Mobile Money: Opening the Door to Financial Inclusion
For the overwhelming majority – let’s in fact say all – of the readers of this blog, when you (and I) now say that we regard the mobile phone as essential to our everyday lives, what we actually mean is that it has become part of the fabric of those lives because we can play Angry Birds whenever we want, browse the Internet, read eBooks and generally keep in touch via call, email, social network or text and thus use the acronym LOL far more than is strictly necessary. For those in developing markets, however, the mobile is increasingly assuming a role which puts Angry Birds in the shade: through mobile money, it provides a genuine opportunity for financial inclusion for the unbanked and under-banked. And the indications are that that opportunity is increasingly being embraced. In developing world economies, such as Africa, developing Asia and the Indian Sub-Continent, there is restricted access to financial and payment services; typically only a small percentage of the population has a bank account or a credit card. According to the World Bank, more than 80 countries have an unbanked penetration rate amongst adults higher than 50%; in 38 countries, the rate is in excess of 80%. The most popular methods for sending or receiving money in Kenya, for example, up until the advent of Safaricom’s phenomenally successful M-PESA service were informal methods, via a family/friend or using a bus company. A much larger percentage, however, has a mobile phone or access to one, and mobile phone subscriber numbers are rapidly increasing. Safaricom in Kenya has seen its total subscribers rise by more than three times over the six years between March 2007 and March 2013, from 6.1 million to 19.4 million. At the same time, these markets have experienced truly dramatic growth in mobile subscriptions. Across the Indian Subcontinent, Africa & Middle East and developing Asia, there were nearly 2.7 billion active mobile subscriptions at the end of last year. Furthermore, despite the high levels of global mobile penetration, these markets offer the greatest level of scope for future growth: together, Juniper envisages that by 2018, they will have gained a further 1.2 billion subscribers, or 69% of global net additions in that period. The reality is that far more people in countries that are under-banked will have used a mobile phone than will have used an ATM or visited a bank branch. This presents a unique opportunity to deliver new services into this vast mobile customer base. Furthermore, as far as P2P transactions are concerned, these transactions take seconds to complete and funds are transferred almost instantaneously: in India, when such transactions are conducted via a bank, they may take a couple of hours to complete, and the end user may not receive the funds for several days. While Safaricom’s success with M-PESA has been well documented, numerous other markets are now seeing strong usage of mobile money transfer service services. Several – including Bangladesh, Pakistan, Tanzania and Uganda – have over 5 million active mobile money users. As our latest report on mobile money transfer indicates, increasing deployment by multi-national MNOs across a variety of their markets (rather than, as was often previously the case, deploying on an ad hoc basis) allied to strong service promotion before and during service launches is bolstering usage: we envisage that, by 2018, there will be nearly 400 million such users worldwide.