Monthly Archives: December 2008

Greek Riots, Facebook, Twitter and SMS (Updated)

I am particularly interested in riots since part of my doctoral research focuses on the strategic and tactical uses of digital technology to organize, mobilize and coordinate protest events in repressive contexts. On this note, Alternet just published this piece by Andrew Lam on the “Greek Riots and the News Media in the Age of Twitter,” which echoes some of the issues raised during the panel discussion I participated in last week in  DC on the decline of foreign reporting and rise of citizen journalism.

The Greek riots are a classic case of iRevolutions in the making, i.e., individuals and networks (hyper) empowered by linking technologies like Facebook, Twitter and SMS. What follows first are my thoughts on the two main points that the Andrew highlights in his piece. The second part of this post sheds light on the dynamics of riots by drawing on complexity science and Clay Shirky’s work.


Initial Conditions: The riots were sparked after a 15-year old student “died from a gunshot wound in his heart, inflicted by a policeman following an altercation between a police patrol and a small group of youths in Athens” (1). Thousands of young people took to the streets after quickly spreading the news via Facebook, Twitter and SMS.

But as Andrew points out, no one bothered to verify or investigate the police officer’s claim that he was innocent: “When the coroner’s report came out several days later, it said the bullet was dented, meaning it ricocheted before hitting the teenager, but the information changed nothing. Athens had been burning for several nights, and the people, whose rage fueled the flames, couldn’t care less for facts.”

These valid points aside, my first question is what took the coroner so long? Extracting a bullet (pardon the morbidity) is not exactly brain surgery.  If said coroner had a mobile phone, s/he could have taken a picture of the dented bullet and shared it as widely as possible hoping that it would go viral. I have no idea how effective that would have been, but it’s a thought. The second question I have is whether any investigative journalists were pressing the coroner to get on with it?

Future Conditions: Andrew notes that “professional front line reporters may very well be on the way to being redundant in a world where, according to Reuters Director of News Media Development, Chris Cramer, ‘Every key event going forward will be covered by members of the public, and not by traditional journalists.’” (I just checked the Wikipedia page on the riots and it was edited close to 200 times within 48 hours of the shooting).

However, as I mentioned during last week’s panel, the mainstream media has an increasingly more important social service to play in the Twitter Age: distinguishing fact from fiction. Andrew is thus spot on when he writes that “the role of the mature news organization [...] is to filter real news from pseudo news, rather than treating all content as equal.”

Complexity Science: Power laws are a defining signature of complex systems. The Richter scale, which relates earthquake frequencies to magnitude, is probably the most well known power law. As we all know, there are many small tremors every day but only a few major earthquakes every century. As it happens, protests such as strikes also follow a power law distribution. See for example this piece by Michael Bigs in the American Journal of Sociology. Here’s the abstract:

Historians have persistently likened strike waves to wildfires, avalanches, and epidemics. These phenomena are characterized by a power-law distribution of event sizes. This kind of analysis is applied to outbreaks of class conflict in Chicago from 1881 to 1886. Events are defined as individual strikes or miniature strike waves; size is measured by the number of establishments or workers involved. In each case, events follow a power law spanning two or three orders of magnitude. A similar pattern is found for strikes in Paris from 1890 to 1899. The “forest fire” model serves to illustrate the kind of process that can generate this distribution.

One classic way to illustrate this is by using the analogy of grains of sand falling on a sand pile. Eventually, small and large avalanches begin to occur at different frequencies that follow a power law.


The study of complex systems is often called the study of history. The sand pile becomes increasingly unstable over time as grains of sand cause “fingers of instability” to run through the structure, like fissures running across a wine glass or cracks in the earth as an earthquake unloads the built up tension. If you want to understand the vulnerability of the sand pile of a “Richter 9″ earthquake, dissecting the falling grains will give you little insight. In other words, the answer lies in the past, in the evolution of the sand pile.

I make this point to reinforce the fact that the recent shooting and riots in Greece should be understood in context. The incident was  but one of several that befell Mount Olympus. As Katrin Verclas and others have commented (below) in response to this blog post, “the disenchantment of Greek students, the mistrust in and corruption of the right-wing government,”  as well as the “many acts of police brutality and incompetence through the years,” provides the historical context behind the shooting. “This is why people wouldn’t wait for the coronary report. There were many things wrong even before the shooting and the coronary report.”

