BOGOTA, COLOMBIA—This is a seriously schizophrenic country. On a recent morning I went from a briefing at Doctors Without Borders’ local headquarters, where I learned about a skyrocketing refugee count from newly emerging groups of narco-terrorists, and massacres where the killers played soccer with their victims’ severed heads; then I went across town and discovered an terrific made-in-Colombia technical innovation that just might change a whole lot of lives for the better.
The company is Gemalto, and the innovation is banking from your mobile phone. From any mobile phone, so long as it’s GSM (the standard used by most of the world, including Rogers, Fido, T-Mobile, Cingular, and AT&T.) Their key innovation was miniaturizing their software so that it fits entirely onto a SIM card — that little notched chip which is your phone’s removable soul, as opposed from its Nokia or Motorola body.
(Technical detail, for those so inclined: their lead designer German Martinez actually managed to stuff a secure Java applet into 18 kilobytes, which, take it from this former software engineer, is the programming equivalent of nailing a quadruple axle through flaming hoops in a tiger cage.)
Gemalto’s software is already preinstalled on 25 million South American SIM cards, and their user-growth graphs have a pleasing 45-degree upwardness. You can use it to pay bills, transfer money between your accounts, and soon, transfer money to other people — all in 8 seconds, from your phone. Entering a PIN code every time for security, of course.
What’s more, this free service actually makes money — ah, the miracle of profit — by making it much easier to buy prepaid minutes or pay your phone bill, which leads to more phone use and hence more money for the networks. Meanwhile the bank takes a tiny slice of every such transaction.
But most interesting to me is their plan to extend service to people who don’t currently have a bank account. That’s 75% of Colombia’s population; even more for some of the countries they’re expanding into, such as Peru and Venezuela. People in remote jungle villages without land lines, much less branch offices, will be able to get bank accounts for the first time. (Even the very poor. SIM cards cost all of $2 here, and you can rent cell phones for 5 cents/minute.)
Try to imagine your life without a bank account, and you’ll begin to realize just how big a deal they are. You don’t have to keep your money under your mattress, or travel with it wadded in your pockets. You can get remittances from city relatives, or loan money to faraway friends. And a bank account is the first step on the road to credit cards and loans.
Hernando de Soto argues in The Mystery of Capital that many of the world’s poor are poor because they can’t turn their assets into capital; for instance, they usually don’t have property rights to the land where they live, so they can’t get a mortgage. Gemalto’s software obviously doesn’t solve that problem, but it does make any solution much easier to implement. Mobile banking for the unbanked doesn’t sound as sexy as, say, One Laptop Per Child — but in the long run, it’s a much bigger deal.
Oh, and you may wonder: why can’t you do this on your phone, in the allegedly far more advanced First World? (I guess you could log on to your bank’s web site with its browser, but trust me, this is much easier.) Good question. I sure wish I had an answer.
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Legong: I know I am replying to this pathetic, racist statement a little late and the whole ignorant rant probably doesn’t even deserve a reply. Wanhenglo, if we were all to generalise about...
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