In Nov 2011 I was standing in a hotel room in Dar es Salaam, Tanzania, on the lookout for glimpses of activities in the neighbourhood. Towering behind a block of closely built houses I saw a credit card advertisement promoting the wonders of online shopping. It struck me as mocking, since most of the people in this block were far more likely to conduct their digital transactions using feature phones, as a rapidly growing extension to a cash-only economy.

A view over a city block and a credit card ad on online shopping

Dar es Salaam, Nov 2011. My view of the hotel window and a close-up of the ad visible in the background.

My stay in Tanzania lasted one week: Our four member student team, Aalto University professor and a Ramboll Management Consulting agent were gathering weak signals and up-to-date information on ICT and energy sectors. The aim of the study was to provide policy recommendations for Finnish foreign aid (here’s a link to the final report ‘Emerging Innovation Systems in Developing Economies: Cases Tanzania and Vietnam’). Our approach was not to be ‘fully immersed’ into everyday local life as it is usually meant with such reports: instead we were visiting bureaus, companies, universities and NGOs for interviews, and inviting further representatives for focus group discussions. I conducted my own observations from the backseat of a car and through small discussions with our local contacts.

I was reminded of this moment a while ago when I saw the announcement of frog design and Visa (signed a ‘payment company’, not a credit card company by the way) hosting an event on innovation in emerging markets. Here’s part of the introduction to it:

Mobile connectivity is creating and enabling new approaches to markets which have traditionally been hard to crack. For emerging economies, connectivity can improve everyday life for the poorest if companies find a sustainable model for reaching new consumers and understand the complex canvas of emerging markets.

Visa, a payments company, recently partnered with frog to complete a three-month long project in Rwanda to uncover how technology can advance financial inclusion. Teams immersed themselves fully into their local Rwandan surroundings, living alongside the people who would ultimately benefit from financial inclusion to understand their everyday lives more completely.

Street vendor in Tanzania

Dar es Salaam, Nov 2011. Street vending stands and telecom service offering kiosks seem ubiqutious in Dar. Tigo Pesa is a money transfer and airtime service. Think this when you think of visiting your local teller. Pic by my team member Kalle.

Curious about this co-op, I wanted to take a closer look. There is no direct report of that event (at least as of yet), so my best bet was to look into frog’s publications. Two online books seemed most promising: Mobile Money: Afghanistan (by Jan Chipchase, who was one of the speakers at the aforementioned event, and researcher Panthea Lee), and Mobile Ecosystems Evolving.

‘Mobile money’ is a field report:

“In late summer 2010, we landed in Kabul, Afghanistan, to conduct a field study exploring practices around money, with a particular focus on the M-Paisa mobile banking service recently launched by local operator Roshan”

– Chipchase & Lee in ‘Mobile Money: Afghanistan’, p.13

The concise and visual report provides very human accounts about the practical circumstances, attitudes and aspirations of the met Afghans. It also points out some field survival tactics for working under precarious conditions with highly intimate discussion topics expected from research participants. The task then was to understand market potential (real capabilities and desires of those likely to benefit, or be harmed, by the use of M-Paisa) and use these insights for service development. The gathered insights are told from the perspective of three potential mobile customers and an M-Paisa agent.

In ‘Mobile Ecosystems Evolving’, frog Milan discusses possible milestones in a race between mobile and banking businesses: in favor of mobile, the idea in any case is that future’s financing, insurance and banking service providers come outside the financial industry of today. One of seventeen articles scoping out perceived changes and impact of mobile technology, this is more of an introductory editorial in which short, practical examples and references to existing services flesh out the provided discussion:

Short term: New payment models and channels connecting customers and distributors/owners/entrepreneurs (such as taxi drivers and passengers). The critical point, as it is proposed, is that these systems tie well to existing practices, customer journeys and vendor programs while radically simplifying paying: the idea of store, ATM, place to grab a meal or a snack, etc. become conceptually as much defined by the online, and mobile world as our physical world.

Mid-term: One of the core services of banking is the exchange and ‘storage’ of money. New companies, telecoms and retailers in particular are posed to offer their own financial, interest and exchange inducing empires. M-Pesa already claims a quarter of all financial transactions in Kenya, having launched five years ago. Doing this, M-Pesa has formed up, “to all intents and purposes, a parallel, privately controlled e-currency, backed by the Kenyan shilling but seperate from it”, outside existing regulation controls. Amazon has announced its own virtual currency for Kindle users (in another post we are asked whether we are ready to start to barter with our Nike Fuelpoints, banner space, and data)

Long-Term: Insurances are based on risk evaluation, evaluations are made on data, and big data is the hot topic. “The trend of the insurance industry has been to create more and more sophisticated models to define risk categories”. In other words, the idea of insurances relies less on many shouldering the misfortunes of the few, and more on individually calculated, source cross-polluninated (e.g. living, socialising and shopping habits based) predictions. This forces us to sooner or later face questions on “choice, destiny, discrimination, individual and social responsibility” when “those most likely to require insurance may no longer be able to afford it”.

