Net2 Featured Projects 2011: SMS Micro Loans

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During the last few days we have been bringing a few amazing projects that appeared on NetSquared in 2011 to your attention. This blog post is the last in the series. We want to introduce you to the SMS Micro Loans idea. Daniel Schiffman wanted to combine mini-loans and ICT while working on his Master thesis. He described and researched the project (and posted it in the NetSquared Projects Gallery), but hasn’t been able to find the funding to bring the idea to life. He still believes in the project though, and so do we. Reading this interview you can learn more about SMS Micro Loans and David himself. If you want to connect with him, please let us know in the comments or reach us using one of our social media channels (Twitter or Facebook or Google Plus). Thank you Daniel for taking time to answering our questions!

Q: What social problem is the SMS Micro-loans trying to solve?

A: The problem is the cycle of poverty. It’s a complex problem with many dimensions, but it can be mitigated through the proper use of communication technologies. If, for example, villagers in India could text each other instead of wasting precious money on gas to perform the same task, they wouldn’t just cut back on costs – they would save time too. Their network becomes more expansive, and their access to information becomes less costly and more abundant, giving them more opportunities for economic development.


Q: Could you walk me through a use case? Let’s say that I am interested in donating a microloan -- what happens next?

A: You donate however much you want to donate. Let’s say you donate $10 to a villager in Meghauli, Nepal. That $10 goes into that villager’s account, which can only be used for mobile texting. You can log in any time to see how much money has been drawn down. In exchange for this donation, every month, the villager must text you an SMS message. The message shows up on the website, as opposed to your phone. You have the option of texting back through the website, too. This creates the relationship between you and the villager, one that allows you to see and feel how far your $10 is actually going, while at the same time, creating a connection between you and your donee.


Q: Could you elaborate on the project’s tech background? How is it different from the other micro-loan operations?

A: Similar microloan operations exist, such as the Grameen Bank that simply lends money. This is simply a loan, like you would get from a bank. There really isn’t technology that underpins this idea. Then, there are SMS-based technologies such as Frontline SMS which gives “users” the ability to text with access to a laptop or a GSM modem. My service is different in that it doesn’t require the user to have anything but a mobile phone. We have the technology now to send mobile SMS messages to the web from anywhere in the world. The only question is at what cost.


Q: You submitted your project to the Project Gallery in August -- what has changed since then?

A: Last August, I was planning on going through with this idea for my final master’s project and thesis. The problem I ran into was finding enough funding and having the right deals with the right people to accomplish the project in a serious and meaningful way. I spent the summer doing research and preparing a production timeline to complete the project, but when it came down to it, I didn’t have the right connections or enough funds to sustain even a beta version that would give me real data points upon which to learn and iterate the idea. I was forced to table this idea for now and move onto something more realistic in terms of funding. I still have this project in my sights though. In fact, given the right opportunity, I could really make this happen given all of my preparation.


Q: You say that the project is your Master’s thesis topic -- what sort of input did you get from your advisor or classmates?  Did they help you shape the direction?

A: My advisors told me that I had an interesting idea and were pretty encouraging. Unfortunately, as a master’s student, sometimes you just can’t do things because the funding or resources aren’t there. I’m in a unique position in my program because I’m situated among some of today’s most innovative and creative designers of digital “stuff.” I take classes with game designers, artists, and other digital storytellers. I’m trying to bring together today’s modern digital design strategies with the very real opportunity to help the poor by bridging the digital divide. 


That Is It!

This is the last in the Net2 Featured Projects 2011 blog posts series. Thanks to Daniel, and everyone who took time to be interviewed. We will be talking to you more next year with the launch of our NetSquared beta platform. Monitor the NetSquared blog, and in the meantime -- enjoy the holidays!