Banking the unbanked using prepaid platforms and mobile telephones in the United States

Francesc Prior and Javier Santoma (jsantoma@iese.edu)
Additional contact information
Francesc Prior: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Javier Santoma: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN

No D/839, IESE Research Papers from IESE Business School

Abstract: The rapid growth of mobile phone usage and the continuous rise in wireless coverage fuel the expectations that access to financial services trough mobile phones could transform the way financial services are provided. The emergence of new and more efficient business models, can potentially resolve supply inefficiencies that explain the large unbanked population that exists in the USA, much larger than in most developed countries. Nearly 40 million US households (approximately 73 million people) are financially underserved (CFSI, 2007), of which 15 million households (approximately 28 million people) are totally unbanked. This problem is explained by the non adequacy of the value proposals offered by financial institutions to the demands of the US customers. The areas of poor alignment refer mostly to the design of products and the marketing and distribution networks used. To resolve these misalignments, this paper will argue that business models based on prepaid cards as products and mobile phones as transactional and distribution channels could be used in order to close the supply gap. We will call the business model proposed based on prepaid products and mobile phones mobile banking, since these two elements are the basis of the business model used companies such as Smart Money and G-Cash in the Phillipines, Wizzit in South Africa and M-Pesa in Kenya.

Keywords: prepaid platform; unbanked; financial services; mobile phones; prepaid cards (search for similar items in EconPapers)
Pages: 21 pages
Date: 2010-01-07
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (1)

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