Somehow, our story began with Twitter, coffee and several tremendous leaps of faith.  From jokingly drawing a \$/ symbol in the basement of a bookstore to writing a concept article with Ken Banks, our entire journey up to this point – in retrospect – seems either improbable or inspired.  Either way, we proudly stand before you today to announce the launch of FrontlineSMS:Credit, the third iteration of the FrontlineSMS family and a new chapter in inclusive finance.

Our mission is simple: leverage the mobile space to extend access to affordable financial services to rural, disconnected and impoverished communities.  To achieve this end, we are constructing a series of free and open source financial modules that will allow FrontlineSMS to communicate with mobile payment systems in real time, turning FrontlineSMS in to a microfinance management information system, a payroll center for small & medium enterprises (SMEs), a collection and distribution center for micro-insurance premiums and payouts, and a detailed center for individual credit histories and scores.

By integrating mobile payment systems in to the core management platforms of microfinance institutions (MFIs) and SMEs, FrontlineSMS:Credit will allow implementers to cut operational costs, increase geographic reach, lower interest on credit and automatically maintain detailed accounting records.  MFIs, for instance, will be able to distribute microcredit loans and receive scheduled repayments via text message, allowing loan officers to manage larger client portfolios and pay for travel less frequently.  In return, implementing MFIs will be able to reduce interest rates commensurate with the amount saved while simultaneously gaining access to larger client portfolios and, therefore, increased revenue.

Our first module, Savings & Credit, will be available within the next three to five months.  It will allow users to issue credit, hold client savings and record client credit histories.  By linking individual profiles to their respective phone numbers, Savings & Credit will automatically track loan dispersals and adjust outstanding balances as mobile payments are received.  Any mobile payment in excess of an outstanding balance will be attached to the appropriate profile in the form of mobile savings, which an end user will be able to withdraw to their handset via text message.

Later modules are likely to include Insurance, Payroll, Islamic Banking, and Mortgage.  Ideally, we aim to make every formal financial service available to the informal sector in 160 characters or less.  Of course, none of this would be possible without help – LOTS of help.  If you would like to join or contribute to FrontlineSMS:Credit, please don’t hesitate to contact us.

by Ben Lyon

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