The development of mobile and branchless banking has been steadily gaining momentum over the last 10 years thanks to a highly innovative technological environment fostering the development of new mobile money platforms and applications. The success of Safaricom’s M-PESA in Kenya created high expectations with regard to the benefits of mobile payments. As a result, many donors, experts and MFIs became convinced that mobile financial services (MFS) are more convenient, efficient and less costly than the traditional high-touch model for delivering microfinance services, especially when targeting the unbanked poor living in remote areas. Indeed, MFS were seen as the alternative to brick and mortar branches, allowing MFIs to improve existing services in the short term while increasing their outreach in the long term. By serving a greater number of unbanked poor, it was – and still is – seen as a powerful means of achieving greater financial inclusion.

But attempts to replicate M-PESA’s success in other countries have thus far been met with what can only be qualified as mitigated success. In Tanzania, the transfer costs have been too prohibitive to offset the users’ cost to travel to an agent. In Cambodia, it was the limited geographical outreach of agents and the shortages of liquidity (e-float). In Senegal, the restrictive regulatory environment made it difficult to roll out and reach the scale of transactions needed to make the service viable. The research revealed that without an enabling market and regulatory environment, the cost-benefit equation for mobile financial services was no longer as obvious as initially perceived.

Through direct interviews and an online survey, the research team began by conducting an overview of MFI experiences with MFS in several geographical regions. This provided the basis for identifying best practices as well as the critical factors for successfully implementing MFS. Key findings follow.