Networks Analysis: One way to think about the impact of the information revolution on the ability of groups to mobilize and organize is to use the analogy of disease contagion, which also follows a power law distribution. As Clay Shirky writes, “The classic model for the spread of disease looks at three variables—likelihood of infection, likelihood of contact between any two people, and overall size of population. If any of those variables increases, the overall spread of disease increases as well.”

As a consequence of the information revolution, the likelihood of an individual receiving and broadcasting information is increasing significantly while the likelihood of any two people communicating is increasing exponentially; and world population is also growing at a furious pace. Since each of these three variables are increasing, the overall risk of protests increases as well.

The reason I raise this issue of power laws and epidemics of information is to address the issue of rumors. As Andrew Lam writes, “the streamlining of news [via Twitter and SMS] makes the story skeletal and thin, bordering on becoming rumor and hearsay.” Countering false rumors  in a highly connected network may require a systems approach since command-and-control is unlikely to work (short of switching the network off).

This is where the work by Malcom Gladwell, Mark Buchanan and and the Santa Fe Institute’s (SFI) research might shed some light on the viral cure for false rumors in the Twitter Age.

See also my follow up post on the Greek riots.

Patrick Philippe Meier

Depiction – Decision Support for Crisis Mapping

I got word from my colleague Jim Benson at Modus Cooperandi that Depiction just launched. Depiction is a GIS based simulation (what-if-mapping) tool that can quickly building data visualizations and run them through a variety of scenarios using the following three easy steps:


  • Location: Select a geographic area, then download or import satellite images, street maps, digital images, spreadsheets, shape files, or even live reports.
  • Integration: Your data immediately becomes interactive, influencing the behavior of other elements. You can add, edit, or even create new elements and make rules to govern the interactions between elements in your Depiction.
  • Exploration: Organize and display data where and when you want it. Measure, count, annotate and more.

I really like the ideas that this platform brings together: crisis mapping, simulation and decision support. Being able to play out what-if scenarios is key to making more informed decisions. For example, this interactive component allows users to identify the best route for an evacuation or the delivery of relief supplies should the primary route become inaccessible.  The platform can also receive live reports via email and have them mapped in real time.  I hope the developers will add an SMS component. In any case, Depiction brings crisis mapping closer to serious gaming.

One scenario the group makes available for free trial purposes is a tsunami hitting India. “Depiction provides a what-if scenario map to explore the functionality of the platform. The scenario shows imagery and data for Nagapatnam, India, including a what-if look at a 15-foot tsunami inundation. All of the data in this tsunami scenario is freely available from the internet.”


Finally, I also like the fact that their tutorials are all video based, far more compelling than a text-based manual.

Patrick Philippe Meier

Conference: Creating the Future

Robbert Guerra at Freedom House kindly flagged this conference for me:

Creating the Future: Computers Freedom & Privacy Conference

Suggested topics include:

  • Anonymity Online
  • Citizen Journalism
  • Social Networks
  • P2P Networks
  • Cybercrime & Cyberterrorism
  • Open Access and Open Standards
  • Technology Policy Administration

Call for Papers due January 9th, 2009.

New Page on Projects

What I am currently working on (updated monthly):

From Social Mapping to Crisis Mapping

I recently came across the topic of social mapping thanks to a former student who is now doing some excellent people-centered development work in Haiti. Social mapping is about participatory mapping but the purpose of social mapping is not to build exact replicas of one’s environment albeit at a smaller scale. Social mapping is carried out without any rulers; simply with some pens or crayons and whatever paper is available.

The goal of social mapping is to capture local knowledge and social perceptions on a map:

The map will contain information both about physical features of the locality and about people’s attitudes to their community. Often the process of making the map – finding out about the local context and different views on what should go on the map – is just as important as the information the map contains.

Maps can also be used as simple planning. monitoring and evaluation tools. ‘Before’ and ‘after’ maps can be used to record what existed in a community at the beginning of a project and what changes occurred a year later (1).

Social maps are not drawn to scale and are not meant to be complete. The relative size of the symbols  representing available resources and infrastructure may denote their importance to a community. Likewise, the relative distance on the map of these assets may also denote how accessible or inaccessible they are to the local community.

Social mapping excercises may capture tacit knowledge of conflict triggers that would simply not surface clearly using a computer-designed map. These maps provide “The View From Below” as opposed to the top-down myopic perspective of “Seeing Like A State.” Below are a few examples of social maps that I have recently come across.

