[This article is contributed by Patrick Ainslie, and it’s an excerpt from Embracing Informality: Designing Financial Services for China’s Marginalized, a new publication from Reboot, a New York-based consultancy focused on issues of governance and international development.]

Hundreds of millions of migrant workers have flocked to Chinese metropolises in search of opportunity. But financial access has not kept pace with an increasingly transient population. Citizens at the bottom of the economic pyramid lack even the most basic means to save for their children’s education, make purchases on credit, protect their homes through insurance, and send and receive money.

Financial exclusion prevents many of them from realizing their potential and improving their livelihoods.

Globally, new technology has created promising second-generation banking services like oft-cited mobile payment platforms in Kenya, Paraguay, and the Philippines. High mobile penetration rates, extensive agent networks, and an intensive reliance on remittance payments in rural areas suggests China is similarly primed for the deployment of a national, mobile-based remittance system.

For migrant workers, a mobile remittance service would address the challenge of finding a safe, reliable, and affordable way to send money home.

Migrant workers would be able to initiate transactions (cash deposits, or “cash-in”) through a local agent by sending an SMS to their relatives back home, who then receive the funds (withdrawals, or “cash-out”) from another agent in their neighborhood. The sender receives an SMS alert once the money has been received, ensuring peace of mind and confidence in the remittance service.

The market potential for this kind of service is enormous. China’s 250 million migrant workers send an estimated USD 132 billion across the country each year. While total remittances were last measured in 2005 when they stood at USD 65.4, the migrant worker population has more than doubled since that time.

But, any service provider seeking to enter the Chinese mobile remittance market faces a number of challenges.

How to reach the target customers? Migrant workers are inherently transient and often dispersed. Which channels are the most appropriate to use for outreach and functionality? While younger workers may feel comfortable using mobile phones and text messages, their parents and other relatives in rural areas may not be as comfortable using a mobile-only service.

To overcome these challenges, service providers should learn to embrace informality and leverage existing informal service relationships, such as those between migrant workers and their laobans. In the absence of viable alternatives, migrant workers frequently rely on their laobans, or labor bosses, to send money back to their families. These services are foremost rooted in trust, born of mutual reliance, and built on powerful and long standing social connections.

New services should complement—not compete with—these informal alternatives.

Laobans can be incentivized to promote initial adoption and new customer acquisition. Small “mom and pop” stores in rural areas, which garner the confidence of local communities, could serve as agents and key links to services beyond the village. The goal should be to provide the same trust, convenience, and ease of use that make informal services so useful to migrant workers.

Designing inclusive financial services for migrant workers could quickly transform into a growing and sustainable consumer base for savvy and forward-thinking service providers who can recognize the latent potential and make strides to meet their diverse needs.