As a new avenue for faster and more efficient money transactions, mobile money, also referred to as mobile banking services, is now seen throughout the developing countries of the world. Knowing that a significant fraction of the population in the developing world have mobile phones but no bank accounts, the advantages of cashless transactions through mobile money is indeed a great alternative.
The simplicity of this system makes it ideal, especially to those who don’t have the access to banks or those who are far from ATMs and money transfer networks. As of today, a record of about 100 mobile money deployments is seen throughout the emerging markets and 84 of these have been established in the past 3 years alone. This is surely a robust transformation. Perhaps you might be asking what has brought this growing number of mobile banking services through this short span of 3 years.
The Success of Mobile Banking
Behind the huge growth is the success of the most renowned mobile banking provider M-Pesa, which was established in 2007 in Kenya. The International Monetary Fund (IMF) said in its October 2011 Regional Economic Outlook: Sub-Saharan Africa report that the mobile banking provider has processed more domestic transactions than Western Union did globally. The report further revealed that 70% of the adult population in Kenya avails the services of M-Pesa. With its 14 million clients and 28,000 agents, M-Pesa has inspired more than a hundred banks and telecom companies to start their own mobile banking system in the developing markets around the world.
Though M-Pesa success is quite promising, only a few of the newly launched mobile banking systems have reached a sustainable scale. This includes MTN of Uganda, Vodacom of Tanzania and FNB of South Africa. Analysts noted that most of these providers are actually not becoming superbly successful as these big mobile banking systems are utilized only for simple money transfer and payments. Nevertheless, they were positive that this will change in the short run as forecast now presents a promising industry of mobile banking in the coming years.
Analysts Foresee Growth of the Mobile Banking Industry
Statistical findings reveal that the world will have more than 6 billion mobile phones by 2012. For the year 2015, Africa’s population of mobile subscribers is expected to reach more than 265 million. What has started to be a tool for elites has now become a household item and is transforming itself in a weapon against poverty. Along with this promising growth is the forecasted increase in industry of mobile banking. Inadequacy to having good access to basic financial services has remained a major issue hindering economic growth and halting poverty reduction. In fact, the sad truth is that only 20% of the total population in developing countries has access to good financial services. Analysts now believe that this is a good avenue for mobile banking and that it is the solution to address this gap. With mobile banking, people who do not have access to good financial services will be able to send and receive money safely with the use of their mobile devices regardless of where they are located.
Ensuring Financial Sustainability and Accessibility of the Future
Will mobile banking be able to change the world? The answer is a yes; in the same way as mobile phones have brought transformations to the world today, mobile banking will bring empowerment to emerging economies. A good point to look at is how mobile banking achieved what the years experiment on microsavings failed to bring. That is to be able to cover a larger proportion of the population to have the better access to financial services. The low-cost and simplicity of the system makes it more ideal than any form of financial service. Mobile money showcases an unparalleled favor to bring a simplified suite of a technology based financial services to the millions of people across the world. World Bank reported that by 2020 about 2 million people in developing countries will be able to harvest the benefits of mobile banking. This is the era in the financial world where banking will become a privilege not just for the elite but for the entire population as a whole. The power of mobile revolution will surely extend beyond connecting people as mobile banking is seen as the vehicle of financial sustainability and accessibility of the future.