Social Map from Sudan

social map Sudan

Social Map from West Bengal

Social Map West Bengal

Social Map from Orissa

Social Map Orissa

Social Map from Philippines

Social Map Philippines

Patrick Philippe Meier

Links: Satellites Spy on DC, Tor, Real Time Mapping

  • Trading Bronze Age Technology: Before the BlackBerry, before the iPhone, before e-mailing, texting and instant messaging, was an ivory-hinged boxwood writing board.
  • Thematic Mapping Presentation:
  • Some of the first images to be collected by the GeoEye 1 satellite that can “see” objects on Earth as small as a 0.41 meters in size in black-and-white mode or 1.64 meters in color.
  • Map of Casualties in Afghanistan: The International Council on Security and Development (ICOS) has published a map of civilian, military and insurgent fatalities in Afghanistan from January to November 2008. The data is gathered from publicly recorded attacks.

3D Crisis Mapping for Disaster Simulation Training

I recently had a fascinating meeting in Seattle with Larry Pixa, Microsoft’s Senior Manager for Disaster Preparedness & Response Program. What I thought would be a half-hour meeting turned into an engaging two-hour conversation. I wish we had had even more time.


Harvard Humanitarian Initiative (HHI) co-Chair Dr. Jennifer Leaning and I had a conversation two years ago on the need to merge disaster training with serious gaming and 3-D crisis mapping. Her vision, for example, was to recreate downtown Monrovia as a virtual world with avatars and have both live and manual data feeds simulate the virtual environment, a.k.a. immersive realism meets reality mining.

This world would then be used to create scenarios for disaster preparedness and response training, much like my colleagues at ICNC have done by developing a serious game called “A Force More Powerful” which uses artificial intelligence and real-world scenarios to train nonviolent activists.

Force More Powerful

Larry and his colleagues at Acron are pushing the envelope of disaster simulation for training purposes. They are integrating Acron’s serious games know-how with Microsoft ESP and the video game engine of Microsoft’s Flight Simulator platform with dynamic crisis mapping to develop a pilot that closely resembles the vision set out by Jennifer back in 2006. I personally thought we were still a year or two away from having a pilot. Not so. Larry will be presenting the pilot at HHI’s Humanitarian Health Summit in March 2009.

The goal for the pilot, or as we the United Nation’s World Food Program (WFP) call it, the “software-based proof of concept,” is to establish the proof of concept into a “training platform” to be combined with training materials that will serve as a demonstrate the tool to governments and international organizations worldwide; particularly vis-a-vis training to build preparedness & response capabilities and informed decision making for the adoption of technologies to enable or improve disaster response and crisis management.

So our goal is to engage with any/all appropriate agencies to provide training against the “training platform”; the training will be based on some key scenarios in Bangladesh acquired through the partnership between WFP and Microsoft.

Successful training requires that we actually remember the training. But we all know from conventional class learning that we retain little of what we read. On the other hand, our memory retains almost all of what we do and that, according to Larry, is what his new disaster simulations platform seeks to achieve.


What I find particularly compelling about Larry’s work is that the tool he is developing can be used for both disaster training and actual disaster response. That is, once trainees become familiar with the platform, they can use it for in situ disaster response thanks to live data feeds rendering the “virtual” world in quasi-real time. This should eventually enable disaster responders to test out several response scenarios and thereby select the most effective one, all in quasi-real time.

Patrick Philippe Meier

Roundtable: Human Rights and Technology

I was recently invited by USAID to participate in a closed meeting with global activists promoting human rights. The roundtable was described to me as follows:

We are having a high-level event in Washington and we are hoping you can participate. It will be very small, with only 20-25 people, and we are seeking someone who can speak to best practices and the future of human rights blogging at an awards ceremony honoring international human rights bloggers. Either Secretary of State Rice or Administrator Fore of USAID will be in attendance.

The organizers wanted an independent academic and avid blogger with a good understanding of human rights monitoring and digital activism. I accepted the invitation since the roundtable would be an opportunity to brainstorm about the challenges and opportunities of blogging for political activism and human rights advocacy.

I was initially not going to blog about this event given some of the sensitivities involved, but as it turns out President Bush had a public meeting with the activist bloggers right before our roundtable (which is why we started almost an hour late). The White House meeting was covered by Jackson Diehl of the Washington Post. The organizers of the roundtable thus encouraged me to blog about the event (although I still have some reservations about the public nature of all this).


