Trust through technology

The most recent Economist has a piece on mobile phones in the developing world - The meek shall inherit the earth - that hits on a lot of topics discussed on the PSD blog (Hat tip: Giulio Quaggiotto). It talks up the potential value of mobile phones in the developing world while warning about some of the technological barriers that still face mobile technologies: "walled gardens", overlapping efforts, sustainability, etc. The thing that amazes me, though, and that seems to get missed in much of the media coverage, is the extent to which trust plays a role in the use of these technologies, particularly m-banking. Here's the Economist's description of m-banking:

A case in point is M-PESA, a mobile-payment service introduced by Safaricom Kenya, a mobile operator, in 2007. It allows subscribers to deposit and withdraw money via Safaricom’s airtime-sales agents, and send funds to each other by text message. The service is now used by around a quarter of Safaricom’s 10m customers. Casual workers can be paid quickly by phone; taxi drivers can accept payment without having to carry cash around; money can be sent to friends and family in emergencies. Safaricom’s parent company, Vodafone, has launched M-PESA in Tanzania and Afghanistan, and plans to introduce it in India.

Similar services have also proved popular in South Africa and the Philippines. Mobile banking is now being introduced into the Maldives, a group of islands in the Indian Ocean where many people lost their life savings, held in cash, in the tsunami of December 2004.

Why is it that the poor stock away their savings under their beds or, alternatively, in the form of livestock or other assets? It could be a total lack of financial intermediaries, or financial intermediaries at the right price. But the one issue I haven't seen sufficiently explored yet is the question of trust. Handing over one's meager savings to a relative stranger no doubt requires a leap of faith. In a low-trust society, it may not happen at all. A recent event here at the World Bank on Consumer Protection and Financial Literacy, particularly a presentation by CGAP, touched on this issue. The CGAP presentation calls it "trust through technology." Although ignored in the Economist, I suspect ensuring trust will be just as important for development as surmounting the technical problems associated with these devices.