In both the public and private sectors, technological innovations help low-income households get access to essential goods and services. Take food stamps (now called SNAP—Supplemental Nutritional Assistance Program). Electronic benefit transfer (EBT) technology has prompted greater participation in SNAP because plastic cards don’t have the stigma of paper food coupons.
EBT might promote better eating too. The program’s delivery system facilitates new approaches to test and try new approaches to get people eating more fresh fruits and vegetables by making them less pricey and easier to find. Many farmers’ markets now accept these cards and that includes new mobile farmers’ markets, which bring nutritious food into low-income urban “food deserts” where there are far more fast-food joints than produce markets. USDA’s Healthy Incentives Pilot in Springfield/Hampden County, MA discounts fresh produce for SNAP clients by a cool 30 percent at supermarket test sites. The savings are credited right back to the EBT card.
Another technology, mobile banking, can save low-income people time and money. With M-banking, cellphone users access account information and conduct basic transactions. Nearly 90 percent of all Americans now have cells, but trend-watcher Mintel finds this rate to be only 40 percent for those earning less than $25,000 a year. As this number rises, so does the potential for helping the “unbanked and underbanked” join those who already make merchant payments, pay bills, send remittances, add to savings, or get short-term credit via cellphone.
Curiously, sub-Saharan Africa, the Caribbean, and other parts of the developing world have outpaced the U.S. in establishing mobile banking systems for low-income people. M-banking is vital to the economic growth strategies of Kenya (through Safaricom’s M-Pesa network) and South Africa (through WIZZIT). So why is it so slow-going here? In the U.S. the low-income consumer market is highly segmented; our e-infrastructure and our regulatory environment for service providers in both retail banking and wireless communications are maze-like. That makes it hard for major financial institutions and telecommunications operators to form partnerships.
With access to the basics for the poor at stake, what’s to be done? As the Center for Financial Services Innovation has observed, emerging third-party players, such as Trumpet Mobile or mVia (which market through major retailers) are the most likely to find a way through the maze. But it’s not clear that creative businesses will target customers in financial deserts. If not, the underserved will be stuck with the high-cost alternative financial services most providers now use. With the smart money on smart tech, why not draw insights from mobile banking in countries like Kenya and South Africa and also apply what we’ve learned so far in using technology to increase access to nutritious food?