A new grant from the Financial Capability Research Fund, a collaboration between Innovations Poverty Action (IPA) and Citi, will fund a study to evaluate a mobile phone-based employee savings program in Afghanistan.

iSchool Assistant Professor Joshua Blumenstock is working with one of Afghanistan’s leading mobile communications providers and a team of researchers to design and implement a way for people to automatically  have funds deducted from their monthly paycheck and deposited into a savings account using their mobile phones.

The new savings account program will be the first mobile-based banking product of its kind.

“In developed countries, 401(k) accounts and similar ‘defined contribution accounts’ have been shown to dramatically increase the amount individuals contribution to long term savings, and such savings are generally thought to have a positive effect on overall welfare,” says Blumenstock.

“With the advent of ‘Mobile Money’ and the mass proliferation of mobile phones, it is now possible to deploy a basic defined-contribution account using mobile phone technology. Such accounts have historically been next to impossible in places like Afghanistan that have high levels of corruption and conflict.”

Using a randomized controlled trial methodology, Blumenstock’s study will provide different types of a long-term savings account to a test group of over 1,000 employees. Some accounts will include automatic enrollment and commitment savings features that are designed to promote savings, while others will simply provide simple reminders to employees via SMS. By looking at different rates of adoption and use of these accounts, the study can provide insight into different way to promote savings in Afghanistan and other conflict-affected nations.

If the study shows success, the phone-based account could be replicated in other countries where Mobile Money is used for payments. In addition, the research results could be used to encourage more widespread implementation of default enrollments into savings accounts in developing countries.

The new project builds on Blumenstock's recent work using terabyte-scale data on network communication to understand patterns of adoption and diffusion of mobile technologies (Pakistan and Mongolia), the welfare implications of Mobile Money (Rwanda and Uganda), and the role of technological innovation in reducing corruption and violence (Afghanistan).
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