Mobile Money: A Lifeline to Developing Nations
There are nearly 5 billion adults on planet Earth today but more than 2.5 billion do not have access to even basic financial services like a bank account.
However, this is changing rapidly as the new century unfolds. According to the Groupe Speciale Mobile Association, the introduction of mobile technologies across the globe has led to a wide range of low-cost, convenient financial services that are dramatically enhancing the wealth and prosperity of some of the world’s poorest people.
At the Mobile World Congress in Barcelona, Spain, last week, MasterCard CEO Ajay Banga highlighted some of the ways in which public and private partnerships are leveraging new technologies and the emerging concept of “mobile money” to deliver a wide range of banking and financial services to the “unbanked.”
“Because of technology, we can help shape the arc of history to bend it towards financial inclusion and greater human progress,” Banga said. “Financial inclusion is a massive undertaking – one that can only be met together – across countries, sectors and industries.”
This idea of “financial inclusion” becomes more critical as the world economy coalesces around digital interactivity and the Internet of Things, Banga added, and if not guided properly could push the world community beyond simple ‘haves’ and ‘have nots’ to produce a class of people who are shut out completely from the workings of modern society.
“…in the future with the Internet of Things, where every device will be connected to the Internet, what kind of life will those who are financially excluded have? We’ll have the Internet of Everything but not the Inclusion of Everyone.”
Avoiding this state of affairs will require a concerted effort on the part of government, corporations, non-governmental organizations and other stakeholders to first create the infrastructure to support mobile financial services and then educate recipients on how to set up and use financial accounts and how to access and leverage the right technologies to enable their financial freedom.
Already, the seeds of this transformation are being sewn. According to the GSMA, mobile money accounts represented about 8 percent of mobile connections where such services are available in 2014, which is double the number of accounts in 2012. In raw numbers, there were nearly 300 million registered mobile money accounts at the end of last year in 16 markets across the world, with more than 75 million accounts opened within the last year alone.
As well, the past year saw a 45.8 percent growth in the number of mobile money agents across the globe, and in areas where bank branches are scarce agents are emerging as the preferred method of banking. Most customers utilize a two-channel method to access mobile money services consisting of a network of physical access points for deposits and withdrawals coupled with a user interface that enables transfers and payments from handheld devices.
On the downside, only about 103 million of the registered accounts are considered to be active, even as the number and variety of services continues to grow. At the same time, merchant payments are on the rise overall, but developing countries still lag, primarily because they lack the regulatory and legal framework to allow mobile financial services to thrive.
And yet these are the regions that would most benefit from mobile money. The average cost of sending mobile money internationally is less than half that of a traditional wire transfer. Already, international remittances via mobile money in West Africa account for nearly 38 percent of the world total, an indication that demand is clearly present in currently under-served areas.
Providing adequate financial services to the world’s developing regions is a global responsibility in that it is the most effect means of countering the hopelessness and lack of opportunity that fuels instability and extremism. By empowering citizens across all economic and social strata with the tools to not only survive but prosper in the new digital economy, the legacy of the 21st Century could be the age in which self-determination and economic freedom of choice finally became a reality for everyone.