[From Center for Financial Inclusion blog, 25 June 2012]
Book review of Money Real Quick: The Story of M-PESA by Tonny K. Omwansa and Nicholas P. Sullivan
When it comes to mobile payments, Kenya has become a global innovator. Almost three-quarters of the adult population knows how to fiddle with a small keyboard in order to send money to someone else or check their balance. They haven’t been seduced by Jobsian gadgetry (any phone will do), but rather by the sheer simplicity and convenience of the M-PESA service. Anywhere you go you find stores offering to help you with the bothersome business of getting cash into or out of your phone. It’s practically doorstep service. Indeed, the most striking thing about M-PESA is how visible it is.
In their new book, Money Real Quick: The Story of M-PESA, Omwansa and Sullivan have done an excellent job of consolidating all that we know about M-PESA today, following every nuance in its development and every tentacle in its growing reach. This book will become not only the classic story but also the reference for all things M-PESA.
The first half of the book is a fascinating account of how a new mobile payment system has ripped through a population that has long been trapped in a cash economy. It’s a tale of innovation and disruption to match any that Clayton Christensen might tell. The authors pour richly deserved praise on the key Vodafone and Safaricom people involved. Their formula was maintaining an unrelenting focus on identified customer needs, marketing use cases that resonated with people, and committing adequate resources to the project. They made rolling out mobile money look deceptively easy, as the hundred or so mobile operators who are following in their footprints are now painfully discovering.
The second half presents a hopeful perspective on how the service is rippling through the Kenyan economy and internationally. This part is about slower-paced transformation. Kenyan banks are still sorting out where they come out among the threats and opportunities posed by mobile money, but at least they are now seeing the potential of the base of the pyramid more readily. Microfinance institutions will be slow to rework their systems and processes to move towards cashless operations. An ecosystem of players is emerging to help online merchants, employers and billers connect to M-PESA. There is a new generation of developers keen to find ways of exploiting the opportunities presented by M-PESA to monetize their software and content. The authors do a fantastic job of casting a wide net in identifying these signs of change, though some of the stories they latch onto are still very incipient.
Only time will tell whether these ripples will swell into broader economic transformation. It’s not only about the rest of the economy catching up to M-PESA: M-PESA also will need to adapt to become more useful beyond the specific social needs it mainly covers today. The asks on M-PESA are huge: connecting more seamlessly to banks, presenting application programming interfaces that allow M-PESA transactions to be fed directly into corporate IT platforms, lowering transaction prices, dealing with lingering platform stability and customer support issues, and interconnecting with other mobile money platforms.
We can all be in awe at how fast M-PESA grew, but what is harder to judge is how patient we need to be for it to pervade the economy and society more fully. Keep in mind that this is a biography of early childhood: the book appeared on the eve of M-PESA’s fifth anniversary. So what can we expect the sequel to contain? Will the genius child live up to its great expectations, or will it become complacent and fail to develop further?M-PESA has spawned a niche travel category in Kenya: M-PESA safaris, for banking and telecoms execs, policymakers and researchers from other countries who want to see for themselves how it’s been done and how relevant it might be in their own countries. With this well-documented, comprehensive and animated book, we can now all go on an armchair M-PESA safari. It’s a gripping tale, written in a straight-forward manner suitable for all audiences. I was already familiar with much of the content, but found myself tearing through the pages and discovering nuggets, just as I would on the third re-read of a favorite novel. I can only imagine the exhilaration for those who are new to M-PESA.