A proud African woman stands in front of a teeming outdoor marketplace, staring thoughtfully into the distance: welcome to Libra.org’s website. There’s no mistaking the message, and it’s reinforced every step of your journey into Libra. This new global currency is all about financial inclusion. I really want to believe them. I work in African payments; financial inclusion is our guiding star. But can I?
In June, Facebook announced ‘Libra’, a new global cryptocurrency with associated payments infrastructure aimed specifically at people who are underbanked, but who use mobile social media (including Facebook, Messenger, WhatsApp). This is at least the third attempt by Facebook to enter the payments space. Given WeChat’s success, it was inevitable and much speculated on. And pretty clearly, they have gone all in.
If it lives up to the promise, this is BIG STUFF: the proverbial game changer. Globally, maybe two billion people are underbanked, trapped in a generational cycle of grinding poverty. As the World Bank, the Bill and Melinda Gates Foundation and many others have found, very cheap financial services plus the education to use them means not just that we can break that cycle; it means people are enabled to break it for themselves. Poverty eradication with self-determination is the holy grail. In its wake comes crime reduction, employment, health care, education, and, yes, economic freedom.
With Libra, there’s much to like. This proposal is well thought through, strongly backed, clearly and attractively marketed. I am sceptical about the insistence on blockchain technology, which adds large and unsolved problems when the business model is clearly centralised and there are traditional database and network solutions that would suit it better. But as for any payments play, by far the most important thing is the network effect. And here, Libra comes up trumps. Instant customer reach in the billions can do more good than any bank, telco or aid agency on the planet. Perhaps more importantly for the uniqueness of the offering, it is designed to be borderless. Whether that really happens or not depends on the regulatory framework – or more likely, the range of different regulatory frameworks – applied by national governments.
If we listen to the detractors, there is a great deal of concern about privacy, misuse of big data, lack of customer control, monopolisation of digital commerce and even subversion of national monetary policy. I think these are all valid debates, but they affect developed economies as much or more than developing ones. I hope that the relatively skilled, relatively well-resourced financial authorities of the USA, UK and Europe will listen carefully to all this and dig into these issues with enthusiasm.
But my special interest is the promise of financial inclusion. How do we assess the inclusive potential of mass social media adoption of a new special purpose digital currency? It’s tricky, because its new territory and there’s so much about Libra we don’t know yet. But we do have a number of examples of widespread adoption of instant mobile and social payments services, albeit using national currency. I think applying lessons from these real-world models to Libra can tell us quite a lot.
If we look at what has worked already for the underbanked, a few ideas stand out, and they might be quite surprising if you make your home in Silicon Valley:
1. Ironically, adoption of mobile and social payments depends on cash availability. People who currently rely on cash for daily payment needs must have very cheap, very convenient cash-in, cash-out facilities, distributed right across the target market. Mobile wallet services like m-Pesa worked in East Africa because the telco was prepared to put in the effort to create a comprehensive agency network to handle the cash conversion. A digital network by itself just isn’t enough;
2. Systematic government support is essential. Governments approve or license new payments services; but they do much more. They provide necessary supporting elements of the ecosystem that are too hard for any other player, at least partly because they are used by many other services. A key example is reliable digital identity (note Aadhaar in India). Governments can also adjust economic conditions to help or hinder adoption, for example by restricting cash, changing the tax mix to encourage bank accounts or wallets. Government often own significant chunks of banking industries and payments infrastructure. Finally, they are major payers and payees in their own ecosystems, so they can decide how they will make or accept payments. Financial inclusion success stories in places like China, India and Thailand rest on systematic government support.
3. Financial education must be pervasive and sustained as part of any financial inclusion effort. As a negative example, South Africa issued 10 million social grant recipients with debit cards linked to a bespoke bank account to improve grant distribution and reduce fraud. Six years later, it appears we have not really moved the dial on financial inclusion. The great bulk of grant money is still being withdrawn in cash from ATMs and retailers as people continue to live in cash. The only new financial services people have been persuaded to accept were the offerings of the operator providing the grant system. The SA Government has now acted to reduce the unfairness of this, but for those of us dreaming of inclusion, it stands as an opportunity missed. No education equals no change.
4. To paraphrase Bill Gates, we may not need banks, but we certainly need banking. Payment services are the gateway to financial inclusion rather than financial inclusion per se. The system needs to accommodate competitive provision of credit, safekeeping, investment and insurance services based on the financial data that is generated by payments history. This is what will give people the tools to lift themselves out of poverty. History suggests that these activities are games for local players, at least in the early stages – they require a keen and real time appreciation of where the risks are. And you won’t get that from Switzerland, or California.
Let’s be honest: the mystical interplay of financial inclusion and blockchain is a marketer’s dream: who can be against innovation that helps poor people? But I can’t really see how it is any more than a dream without boots-on-the-ground, door-to-door hard work, as the aid agencies can tell you. Africa has 55 governments and thousands of languages. Will the well-heeled founders of Libra.org have the stomach for years spent building agency networks, knocking on the doors of Treasuries and central banks, running mass media financial education and building communities of financial services providers across these diverse communities? Perhaps, but the absence of founders in the banking, clearing house and telco fields, and the absence of the major aid organisations, is interesting: these are the guys who have done some of the hard yards, and who already have some of this infrastructure in place. They are also, of course, developing and backing open platform competitors to Libra.
