It’s Complicated: What we can learn from the developing world about payments
I was fortunate enough to spend a day yesterday at Bill Maurer’s IMTFI (Institute for Money, Technology and Financial Inclusion) conference at UC Irvine. Bill is an anthropologist, and his institute funds fascinating small projects in developing countries that look at how people interact with money. (IMTFI, in turn, is funded by the Bill & Melinda Gates Foundation.)
We heard great presentations throughout the day from researchers. A common theme of the day was surprise – many of the researches had found unexpected behaviors, some even having to realize that their basic hypotheses were wrong.*
Many of the surprises came from insight into how complicated financial management is, from a human dimension, for many of the subjects of these studies. And “complicated” isn’t necessarily bad: sometimes, it is just a description of reality. Money, after all, plays an important role in complex family relationships, employment situations, and community obligations.
In developed countries, relatively affluent payments professionals may think that their estate planning, or mortgage financing, or college funding strategies are complicated, and that their “payment life” is simple. (Although, for some rewards junkies, even that “payment life” is complicated, as they try to figure out which card gives them the most points!) But all people, poor or not, have ways of dealing with the intersection of money and the complications of life. Assuming that poverty makes this simple is just wrong. The IMTFI researchers are doing a great job of illustrating this.
Just some of my favorite sessions:
- Information and insight into the role women play in managing finances both in businesses and at home: Mobile money systems in northern Ghana (Dennis Chirwaurah, Seidu Al-hassan and Deborah Elzie)
- A fascinating glimpse at how financial obligations can be fluid across people and communities: How “The Poor” Account: Financial Reckoning and its Cosmoeconomics in Assam, India (Sean Dowdy)
- An investigation into why poor consumers aren’t using mobile money in Nigeria and Ghana – and why it’s not as simple as telling them about it: Mobile Money Utility and Financial Inclusion: Insights From Unbanked Poor End-Users (Lite Nartey, J. Adtunji Adegbesan and Olayinka David-West)
- Looking at how consumers cope with the decision of a government to pay benefits in a new way: The use and impact of Mobile Money in the delivery of conditional cash transers in the Philippines (Erwin Alampay and Charle Cabotaje)
- Looking at the use of cash by consumers and merchants in one of Mumbai’s largest slums – and showing that both groups pretty much like cash: Understanding the movement of cash of the privately led enterprises in Dharavi and scope for electronic or mobile payments (Deepti KC and Mudita Tiwari)
What can we learn? Some of the oldest marketing lessons in the world. First, we need to really listen to people, and not just assume we understand their rationale based on their behaviors. (I’ve written about this in the past, on cash usage in the U.S.) Secondly, we need to recognize that money – and payments – reflect complicated, multi-party social situtations. Simple, one directional payments may look clean and efficient, but they may not suit the situation.
That made me reflect that we’ve been here before – when mobile phones transformed a phone call from a social act (calling a household) to an single act (calling a person). In that example, in the U.S. at any rate, the technology prevailed, and the social context changed. I’m not so sure the same will be true for payments.
Finally, we can learn that the adoption of new payments solutions can’t be looked at purely from a cost/benefit lens. Understanding the social – the human- context can make all the difference.
* Isn’t that great? How academia is supposed to work – and business should learn from them!