TECH

Social Money joins Gates Foundation financial mission

Matthew Patane
mpatane@dmreg.com

A West Des Moines financial company has joined a Bill and Melinda Gates Foundation mission to increase the savings power of low-income individuals.

The Gates Foundation awarded Social Money a "seven-figure" grant to expand the use of its savings and banking platform in India, company officials told the Register on Monday.

Founded in 2008, Social Money is the firm behind goal-based savings platform SmartyPig. The company expanded to India in 2013 and has offices in Chandigarh, India.

The grant will help expand the use of Social Money's CorePro product in India.

CorePro is the programming interface that provides the backbone to SmartyPig. Banks, credit unions and other finance companies can use it to build their own products, such as mobile banking applications.

The idea is to give banks and financial service firms cheaper ways to provide banking services to low-income customers.

"It's very difficult for a bank to want to bank that person because their cost structure doesn't facilitate that," said Social Money CEO Scott McCormack. "CorePro eliminates a lot of the challenge that goes along with banking an underserved or under balance (consumer)…it makes it feasible."

Once the cost to provide that service, especially on mobile phones, is more effective, the hope is banks will start accepting low-income consumers.

"The focus when you think about financial inclusion is about how can you help someone build up purchasing power," McCormack said. "Even though it's a dollar or two a day, holding on to 50 or 70 percent of that dollar…you're moving up to a different category."

The Gates Foundation has made increasing access to financial services among the world's poor a priority.

In their annual letter, Bill and Melinda Gates listed mobile banking's ability to help the poor "transform their lives" as one of their "bets for the future."

"Not having access to a range of cheap and easy financial services makes it much more difficult to be poor. But in the next 15 years, digital banking will give the poor more control over their assets and help them transform their lives," the letter reads. "The key to this will be mobile phones."

Gates Foundation officials did not respond to requests for comment.

If the use of CorePro and similar services takes off, "it can change everything," said Social Money co-founder Jon Gaskell.

"We already know that CorePro can make a low balance customer desirable for any bank, but for financial institutions the world over to be able to afford to offer what we think of as being fair services to the most needy individuals and the most needy families, that's pretty amazing," he said.

Social Money's program will launch later this year with ICICI, a multinational bank holding company in India, as the first partner.