Microfinance and community savings groups are something that can be really effective for providing small amounts of capital to businesses that need to get off the ground - particularly in Africa.
Pidges
One of the problems with rolling out a card in Africa is the lack of a postal service, and fixed or defined addresses. However, what if you switched the method of transporting? At Oxford, we have ‘pidges’ - pigeon holes in a secure room, watched by CCTV. People ‘pidge’ each other items of reasonably high value, because the rooms are constantly monitored.
Ordering a card could mean that it arrives in this pidge. Access to the room is granted by a code, which is texted to the phone of the person who has ordered the card (similar to entry to Buzz Gym). The card also only becomes active after a time delay, and requires some ID verification. For example, the pidge could have CCTV or facial recognition which is matched against a video sent in by the phone. Once the two have been checked off, the card is activated.
The advantage of this is it wouldn’t necessarily require additional personnel, and ID verification could be done remotely. The delay in card activation would also deter the advantages of breaking in. People could even be given ‘dummy codes’ that in the event of their having been threatened to give their code would lock the offender in.
Online and mobile banking is a rapidly growing sector within Africa. Currencies such as M-Pesa have led to ways of transferring money effectively by mobile. However, many transactions with the West still require a card of some form. This would allow access to these forms of transactions, whilst taking advantage of the propensity for using mobile money within Africa for transactions, and the phone as a source of verification.
Community Saving
Microfinancing can be used anywhere, but is especially useful in areas of Africa. The NGO I’m interning with sets up GROW groups. This involves 3 physical pots being placed at each meeting of the group - one for fines, one for weekly contributions by each group and one for interest payable on loans. Loans are then given out and decided by the group as a whole, and are then paid back in a 6 month cycle of saving and lending, allowing for the accumulation of capital by the community.
Could Monzo automate this process?
Firstly, by moving the physical pots into digital ones. This would allow for everything to be traceable, mean that there could be no money lost, and put the money into a more accessible format. By making the process digital, you can enhance the legitimacy and trust in the groups themselves.
Secondly, for transactions to be made by community pots, it would require every user of the app to sign off on the transaction from the pot - retaining the community element.
Thirdly, there could be community chat groups for updates about how the money is being spent, retaining the social aspect of having the group in the first place, and providing accountability within the community.
Again, Africa will be a huge market for mobile money. I’d love to hear peoples thoughts (and apologies for conflating two ideas in a post…)