Monthly Archives: November 2015

Next Stop for Disruptive Innovation: Banking

60 Minutes just aired a piece on the M Pesa mobile payment service in Kenya, Africa.  Safaricom administers the money transferring service that allows users to pay for goods and services, without cash, by texting.  While the service exists in other places in the developing world, Kenya is the success story.

The reach and the business model are breathtaking and inspiring.  Kiosks that exchange money for an M Pesa balance are ubiquitous, often appearing in or next to other high-traffic businesses.  19 million people, or 90% of the adults, use it, although more transactions still take place in cash.

The service was developed in England, but the thinking it has inspired in Kenya has given rise to the nickname, the “Silicon Savannah.”

The service uses PIN protection and can cover bills and taxes, salary deposits, and loans, with less interest because of the significantly reduced overhead.

The real story is what this user-friendly microfinancing has done to increase the standard of living for the poor, especially in rural areas. It means access to personal services and self business development that were before, out of reach.

So, what does this mean for us in the US?  Disruptive technologies like Uber face barriers from the existing taxi service, and the banking lobby is obviously opposed to M Pesa.  So it seems that the absence of a strong, existing supplier of a service is a boon, but it is harder to come by such holes of unmet need in the developed world.  But if and when you do, the spoils will be yours for the taking: MPesa generates $250,000,000 a year in service transactions in Kenya alone, proving the old saw that it is easier to sell a million items for a dollar, than one item for a million dollars.