4th May 2012
The innovation in question? Mobile payment applications, which are enabling the use of handsets to conduct cashless financial transactions and finally beginning to be embraced by the British banking industry. The latest offering is in the form of O2 Wallet, launched by the eponymous mobile phone service provider.
The smartphone and tablet app enables users to send money to nominated persons and buy goods and services online, regardless of their mobile network. It follows Barclays' launch of its Pingit cash transfer application in March.
But the fact is mobile payments and cash transfers have been in widespread use across Africa for the last five years, primarily among the millions of ‘unbanked' in the across the continent.
The source of mobile payments' inspiration is M-Pesa (‘Pesa' meaning ‘money' in Swahili), launched in Kenya in 2007 by the local telecoms carrier Safaricom. It allows the storage and transfer of money and airtime between users, who send the desired amount via SMS and redeem the cash at the local M-Pesa agent's premises or participating bank.
By last October there were 14 million M-Pesa users in Kenya and over half of the country's GDP has passed through the system since launch. M-Pesa also operates in Tanzania, Uganda and South Africa. MTN, Africa's largest mobile telecoms provider has the rival Mobile Money offering in Uganda, Nigeria and South Africa with further expansion plans.
Other countries like India and Afghanistan embraced the technology before it finally wound its way up West. There's even a name for the phenomenon: ‘Trickle-up innovation'.
For the majority in most of these countries landlines and the PC-based web have never been part of the communications landscape. The mobile phone helped millions to leapfrog those ‘legacy' technologies straight to the cutting edge of non face-to-face, un-tethered interaction. (Incidentally, 4G mobile will most likely happen in Angola long before it's taken up in the U.K. and 4G data services launched in India this month.)
That lack of technological baggage must provide for a unique perspective for today's sites of innovation.
It's widely acknowledged that the squeezing of R&D budgets as result of the credit crunch in the West has led corporations and investors to look further afield for the next big things. Some enlightened companies often employ anthropologists, among others, for their unique insights into cross-cultural phenomena, to help in the search for ideas and inspiration.
Another aspect of the financial meltdown has been that the West now takes micro-financing and micropayment models as seriously as the world's so-called ‘last billion' – those at the bottom of pile in developing societies. Mobile apps from the productivity enhancing to the trivial – all sold for pennies and cents – are testament to that.
In the final analysis, the concept of trickle-up innovation should not be at all surprising: It's already widely predicted that future economic growth will be powered by the developing ‘BRICS' nations.
The very nature of global communications means that ideas, goods and services, can now transfer more quickly and more easily from the developing to the developed parts of the globe than ever.
To boot, some of the best minds of the developing world have been physically migrating to the West for many years, bolstering everything from Silicon Valley to the U.K.'s National Health Service. It makes absolute sense that ideas and cultural capital would be the next big commodity.
For corporations and investors…
Could there be a better argument right now, for a bit of diversity within the workforce and the portfolio?
Other Trickle-up innovations of note:
Ushahidi: an open source software mapping tool originating in Kenya during the violence that followed the presidential elections in 2008. The web-based tool was designed to enable users to report where violence was breaking out, tagging their locations and sending the information to a database via SMS. It has since been adapted to help locate survivors in the Haiti earthquake, the Russian forest fires in 2010, and the earthquake and tsunami in Japan last year. It has been used in over 130 countries.
General Electric: Unable to sell expensive ultrasound medical scanners in China in 2002, the US conglomerate developed a lower-quality, compact device which fared far better – both in China and back in the U.S. when it was repackaged for the recession-hit home market.
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