The roundtable was attended by the above activist bloggers (now residents of the US) and several representatives from USAID, the State Department, the National Security Council (NSC) and Department of Defense (DOD). Clearly, I was the only non-USG, non-dissident blogger around the table, which made sense since I was invited to provide an independent perspective to the conversation. Consider this blog post as an extension of that invitation.

After some formal introductions, we were each given about five minutes to present our perspectives on the issue of human rights and blogging. Only ten minutes were available for Q&A. Here are some of my personal, independent reactions, to the roundtable:

  • I was surprised how often Russia was referred to as the Soviet Union;
  • The introductory remarks placed too much faith in technology as the solution. There was little discussion about tactics and overall strategy;
  • The reference to the platform developed by the MIT Center for the Future of Civic Media (C4)  to enable activists to communicate securely and anonymously was not entirely accurate. First, the project is being designed for reporters, not activists, and second, the platform has not  been built yet;
  • One of the blogger activists said that US rhetoric vis-a-vis the support of human rights was less helpful than direct action, i.e., applying pressure via leverage of trade, etc;
  • Another activist said that his network does not want US material or financial support, only moral support;
  • The blogger from Iran (now living in the US), noted that the regime was spending some $60 million to try and control the proliferation of jokes sent by SMS that makes fun of the president and ruling officials;
  • When a USG official asked about the use of mobile phones for political activism, one blogger replied that the best way to help repressive regimes is to use mobile phones. I echoed his concerns by pointing out that mobile phones can be a liability because (1) they can be tracked, i.e., geo-located; (2) encrypted SMS is still not the standard; (3) address books are not encrypted or easily deletable which means that confiscated mobile phones can place hundreds in danger.

The meeting was cut short because it started late, so there was actually little time for brainstorming. Below are my (independent) concerns about the meeting and the future of human rights and political activism. They may not jive with the US Government’s take on these issues, but then again, I know that they wanted someone independent in the room to get as many different perspectives on the topic of human rights and technology. For this, the organizers have my utmost respect.

  • I don’t think that the US Government should be publicly meeting with human rights bloggers, especially the leading dissident, political activist bloggers because this makes life more difficult and more dangerous for the majority of citizen journalists and digital activists still living in repressive regimes; note that the invited bloggers all live in the US;
  • While repressive regimes need no excuse to crack down on bloggers/journalists, they often do using accusation of ties to the US government when in fact there are none. So why make it any easier for them to do so by having dissident bloggers who live in the US pose with President Bush?
  • Some argue that most activists feel their best hope for any nominal protection is to be as public as possible about their high-level meetings. But these activists already live in the US, they have already been granted asylum and therefore are not in as much danger as their colleagues still living under repressive rule. So while the bloggers who met with President Bush won’t be arrested since they live in the US, my concern is for those dissident bloggers who are risking their lives every day to influence change in their own countries;
  • Dissident bloggers tend to be political activists and/or former reporters. They are not tech savvy. In fact, when I asked a blogger sitting next to me at the meeting for their email address, they gave me a yahoo email address. This particular blogger was the only one in the group who still lives in their original country to which they were returning to the following day. I told the blogger that I would not be emaling them on that address and that they should set up a hushmail address as soon as possible;
  • Activist bloggers are in dire need of training in digital activism so that they can ensure both personal and data security; I was truly shocked about the yahoo email address;
  • Echoing what fellow bloggers have told me in the past, not everyone blogs. Bloggers are not the only voice of the people. Speaking out is only part of the problem; more of a challenge is being heard. This presents a catch-22 since a successful activist blogger who manages to be heard will usually present themselves as a target by the regime.

In closing, I don’t think the White House should be publicly supporting dissident bloggers. Instead, the USG should be promoting human rights and principles of free speech in general. If the USG wants some policy guidance on this, I would refer them to the general approach taken by the International Center for Nonviolent Conflict (ICNC). In particular, I would consider learning from the successful US policy regarding the support of the Otpor student movement against Milosevic.

Again, I realize my views may not align with the USG officials who participated in the roundtable, but again, I was invited specifically to provide an independent perspective and to blog about it, which, to their credit, is an important element of policy making—diversity of opinions, that is. I look forward to contributing more of my thoughts in any future meetings.

