Mobile Money Leading Fintech Innovation in Emerging Markets

POSTED BY Nick Maynard

Mobile Money Serves Underbanked Populations in Emerging Countries

Mobile money is the basic form of sophisticated MFS (Mobile Financial Services) in emerging markets, which comprises of a variety of financial services delivered via mobile handsets. Given the conditions and multiple factors in emerging markets making access to finance more difficult, MFS can take the form of simple financial activities, including money transfers or more complex ones involving risk decisioning elements, such as lending and insurance. 

Mobile handsets, as the vehicle to access financial services, are innovative in themselves; allowing telcos (telecommunication companies) and fintech solution providers to adopt a quasi-bank business model in serving unbanked and underbanked population segments and functioning as financial inclusion tools.

Mobile Handsets at the Core of Financial Access Revolution

The use of mobile devices as pathways of access to formal finance has been revolutionary in many countries, greatly assisted by the increasing mobile handset and smartphone penetration levels. Global smartphone penetration is growing, thus enabling widespread MFS provision.

Key Mobile Financial Services Segments
  • Mobile Money Transfer: Mobile money transfer is the most used and scalable product segment within the MFS market, as it is the most accessible one. Indeed, it does not necessitate smartphones or advanced digital capabilities to operate.
  • Mobile Microloans: Mobile microloans is a ground-breaking service; taking the lengthy and process-laden service of lending and making it accessible to both individuals and businesses via a mobile phone through an MFS provider. The mechanism relies on transaction data, rather than formal credit checks, to execute risk decisioning.
  • Mobile Microinsurance: Mobile microinsurance, like mobile microloans, facilitates the purchasing of insurance and provides more flexible insurance policies better tailored to needs of customers.
  • Mobile Microsavings: Mobile microsavings have been on the rise in some countries (ie, Kenya, Mozambique and Bangladesh), driven by the pandemic. Although these microsavings accounts often do not pay interest, they help digitise savings; protecting customers from theft.

► Download Our Free Whitepaper

Our latest whitepaper, The New Wave of Fintech Innovation in Emerging Markets, explores:
  • Mobile Financial Services Key Segments
  • Mobile Financial Services Key Benefits and Challenges
  • Forecast Summary

► Mobile Money in Emerging Markets Research

Our latest research found:
  • The total value of mobile money transactions in emerging markets will exceed $870 billion in 2026, up from $555 billion in 2021; representing growth of almost 60%.
  • This growth will be driven by the transition of mobile money vendors, such as M-PESA, to the PaaP (Payments-as-a-Platform) model.
  • Microloans will be the fastest-growing segment within mobile money, with growth of over 180% over the next five years. 
  • Africa and the Middle East will dominate mobile money transaction values over the next 5 years; accounting for 56% of the global emerging markets value by 2026.