Another company that understands the benefits of fostering social innovation internally is Vodafone. In February 2007, the UK mobile phone giant launched the M-Pesa mobile banking service in Kenya through its subsidiary Safaricom. The service is aimed at the 80 per cent of Kenyan adults who do not have a bank account, many of whom do have a mobile phone.
M-Pesa customers can transfer money to each other via text message. Instructions are sent to a central server, which authorises the transactions. Money can be paid in and withdrawn at kiosks, petrol stations and supermarkets that sell mobile phone airtime. M-Pesa now has 1.8 million subscribers, or 18 per cent of mobile customers in Kenya, with most transactions being relatively small ($15 or less).
Revenues from M-Pesa are growing “incrementally”, says Vodafone's global head of international payment solutions, Nick Hughes. “The objective was to come up with a commercially viable service that addressed the issue of financial inclusion,” he says. But the project would not have got started without £1 million from the UK Department for International Development, he explains. The company matched that investment.
Vodafone is now looking to extend its mobile payment service to other areas such as bill and salary payments, says Hughes. The remittance market is another key growth area. Vodafone has partnered with financial services giant Citigroup to pilot a remittance service enabling customers to send money via mobile to relatives and friends in their home countries. “We are learning lots about moving money across borders, especially compliance [with rules] around anti-money-laundering and customer due diligence,” says Hughes.
Another “strategically important” area for Vodafone's mobile banking platform, Hughes adds, is microfinance. In Afghanistan the company has been working with Roshan, the network operator, to facilitate microcredit loan disbursement and repayment, building on the pilot phase work with Kenyan microfinance institution Faulu.
The success of M-Pesa, and these new product developments, vindicate Vodafone's decision to invest in researching how mobile technology could be used to address social problems. Six years ago Hughes was working in the firm's corporate affairs department on research projects that the company grouped under the heading of “social innovation”. The initiative has developed into a new business stream, with a ten-strong (and growing) team at Vodafone's head office, functioning as a regular business unit with revenue targets.
Chris Evers / chris@chrisevers.dk