Patrick Philippe Meier

mBanking Panel 3 – Creating and Taking Advantage of Regulatory Regimes

The third and final panel of CGAP’s roundtable on mobile banking for the bottom billion figured Rizza Maniego-Eala of Globe Telecom, Philippines and Ali Abbas Sikander of Tameer Bank, Pakistan. The panelists represent two different approaches to mobile banking: a nonbank-based model and a bank-based model. At the same time, they share two features in common: engaged, pro-access regulators and dynamic, outside-the-box-thinking industry actors.


The purpose of the panel was to ask how to create or take advantage of regulatory space? Is the space already there? As we know, existing regulation on branchless banking was not created with mobile banking in mind. There are important gaps in regulation, with claims that Safaricom sprung out of a regulation vacuum.

The moderator posed the following questions to the panelists vis-a-vis their branchless banking projects:

  1. Which regulatory issues loomed largest at outset?
  2. Which seem most significant now? what accounts for change if there has been one?
  3. Looking ahead, how would you rank the following challenges (in order of importance) and why (for all actors involved):
  • Regulatory space
  • Business care
  • Client uptake

Rizza spoke about her gCash initiative. They decided upfront that a partnership with the Central Bank was needed. This posed a big challenge and took many meetings to convince the bank about the viability and security of mBanking in the Philippines. They also engaged IFI’s in parallel. The conversations took over 10 months.

Today, the challenge in the Philippines is to continue that engagement with the regulators. “It’s not over, lots more conversations need to be had and many questions remain unanswered,” said Rizza.

In her opinion, the regulatory space is most important of the three challenges identified by the moderator. Money supply was the first major stumbling block put forward b the Central Bank and regulators. The solution was to ensure 100% backfunds. The second challenge was Know Your Customer (KYC) requirements and anti-money laundering measures.

Cash in/out requires presentation of ID in the gCash system. Regulators were quite impressed with the telco’s ability to track transfers, monitor, tracing, etc. Indeed, the head of Philippine’s anti-money laundering unit, said gCash was notably better than cash because cash leaves not traces while mobile transfers do. The moderator added that the Philippines was taken off the US black list thanks in large part to gCash.

Ali Abbas of Tameer Bank addressed the issue of regulation as a context between the banking led model versus the telco led model. The outcome of the competition depends on which side is stronger and more influential in policy circles.

Pakistan regulators are struggling with commercial banking expansion in rural areas. In fact, there is less than 3% penetration in rural areas which comprises 83% of the country’s population. Pakistan’s mBanking regulation had financial inclusion as underlying tone; they named the telco’s and any agents/distribution networks, e.g., grocery stores, as legal agents.

This led to a partnership based model but with banks bearing the responsibility at end of day. The stumbling block, according to Ali Abbas, is deciding between the bank-led model and telco model. There is a lack of clarity vis-a-vis the end to end ecosystem and  concern about pricing regulations or product restrictions.”If someone reads through Pakistani regulations on branchless banking, they will notice that the language is very focused on technology, which means that regulations don’t jive with what existing business models,” he added.

Regulators are fond of focusing on the security transaction but this almost exclusive obsession with secure banking platforms leaves other fundamental issues such as education at the agent end unanswered. In contrast to bank-led regulations, telco guidelines focus more on the required infrastructure.

In terms of priority areas, Ali Abbas would points to the “business case” as biggest challenge for any institution trying to do mobile banking in Pakistan.

Compliance departments dictate what the banking model will look like; they are an independent entity within the financial institution set up. If they place a limit on the value of transactions per day, then this will drive customers away since business starts and stops at first point of contact. This means that agent uptake is important. Transparency, liquidity, cash management issues need to resolved and scalable manner in order to move  mBanking forward.

The moderator asked the first question of the Q&A session: “Regulators in the Philippines and Pakistan appear to be very concerned with consumer protection; are these issues specific to mBanking?”

Rizza noted that gCash is being treated by regulators as a bank even though they don’t have a banking license; so customer protection in mBanking has always been consistent with banking laws. In Pakistan, Ali Abbas pointed out that regulators are concerned about the potential growth in agents and the issue of cash out. They want to be convinced that there is sufficient liquidity at any given time so clients can be assured they have access to their cash at any given time.

