Liquidity and Savings in the Age of M-PESA

This paper shares the experience of designing and launching Jipange KuSave (JKS), which combines saving and borrowing in a single product. JKS is accessible only via M-PESA, Kenyas mobile money service, and is designed to help Kenyans with low, unpredictable incomes save substantial amounts of money. The paper demonstrates the importance of iterative testing, vigilant innovation accounting, rapid customer development, and commercial model validation. It also exposes the innovators dilemma in trying to provide savings services for the poor. JKS has proven its demand among low-income customers, established scalable operations and demonstrated its profitability after nearly 18 months. Only licensed institutions, however, are permitted to take savings products to market. Senior managers avoid pursuing growth in harder and lower return segments. Savings products that use mobile money services could be successful if:

• Policymakers and regulators stand true to the vision of financial inclusion;
• Investors continue to realize the potential for major disruptive shifts in the provision of financial services;
• Suitable routes to market are created for new providers of relevant financial products.