I participated in on a fascinating discussion of financial inclusion during the thought-provoking Unconference in New York last week, organized by NYPAY and Consult Hyperion. Part of the discussion addressed the potential of mobile technology to bank the underserved.

This notion, which has been proposed on BankThink before, largely originates from the success of M-PESA, a mobile money transfer service launched in Kenya by Safaricom in 2007. M-PESA is used by more than two-thirds of Kenya's adult population and around 25% of the country's gross national product flows through it. The service has, notably, enabled poor farmers and merchants to sell more goods more easily, saving users an average of three hours per transaction.

There are a lot of reasons why M-PESA's success may not be so easily replicated in the U.S., mostly related to regulatory barriers. But a central idea behind its inception certainly resonates here: Not all consumers, particularly low-income ones, have access to a traditional bank, but most do have access to a mobile phone.  

When discussing the U.S.'s growing unbanked population, however, there's an important distinction at play, one I believe a majority of the session's attendees would agree with. While mobile may be a viable entry point for those who need or want access to traditional financial products and services, it's not a cure-all to the U.S.'s financial inclusion problem.

Anyone familiar with Lisa Servon's excellent research on the financial lives of the urban poor will understand why. Servon, a professor at The New School for Social Research in New York, spent four months working as a teller at RiteCheck, a check cashing center in the South Bronx. The subsequent articles she has written on this experience debunk the popular notion that a lack of access to banking services is forcing low-income customers to do business with predatory alternative financial service providers.

Instead, these customers are choosing to patronize businesses that put a priority on establishing close, personal relationships – a practice, Servon suggests, largely lacking at traditional banks. These relationships, in turn, play a critical role in serving the customer's true financial needs. Here's an example from Servon's article for The Atlantic, in which she documents an exchange with Marta, a RiteCheck regular, and Christina, a veteran teller:

When I input the number from her RiteCheck keytag into my computer, the screen indicated [Marta] owed RiteCheck $20 from every check she cashed. I didn't know what to do, so I turned to Cristina for advice. I learned that Marta had cashed a bad check awhile back, and that RiteCheck had worked out an arrangement in which she could pay RiteCheck back in installments … Marta could not pay the $20 today—she needed her entire check to cover an unexpected expense. "No te preocupes, mami—la pr-xima vez." Cristina knew Marta would be good for her debt, and that accommodating her situation was good for business.    

An earlier experiment from the Center for Financial Services Innovation in which bank executives were tasked with spending a day in the unbanked's shoes illustrated that managing money can be time-consuming for low-income individuals. "Since there is no one-stop shop for all of their financial needs – storing value, paying bills, sending money, saving, borrowing – consumers find themselves waiting over and over again,” Karen Andres and Romy Parzick wrote in BankThink last October. 

Mobile services like remote deposit capture or money transfers via text or, say, email, would alleviate friction and save time for underserved, low-income consumers. But convenience won't necessarily transform the financially excluded into the financially included. (And, yes, this a problem, because whether they pay more or less at nonbank providers, the fact remains that, for the poor, financial services are insanely expensive.)   

A mobile bank account is decidedly impersonal. You can't negotiate an alternative payment plan with a smartphone. It's not likely to waive your overdraft fees. Big Data can help make short-term credit more readily available, but customers are still more likely to trust a smiling, well-meaning teller than an algorithm. Particularly if that algorithm was developed by a firm that lost their trust a long time ago.

Access is important, but service and face-to-face interaction are must-haves for low-income customers. This is important for traditional financial firms that are interested in serving this demographic – and, yes, there are a few of them – to remember as they develop new products and services.  

Jeanine Skowronski is the deputy editor of BankThink. You can contact her at Jeanine.skowronski@sourcemedia.com or follow her at Twitter @JeanineSko.