Ali Abbas thus stressed the need for a more flexible complaint handling system since this is right now done at branches. Financial institutions want to monitor whether complaints are getting to the regulators. So the regulatory regime in Pakistan deals more with processes where the driving concern is the potential trade-off between scalability and consumer protection.

The remaining questions focused on gCash. Rizza added the following details in response:

  • gCash imposes a daily limit $800/day and $2000/month;
  • gCash is not allowed to go into lending, interest, etc.;
  • gCash is audited twice a day to ensure transactions;

One participant expressed his skepticism about the business case for gCash, since the service requires 100% backfunds. Rizza pointed out that the gCash business model does is not based at the account level but rather on micro-transactions.

In conclusion, the moderator highlighted that as far as CGAP policy is concerned, “if mobile operators are sufficiently and proportionately regulated, they should be allowed to play in the space.”

Patrick Philippe Meier

mBanking Panel 2 – Building a Viable Agent Network

The second panel of the CGAP roundtable on mobile banking for the bottom billion included three panelists: Nick Hughes with Vodafone (the architect of Mpesa), Carl Johan with the Maldives Monetary Authority (MMA) and Sam Kamiti of Equity Bank, Kenya.


The key interface between the electronic world and cash-based world is the agent network which is responsible for handling the cash. Branchless banking (aka mobile banking) requires the outsourcing of cash transfers to these distributed networks of agents such as small shops. One important question is how to make the compensation model viable for these agents?

The moderator of the panel, Mark Pickens of CGAP showed the results of a small study carried out on Mpesa agents. While I believe this is exactly the kind of study necessary to better understand the cost benefit analysis (CBA) of agent participation, the study in question only drew on a sample of 20 Mpesa agents (!).

The study suggests that the number of transactions follows a Gaussian (or normal) distribution with a mean of 105 transactions per day providing an average of $10.7 daily commission. At -1 standard deviation, there are 58 transactions with $6.6 in daily commission, which is 2-3 times the daily wage. At +1 standard deviation, there are 152 transactions with $14.7 in daily commission.

Mark emphasized the point that an agent can only maintain so much money in float; about $250 for one Mpesa agent he spoke with. The agent therefore needs to visit his closest bank several times a day, which presents additional costs of doing mBanking. Partly as a result, the agent receives more profit by selling non-mobile products. In other words, one of the biggest challenges that an agent faces is getting liquidity, which is why the agent in question does not see Mpesa as the main driver of his sales and profit.

To provide a comparative analysis of Mpesa, Equity and mBanking in the Maldives, Mark Pickens compared the following variables for each initiative respectively: Agents, Transactions/Day, Value/Day, Number of Clients, Agent Networks.


The first panelist, Nick Hughes from Vodafone, played an instrumental role in the design of Mpesa. It was interesting to note that Mpesa never positioned itself as mobile banking:

All we did is ask, do you need to send money home? To move money around? If you try to introduce customers to mobile banking, don’t talk about banking, talk about need and address need, ie, the functions of mobile banking. We got 4.5 million subscribers not because we asked asked, ‘do you want to do mobile banking?’

Agents are critical because they serve as for cash-in, cash-out points. It is important to make it as convenient as possible for customers to take cash in/out. So Mpesa’s 4,000 agents basically act as human ATMs. In setting up mBanking, one should first concentrate on getting that agent network set up. The business case should not just be transfer of stock; one needs to think more broadly. For example, by offering Mpesa in a shop, the owner consequently gets more customers coming to the shop, potentially purchasing more items as a result.

The second panelist, Carl John from the Maldives Central Bank, noted that the average island dweller has no access to banking. There are no bank branches on islands with less 500 people and  only one bank that goes around once a month. There are only 41 ATMs in all of the Maldives and only 38 banking branches agents. Mobile banking thus provides some important opportunities for the country.

Carl pointed out that the endgame for the mBanking initiative in the Maldives is a cashless society. This means identifying new agents, such as small stores or basically anyone accepted and trusted by the local population. The agent network in the Maldives will also need to  handle checks and the Central Bank will treat ATMs as part of the agent network.

There are 3 types of agents according to Carl:

  1. Mobile/handset only agent (boat operator, fisherman), can download statement from website;
  2. Working level agent (printing statements services, provide cash in/out);
  3. Check-enabled agent (using scanners to submit images to central bank for clearing);

In closing, Carl emphasized that the Maldives’ mBanking system is not e-money, but a banking system.