*This is my summary of the original article by Thomas Sutton, Executive Creative Director at frog Milan, in ‘Mobile Ecosystems Evolving’, an e-book by creative agency frog, pp.15-17

The other articles in ‘Mobile Ecosystems Evolving’ cover further perspectives on mobile developments. Together they build up a portfolio of case studies and raised questions from a wide range of industries and use contexts. Occationally, direct inspiration has been taken from models first conceived for emerging markets. Often however Western ideas build upon assumptions and conventions that might not be ‘business-as-usual’ in emerging markets.

Dar es Salaam, Nov 2011. The range of potential customers, their practical needs and preconditions, is high in emerging markets

Adressing potential customers and benefactors of services requires sensitivity to the high diversity of preconditions, practical needs and socio-economical realities people deal with on a day-to-day basis.

To sum up, in these publications I recognize the topics of

/ facilitating for collaboration with many partners, representing different backgrounds and positions,
/ thinking in verbs rather than technologies or products in order to sustain innovation,
/ building bottom-up development based businesses, and
/ creating sustainable value for many

that became some of the founding stones of how I learned to perceive success in emerging markets. One of the key ideas of BOP (bottom of the pyramid) business models lies in recognizing the collective purchasing power of people who are currently underserved: Such corporate oversights can arise out of e.g. mismatched pricing, inflexible payment models, irrelevant or missing features, hardware breakdowns, inefficient distribution, lack of effective communication or plain socio-economic disregard. Just as social conventions and environmental conditions need to be considered, infrastructure for energy, retail and logistics can be unstable, non-existent. One of the core challenges seems then to lie in learning to understand what is desirable: from a locally appropriated, tradition sensitive and forward looking perspective.

Therefore I’m really looking forward to seeing which way Visa will go in shaping the future of payments. As it stands, the reality seems to be that both megacorporations such as Visa, and tiny start-ups have the chance to change the world as we currently know it “at a scale historically reserved for nations” (R.C.Eccles & R. Serafeim).

After all, as payment modes shift and change ‘traditional’ sources as we see the banking system to be in our established markets, applicable legislation and regulation, financial control mechanism, privacy and ownership rights, as well as criteria for identification of a business ‘acting as a bank’ (for the lack of a better definition here) – will most likely need to be renegotiated and revised. Such debates will most likely be raised by success stories in emerging economies, as well as the still reserved adoption of pay-by-phone systems.

As customers and voters we will be taking part in these debates. There are already traces of coding and data analysis being turned into a basic civil skill taught in school – perhaps we should cross-pollinate these with lessons on finance and ethics? As (product, service, system, IA, UX, etc) designers, we’ll be brokering information, laying out and limiting courses of action for others. A core skill for any designer engaged in conceptual and detailed design lies then in providing case-appropriate nudges for people to intuitively grasp what is going on: the ability to understand basic mechanisms as they happen inside the ‘black box’ of insert-you-gadget-here seems crucial to our ability to make informed choices.

The questions we then face as designers can range from the case-dependent and practical to principle-steeped and philosophical: E.g. how do you give the comfortingly tangible sense of ‘handing over a bill to the vendor’ with a [SMS, gesture, etc] as your primary medium? How do you provide all the information needed to complete a transactions to satisfaction of all relevant participants? Of what opinion are you in regards to tracing each move of virtual currency? Who owns the data? Who should you visit, or invite over to discuss these matters when you are doing your design work?

To conclude: building any system of exchange revolves on a mix of economical, psychological, socio-cultural, technological, environmental and situational aspects of relevance. I find it hard to imagine for any payment model to stick unless we adopt them as pervasively in millions as any other type of collective habit or infrastructure. Of course, there are microeconomies such as neighbourhoods that can develop their own, flourishing systems of trade. However, whether the reach of impact is small or extensive,

“Money is the most social of all things because its inherent quality is that of a conventional symbol, an agreement among people for exchange”

– Mihalyi Csikszentmihalyi in his 1981 book ‘The meaning of things. Domestic symbols and the self‘ – also quoted in frog’s ‘Mobile Ecosystems Evolving’