Are feature phones the answer to universal access of banking services to the poor ?


The mobile revolution in Africa has been praised for extending banking services to the previously unbanked populace. A “bank in your phone” has been the mantra that’s catapulted the the number of mobile money subscribers in Uganda alone to 18.5 million as of 2015.

Mobile Money which predominantly is being run by Mobile Telecoms runs on a Technology called USSD (unstructured supplementary service data), a cousin Technology of SMS. You have most likely used it unknowingly whenever you load Airtime for instance by dialing short codes such as *130*something# or whenever you access the MTN Menu on your phone. This Tech is part of the GSM standard and that means –just like SMS — it’s compatible with almost every phone that can text or call. That includes feature and smartphones.

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USSD  is a text only service that allows anyone with a phone (even those without internet connection) to access text based applications.  It’s the reason it’s highly used in Africa and other developing countries where people buy cheap feature phones and data connections are flaky, especially in rural areas.

It’s for this reason that it is a very popular channel for deploying mobile apps in developing countries.

This article from the Consultative Group to Assist the Poor (CGAP) explains very well what USSD is and why it matters for financial services. Therefore most experts in the digital finance field agree that USSD is the most efficient channel to access financial services for rural poor people.

But is it ?

At intelworld, our experience is making us rethink USSD as the defacto access channel to poor people, for the following reasons

  1. You must be able to read to use USSD – and there is a high correlation between poverty and illiteracy. My colleagues in telecom in South Sudan tell me that SMS and USSD usage are so low because people can’t read
  2.  The user experience with USSD sucks. You have to remember codes like *687*34# to access the service you require. You can’t have images.  There is a character limit (260 characters for most USSD gateways) to what’s available on the screen and session timeout as it operates in client server mode. It is okay to use USSD to load prepaid airtime and it might even pass for peer to peer payments but trying to do anything as complex as saving or getting credit! – good luck
  1. It’s very very expensive for both the provider and customer. For the provider – the annual license for a USSD code in Uganda is now USD 12,000 excluding setup fees with every telecom you connect to.For the consumer – USSD sessions are billed, so it might cost a user about UGX 220 (approximately 70 US cents) for a USSD session. Imagine getting billed 78 cents for a web page with only 260 characters. This article from CGAP shows that is true in other African markets

USSD for financial services reminds me of MMS (Multimedia messaging) – a service that was heavily invested in by telecom companies that promised to get users sending media like audio and video on their phones. It worked, but did not get traction.

The reason it did not get traction was the user experience was ‘just not right’ with regards to costs and usability. It was a 5 step process to send and receive an image and it would cost UGX 220. It was not until smart phones and whatsapp came along that users started to send each multimedia – because the user experience is ‘just right’. Its 2 steps to send an image and the cost is nicely abstracted away.

My opinion is that rather than focusing on channel, we should focus on user experience. Rather than focus in siloes with regards to access channels, the focus should be on delivering an Omni channel experience where a user has choices on how to interact with the service. For instance, instead of a Micro Finance Institute (MFI) having totally different access channels and services for mobile , online , Over the Counter (OTC) they should have an integrated system where a user can interact with their service depending on the experience they are more comfortable with. Very poor illiterate people may work better with assistance from agents or with biometrics or cards. The more literate in rural areas may be able to use USSD or even mobile web (via GPRS) and urban millennials love their smart phone apps.


Editor’s note: This is a guest post from Allan Rwakatungu. Allan is the Founder and CEO of intelworld ( , a company that develops mobile commerce solutions that enables customers to transact using their mobile phones. If you are an industry player and have an insightful post on topics that could be interesting to the readers of this publication, please don’t hesitate to email editorial(at)