In response to a lively debate on “the cloud” and “appropriate technology”, Ken Banks of kiwanja.net recently wrote a blog post titled “Our ‘social mobile’ line in the sand”. The purpose of the post was to articulate where FrontlineSMS stands with regard to five key mobile tools for development. In the spirit of openness and precision, we felt it necessary to write a similar post to outline where FrontlineSMS and FrontlineSMS:Credit are both similar and different.

First, to echo Ken, our primary goal is to provide the end user with a tool that is appropriate and intuitive. Although the levels of sophistication in the mobile space vary, especially when it comes to mobile payments and finance, our aim is to construct a tool that utilizes as many pre-existing channels and competencies as possible. Why reinvent the wheel?

1. Who is your target audience?

Our ideal target audience is Tier 3 and Tier 4 microfinance institutions (MFIs) whose clients have access to some form of mobile payment system. FrontlineSMS:Credit may also benefit institutions that need to send mobile payments en masse. Payroll, compensation, crisis relief, and incentive-based programs are good examples of the latter.

In the long run, we plan to provide a comparable tool to Tier 1 and Tier 2 MFIs. Doing so, however, will require a more sophisticated, web-based approach and is therefore not a current priority. Further, Tier 3 and Tier 4 MFIs, which typically spring from and align themselves with grassroots needs, are likely to have greater access to rural populations that are un- or under-served in the status quo.

2. What is your position on scaling?

We support scaling and centralization as long as it’s user-driven and practical. Nevertheless, we are hesitant to promote centralized approaches where regulatory and infrastructural ecosystems are weak or ill-defined. To put it simply, it would be imprudent to subject the finances of the unbanked poor to a single point of failure.

With horizontal scaling, which we prefer, risk is evenly spread across implementing institutions. Any failure is therefore isolated to a particular hub instead of the system as a whole.

3. How does it replicate and grow?

Like FrontlineSMS and FrontlineSMS:Medic, we are driven by “pull” from interested organizations. 100% of our upcoming pilot and beta partners, for instance, initiated contact to collaborate. As a result of time saved from not seeking partners, we can commit the majority of our efforts to getting feedback from potential users and adjusting our designs accordingly. The FrontlineSMS:Credit team is large and geographically scattered for precisely this reason.

4. What is your position on open sourcing?

We consider open sourcing essential for improvement and continued innovation. Unlike FrontlineSMS, however, we will need to closely monitor and scrutinize changes to the source code in order to protect end users from fraud (e.g. a developer could build a back door into the system to access financial data and PIN numbers). Since economic shocks at the bottom of the pyramid can be a matter of life or death, we will have to ensure that any modifications to the code are both secure and made in good faith.

5. Does access to the Internet matter?

No. By providing the data bridge necessary to take full advantage of mobile payment systems, MFIs will be able to provide a range of financial services via the cellular network. Although an internet connection will allow MFIs to backup user data (which could also be achieved with a simple thumb drive), one won’t be necessary for FrontlineSMS:Credit to function.

Note: FrontlineSMS:Credit is currently under development and will be available for free download this Spring. It is being designed to function as middleware that will enable any mobile payment system and any management information system (MIS) to communicate in real time. As a result, implementing MFIs will be able to distribute loans, receive repayments and generate robust auditing trails and client credit histories directly from their MIS.

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