So unless and until we see systemic investment in developing economies of the kinds mentioned above, I am inclined to be sceptical about the dazzle of blockchain driven inclusion. I think we can all agree that digital platforms will be a key enabler of financial inclusion thanks to the extraordinary potential of the smartphone – we can see this already in several countries. But the platforms need to be open and competitive, and they need the local touch. Libra may be a sensational answer to some important questions, but sadly, probably not to the question of financial inclusion.
Millennials turning 40: NOW will you stop targeting them?
It’s one of the most overused terms in youth marketing, and probably the most inaccurate, writes ARTHUR GOLDSTUCK
One of the most irritating buzzwords embraced by marketers in recent years is the term “millennial”. Most are clueless about its true meaning, and use it as a supposedly cool synonym for “young adults”. The flaw in this targeting – and the word “flaw” here is like calling the Grand Canyon a trench – is that it utterly ignores the meaning of the term. “Millennials” are formally defined as anyone born from 1980 to 2000, meaning they have typically come of age after the dawn of the millennium, or during the 21st century.
Think about that for a moment. Next year, the millennial will be formally defined as anyone aged from 20 to 40. So here you have an entire advertising, marketing and public relations industry hanging onto a cool definition, while in effect arguing that 40-year-olds are youths who want the same thing as newly-minted university graduates or job entrants.
When the communications industry discovers just how embarrassing its glib use of the term really is, it will no doubt pivot – millennial-speak for “changing your business model when it proves to be a disaster, but you still appear to be cool” – to the next big thing in generational theory.
That next big thing is currently Generation Z, or people born after the turn of the century. It’s very convenient to lump them all together and claim they have a different set of values and expectations to those who went before. Allegedly, they are engaged in a quest for experience, compared to millennials – the 19-year-olds and 39-olds alike – supposedly all on a quest for relevance.
In reality, all are part of Generation #, latching onto the latest hashtag trend that sweeps social media, desperate to go viral if they are producers of social content, desperate to have caught onto the trend before their peers.
The irony is that marketers’ quest for cutting edge target markets is, in reality, a hangover from the days when there was no such thing as generational theory, and marketing was all about clearly defined target markets. In the era of big data and mass personalization, that idea seems rather quaint.
Indeed, according to Grant Lapping, managing director of DataCore Media, it no longer matters who brands think their target market is.
“The reason for this is simple: with the technology and data digital marketers have access to today, we no longer need to limit our potential target audience to a set of personas or segments derived through customer research. While this type of customer segmentation was – and remains – important for engagements across traditional above-the-line engagements in mass media, digital marketing gives us the tools we need to target customers on a far more granular and personalised level.
“Where customer research gives us an indication of who the audience is, data can tell us exactly what they want and how they may behave.”
Netflix, he points out, is an example of a company that is changing its industry by avoiding audience segmentation, once the holy grail of entertainment.
In other words, it understands that 20-year-olds and 40-year-olds are very different – but so is everyone in between.
* Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee
Robots coming to IFA
Robotics is no longer about mechanical humanoids, but rather becoming an interface between man and machine. That is a key message being delivered at next month’s IFA consumer electronics expo in Berlin. An entire hall will be devoted to IFA Next, which will not only offer a look into the future, but also show what form it will take.
The concepts are as varied as the exhibitors themselves. However, there are similarities in the various products, some more human than others, in the fascinating ways in which they establish a link between fun, learning and programming. In many cases, they are aimed at children and young people.
The following will be among the exhibitors making Hall 26 a must-visit:
Leju Robotics (Stand 115) from China is featuring what we all imagine a robot to be. The bipedal Aelos 1s can walk, dance and play football. And in carrying out all these actions it responds to spoken commands. But it also challenges young researchers to apply their creativity in programming it and teaching it new actions. And conversely, it also imparts scholastic knowledge.
Cubroid (Stand 231, KIRIA) from Korea starts off by promoting an independent approach to the way it deals with tasks. Multi-functional cubes, glowing as they play music, or equipped with a tiny rotating motor, join together like Lego pieces. Configuration and programming are thus combined, providing a basic idea of what constitutes artificial intelligence.
Spain is represented by Ebotics (Stand 218). This company is presenting an entire portfolio of building components, including the “Mint” educational program. The modular system explains about modern construction, programming and the entire field of robotics.
Elematec Corporation (Stand 208) from Japan is presenting the two-armed SCARA, which is not intended to deal with any tasks, but in particular to assist people with their work.
Everybot (Stand 231, KIRIA) from Japan approaches the concept of robotics by introducing an autonomous floor-cleaning machine, similar to a robot vacuum cleaner.
And Segway (Stand 222) is using a number of products to explain the modern approach to battery-powered locomotion.
IFA will take place at the Berlin Exhibition Grounds (ExpoCenter City) from 6 to 11 September 2019. For more information, visit www.ifa-berlin.com