Sam Kamiti of Equity Bank, Kenya, emphasized the need to focus on the Bottom of the Pyramid and to demystify banking. Equity’s approach is to only charge clients for transactions. They invested heavily in ATMs which is why Equity’s is the largest ATM network in Kenya. Equity also introduced points of service (POS) to provide services beyond payments of goods and services. The POS also charge a smaller transaction fee for cash back than ATMs.

During the Q&A session, one question addressed how best to extend agent networks further, and how to make it worthwhile for all agents along the value chain?

Nick of Vodafone replied as follows:

We need to give aggregators the ability to move funds around without having to go to a bank; the more you can avoid having to go a bank the better. We need to follow the money; if you can remove cash entirely from the marketplace, then you don’t need agents. For example, Vodafone provided a school in Kenya with a Mpesa account so parents could pay directly when they noticed that parents would take out large sums from their mBanking accounts several times in a row just to pay school feels. The take-home point? Follow the money.

Carl emphasized the need to for banks to be responsible for nominating agents and for providing sufficient revolving credits to these agents. Attracting more ATM deployers is also key to further extend agent networks.

Sam pointed out that petrol stations and marketplaces prefer to use less cash; handling large amounts of cash presents problems for these existing networks. To this end, creating synergies with pre-exisitng networks for the purposes of mBanking can provide mutual benefits.

Another participant during the Q&A session asked whether Vodafone had any plans to extend Mpesa to countries where Vodafone is not presently operating?

Nick replied yes since any phone operator can take Mpesa without needing the Vodafone footprint or infrastructure, such as Roshan in Afghanistan. Vodafone provides the platform, Roshan recruits the customers. In the past, mobile operators would go at mBanking alone. The new trend sees mobile operators forming partnerships with banks and other groups. One of the consequences, or necessary conditions, of such partnerships is that systems must be made fully interoperable.

Nick also pointed to worrying developments on the regulatory side of the equation. He gave an example in India that will almost certainly hamper possible partnerships between mobile operators, banks, etc: “A new regulation in India stipulates that no agents can be further than 5km from a bank branch.” In another example, the India Reserve Bank now requires inter-operatbility within 6 months of operation. “This completely stifles innovation and discourages start-ups with new ideas from taking any risks. The key to the future is interoperability, it’s how we survive, but regulation can seriously set us back.”

The problem is that it is particularly difficult if not impossible to scale up mBanking without partnerships between telecom companies and banks. The enabler (such as Vodafone) and the core finance provider (banks), need to find a way to share the profits/costs. Any regulation about what kinds of agents can be used forces a change in strategy from mobile operators.

In response to a question on improving agent training and financial literacy for end users, Nick emphasized the critical need to employ third parties to train agents. “It is vital that agents do their job well in order to establish trust with customers. We also need to move very quickly if we see agent behavior that is not sanctioned; this is absolutely essential.” In conclusion, Nick pointed out that the variation in in-country economic growth and mBanking is less a matter of technology and education and training.

Another Q&A question addressed the issue of tight regulatory control slowing down innovation and contrasted this with the current response to the global financial meltdown which calls for increasing regulations. Where does one draw the line? How does regulation effect agents, their business, Know Your Customer (KYC) procedures, customer protection issues, business models/cases?

Nick took the first shot at the question. It is important a contracts are in place with agents. Mpesa does not charge a fee for registration, but does require ID verification in order to check for fraud, terrorism finances, money laundering, etc. Agents need to collect the KYC data very carefully, “this is something that the Central Bank of Kenya is doing very well.” Agents should be awarded commissions when they bring on a new client, but the initial KYC must be carried out by these agents, with the full KYC done by Vodafone.

According to John, KYC procedures are rather limited in the Maldives because of the hundreds of islands. Agents try and check person ID cards. A client that supplies the most basic KYC data is allowed to get the first basic level of mBanking service. They can upgrade to additional services if they provide additional KYC data. Further upgrades require that they be issued a card.

Other services provided (with additional KYC verification) include Islamic banking. On this note, the Maldives Central Bank allows banks to define their own products/services. It is then up to individual banks to establish the degree of differentiation they want to spur competition.

Sam of Equity Bank concluded the panel discussion by noting that the cost of compliance is generally rather high, which means that expanding to marginal agents is rather difficult. Agents need to be provided with a business model that clearly identifies high returns.

Patrick Philippe Meier