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Mobile money services for people without access to the traditional financial system are spreading at an increasing pace beyond Africa, according to a report released yesterday (24 February) at the Mobile World Congress 2014 in Barcelona, Spain.
The report also highlights nine developing countries — all in Sub-Saharan Africa — where there are now more mobile bank accounts than traditional bank accounts.
“Through mobile tech, underserved people are being digitally and financially included,” says Tim Hayward, acting head of mobile for development at GSMA, which represents mobile operators worldwide and which released the report.
In June 2013, there were more than 203 million registered mobile money accounts worldwide, according to the report. New mobile operators are emerging in developing regions as the number of customers rises and governments reform their regulations, it says.
“The question now is: how can we make this industry sustainable?” says Claire Pénicaud, a market intelligence manager for GSMA’s Mobile Money for the Unbanked (MMU) programme.
In 2009, there were fewer than 20 mobile money services for the unbanked, according to Pénicaud. Four years later, there were 219 services in 84 countries, and Pénicaud points out that in some countries mobile money services have overtaken local bank branches in terms of the number of accounts they hold.
The report says this is partly due to the MMU programme, which is fundedby the Bill & Melinda Gates Foundation among others and was launched in 2009.
But Pénicaud adds that it is also because, out of the estimated 2.5 billion people in the world that still lack access to banking, more than one billion have access to a mobile phone.
In some emerging markets, phone companies are targeting such people by offering low-cost smartphones, the conference has heard.
“Mobile money can reduce transaction costs on remittances by 70 per cent. That is vital for the poorest.”
Elaine Weidman-Grunewald, Ericsson Group
And at the Mobile World Congress, the Mozilla Foundation, a non-profit organisation that promotes internet participation,unveiled a US$25 smartphone, produced thanks to a partnership with Chinese low-cost chip manufacturer Spreadtrum, targeting emerging markets such as Brazil, India and Indonesia.
The report forecasts that new subscribers will come almost entirely from rural and lower income populations. To reach them, the operators of mobile money services have requested more affordable mobile services, regulatory reforms and more extensive network coverage, says Pénicaud.
“The industry will need to continue engaging with regulators to make sure that these services can spread to other countries,” she adds.
One advantage of mobile money services, the conference has heard, is that people from remote regions, such as the mountains in Colombia, can make transfers without travelling long distances to their local bank branch — if one even exists.
“People are using mobile money for airtime top-up, money transfers and bill payments,” Pénicaud says. “Bulk payments — for example, salaries — are also becoming very usual as more organisations accept this kind of payment.”
Mobile operators also say that customers can save money with mobile banking.
“Mobile money can reduce transaction costs on remittances by 70 per cent. That is vital for the poorest,” says Elaine Weidman-Grunewald, vice-president of sustainability and corporate responsibility for the Ericsson Group.
Spreading beyond Africa
Until last year, the rise of these services was taking place mostly in Sub-Saharan Africa, where, the report points out, there were more than twice as many mobile money accounts — some 98 million — as there were Facebook accounts, for example.
But now these banking services are growing in Latin America and South-East Asia.
In 2013, mobile money operators moved in to, and expanded within, nine new countries: Bolivia, Brazil, Egypt, Ethiopia, Guyana, Jamaica, Tajikistan, Togo and Vietnam, says the report.
Latin America could become the second largest regional market after Africa for these services since, according to the report, around 60 per cent of adults in the region remain unbanked, ranging from 86 per cent in Nicaragua and El Salvador to 44 per cent in Brazil.
The nine countries where the total number of registered mobile money accounts has overtaken the number of commercial bank accounts are: Cameroon, Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe.
“This highlights the transformational power of the mobile banking industry in Sub-Saharan Africa,” says Pénicaud.
> Link to State of the Industry 2013: Mobile Financial Services for the Unbanked