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Tracking Mobile Banking Innovation – II

September 10, 2015 - Surti


The emerging markets have the numbers and the ambition, but innovation is not necessarily or innately indigenous. That was where I signed off in my last post, so let me pick it up from there.
What works for the developing can also work for the developed. Emerging markets typically innovate around constraints – like weak infrastructure or low literacy for example – that may not be applicable to more mature markets. The innovation process in emerging markets is often defined by a search for fundamental utility rather than indisputable excellence, which has driven frugal innovation in many of these countries.
But though the approach to innovation may be starkly different, it does not automatically preclude solutions from crossing the developmental divide. Case in point, Kenyan success story, mPESA, which can now be found even in some developed markets. Or consider YouTube’s plans to enable offline playback in order to circumvent the problems of limited mobile bandwidth and access in India. Now that’s an idea that should find resonance even in bandwidth-rich countries.
But having said that, I must add that emerging markets are also evolving up the innovation value chain. Brazil, for instance, has taken a two-track approach to banking innovation where one track caters to the affluent classes with ‘developed world’ products and the other focuses on the needs of the underbanked.
So quality or caliber of innovation is not necessarily the most efficient, or even the most equitable, approach to map an innovation to its provenance. Why, Malaysia’s Maybank has managed to completely mobilize account origination even as many banks in developed markets are still grappling with the complexities.
My view, therefore, is that every mobile banking innovation is a winner and disruptive innovations with a global resonance will emerge from markets at all levels of maturity and sophistication. For instance, any hardware innovations that originate from developed economies may well be adapted to serve certain needs that are specific to emerging markets.
But emerging markets do seem to be developing into a hotbed of mobile banking innovation. Apart from their inherent growth potential, technology vendors, telecom providers and financial institutions from around the world are also increasingly looking at these markets to establish and develop global innovation hubs. In many of these markets, ‘mobile first’ banking is not merely seen as an evolution of traditional banking but also as the easiest and quickest route to take formal banking to the un- and under-banked masses. Now that is a situation ripe with the possibility of fostering innovations that could easily find application across the globe. Meanwhile ambitious startups in the established innovation ecosystems of the developing world are working on the next big idea that will resonate globally. At the end of the day, it all comes down to the power of an idea and the versatility of its applications. Geography is just incidental.

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