How Mobile Banking Can Make Healthcare More Affordable in Emerging Markets
Every year, Bill and Melinda Gates issue their Annual Letter, in which they discuss their Big Bets for the future. One of the Big Bets for 2015 was that mobile banking will help the poor transform their lives within the next 15 years.
“The key to this will be mobile phones. By 2030… mobile money providers will be offering the full range of financial services.” – Bill and Melinda Gates
Mobile-money technology first emerged as a way to offer person-to-person money transfers. Yet, the next step for these platforms is to use mobile-money infrastructure in non-financial sectors to improve transparency and accountability of transactions, increase the convenience of conducting money transactions and drive down costs. In other words, mobile money has the potential to make these sectors more affordable and accessible to the poor.
For example, in healthcare, one of the challenges many developing countries face is the lack of infrastructure to pay for health services. The ability to pay for one’s insurance premiums and receive payouts via mobile phone—instead of taking a full day off of work to travel to the nearest bank—could make a big difference. On a larger scale, international humanitarian organizations such as Doctors Without Borders could send employees’ salaries to their mobile money accounts. This would significantly cut overhead expenses, which often include hiring armored vehicles to deliver salaries in cash.
Replacing cash with mobile money also has the potential to improve patient outcomes as well. It could allow patients to use m-loans to pay medical bills over time. Mobile money can also be integrated in broader mhealth platforms to provide incentives for better patient care, as was done in Pakistan’s Indus Hospital, where employees received mobile money for screening patients for Tuberculosis.
The opportunity to leverage mobile money platforms to support financial transactions in healthcare and other industries is particularly relevant in developing countries. Mobile penetration rates and mobile money adoption have grown continuously over the last decade. As shown in the graph below, the World Bank data shows that over 70 percent of adults in most developing countries now have mobile phones and the number of people regularly paying using their phones is catching up quickly: In 2010, the top five countries with the most mobile-payment activity completed just under 400 million transactions. In 2013, more than 1 billion mobile transactions went through in Tanzania alone.
However, despite the opportunities that mobile money platforms present in supporting other sectors, there are multiple barriers in implementation. Some are related to gender inequality when it comes to owning a cellphone, or scaling up the transaction volume fast enough for mobile money providers to stay commercially viable.
Yet, some of the difficulties are purely technical. Interoperability—or the inability to transfer money across different mobile money provider platforms—is one of them. Additional fees and the time necessary to operate accounts on multiple mobile money provider platforms can limit the value for the company of switching from cash. If a business or an NGO has to accept and disperse payments over multiple mobile-money operators that cannot sync, the process would add time and labor to operate and complicate accounting. It also could cause pricing confusion for the users if operators charge different money-transfer fees.
This is where players like Beyonic, which offers mobile payroll and bulk payments in Uganda, step in. Beyonic partners with mobile money platforms in Uganda, so that the companies that Beyonic services don’t have to. Instead, the companies that use Beyonic do payroll online and send the money to one account; Beyonic then pushes it to individuals’ mobile wallets on multiple networks. The system also allows for individuals to submit work-related expenses via mobile phones, which helps organizations using the service keep accounting transparent.
While today mobile money has very limited use in health services, companies soon will recognize the benefits of adding financial services to mobile health platforms. The combined need to develop better financial integration into mhealth platforms will make the success of both inevitable.
Maybe the Big Bet on mobile money to help the poor transform their lives—or at least get better access to healthcare—will be the winning one.