Having just caught up with the paper by Ignacio Mas & Colin Mayer, in which they set out the concept of “savings as forward payments”, I want to firstly thank them for putting this into the public domain. I’m sure there’s proprietary potential in their ideas, yet this selfless sharing of an inspiration speaks more of a commitment to real change rather than merely personal gain.

Secondly, I like their affirmation that it’s still possible to innovate on the back of an otherwise old-fashioned idea. The functionality of household budgeting sub-accounts been around since even before the development of affordable banking MIS. I recall such manual passbook systems, albeit in limited form, when the PC was not yet a gleam in the eyes of assorted computing pioneers.

My grandmother too would be smiling happily, wherever she now is, to see the fundamental principle of her system of jam jars being applied to the most recently pervasive technology — although I suspect the mobile phone would be dismissed by her as being just a gimmick!

Whether it has been jam jars, tea caddies, or cookie containers, women the world over with responsibility for managing their household cash flows have recognised the need to set aside today’s income for tomorrow’s expenses — both predictable and unexpected.

The Christmas Club account was an early formalised version of saving now for a socially mandated future expense. Even before financial institutions provided these, I remember retailers offering customers the opportunity to put a little aside each week for December’s big grocery and meat purchases. (It only now occurs to me to wonder what they did with the cash deposited with them during the year…). Oddly, back home it’s now only our credit unions that keep the Christmas Club account going; it’s wildly popular, with NZD14.5m — an average of NZD800 each and a 20% increase over 2010 — maturing last November.

For me the universal lesson is, as Mas & Mayer have articulated, that there’s huge potential in facilitating real change with financial services that are practical, meaningful, and intuitively simple to use. Let’s hope their proposal is taken up by an appropriately entrepreneurial mobile money provider.

Having just caught up with the paper by Ignacio Mas & Colin Mayer, in which they set out the concept of “savings as forward payments”, I want to firstly thank them for putting this into the public domain. I’m sure there’s proprietary potential in their ideas, yet this selfless sharing of an inspiration speaks more of a commitment to real change rather than merely personal gain.

Reader Comments (1)

Hello Greg, thanks for your very kind comments. Just in the last three weeks I've been doing some focus groups on this idea with the help of Applab Money in Western Uganda, and with the help of FSDT in several areas in rural Tanzania. The reactions have been fantastic. All villagers we talked to grasp the concept immediately, you see them breaking out in smiles -- precisely because it resonates with what they've always done. The mobile just brings convenience; the forward payments capability brings the relevance.

Regarding the sharing of a new idea that has commercial potential, I wish it was easier to get one's ideas stolen! It's so hard to get service providers to pay attention to new but simple stuff. We may just need to set it up ourselves if we want the idea to see the light of day.

Ignacio

Thu, January 26, 2012 | Ignacio Mas

NB: Originally published January 2012 and republished to move it closer to the top of the list. Even better with the patina of age!