Is it possible for mobile money to bridge the financial inclusion gap and how quickly it is getting adopted across developing economies?

A lot of people in most parts of the world don’t have the luxury to access any financial services. e.g. 53% of the adult population in Asia do not have access to banks. Similarly, in Africa and the Middle East, that’s 61% - Source: McKinsey Report 2016

So, how is Mobile Banking helping people to access Banks in these parts of the world?

Well, the most difficult part about financial inclusion is the cost that it takes to include someone who is not in an urban area and is far away from a banking branch since building the banking branch is very expensive. Banks across the countries and developing economies have all tried various methodologies like agency banking, branchless banking. However, mobile money has proven to be simply the easiest method to achieve financial inclusion, at a very affordable cost.

Opening a mobile banking account is simpler as compared to a full-blown bank account in a physical bank by visiting a branch and furnishing documents. It just takes few steps and in such a fashion thousands of accounts can become active in a day

Moreover, with mobile banking, it is not mandatory to have a smartphone as with a basic feature phone a mobile money account can be accessed, using ubiquitous USSD / SMS technology. Predominantly, this is the case (a large number of feature phones) in most under-developed and developing countries

Let’s see how mobile banking is helping some of the countries to bridge the financial inclusion gap.

Somalia – Adoption of complete cashless culture

In Somalia, approximately 155+ million mobile money transactions worth about 2.7 billion dollars, and roughly 36% of GDP are carried out monthly. Thus, making Somalia, one of the most active mobile money market in the world.

In the Somalian capital, downtown Mogadishu business has boomed in the Somali Capital workshops and most of the shops are operating until late at night as Traders & Shopkeepers are taking advantage of improved sales and buyers feel secure to pay using their mobile and are not worried these days about the safety of their money as it’s more secure than a physical card and cash.

Uganda – Mobile Money shaping lives of common unbanked people

Financial inclusion has doubled to 44% of adults in recent times with the help of mobile banking platforms/service providers available in the country. Access to mobile money has changed the lives and currently, there are 5 million mobile money customers in Uganda.

Now a fruit seller in Kampala can pay its supplier, farmers in far off villages using mobile money. People are using mobile money for paying ticket fares in buses, buy groceries from a local store, pay electricity and other utility bills. All these financial inclusions are happening through the appointment of local agents who onboard customers to the mobile banking platform and this in turn are creating more employment opportunities across the country and creating more opportunities for the expansion of Micro Finance and digital financial services.

Kenya – Help in turbulent times

Kenya was one of the earliest adopters of mobile money & is arguably the most successful model globally for this. In Kenya, families with access to mobile money were able to manage the negative impacts of a sudden loss of a job, livestock death due to diseases, or any issues with their crops. On the contrary, families that did not use any mobile money services had no option to receive remittances and lost more due to transactional costs involved. The benefit of mobile money was even more evident during the violence, which erupted after the elections of 2007, where despite the turmoil Kenyans were able to access money.

Hence, when there is a large-scale inclusion of poor (unbanked), it can improve livelihoods.

Mobile Money Solution Platform by Estel Technologies

At the moment, however, in most countries, it is observed that the financial services the poor are being offered and the services they are looking for has a gap. Therefore, there is a great need to introduce a mobile money service that helps people to access a variety of services that includes:

• Receiving relief payments from Government
• Receiving payments for a work
• Receiving remittances
• Making peer to peer payments
• Buy airtime recharges, pay bills
• Receiving Short Term Loans

There is an estimate from McKinsey Global Institute (via the World Economic Forum) that if such services are created and adopted by developing economies, this would help in generating an additional $4 trillion (approx.) to their economies by 2025.

Mobile Money and Banking solution offered by Estel Technologies has already been adopted in many countries by several MNOs, banks, Fintech, and money transfer agencies and our technology platform ensures that there are no such gaps between the expectation of an end-user and the solution offered.

Estel’s Mobile Money solution is a robust Digital Banking Solution platform, that’s available for banks, fintech, MNOs, and Money Transfer agencies. The solution is completely secure and scalable, which enables to provide a variety of innovative services that include:

• Mobile money
• Mobile Wallet
• Mobile remittances / Online money transfer solution
• Mobile payments
• Mobile banking
• Card-based mobile financial services (m-POS, Micro “Human” ATM Solution)

Estel has been a witness to the building of this “Pecuniary Bridge” as a technology partner to very successful rollouts of Mobile Financial Services in Asia, Africa and the Middle East. It has strived over the last 20 years, learned from the market and evolved as an enriched solution provider for Mobile Financial services.

Written By: Surajit Bhattacharjee (VP-Business Development, Estel Technologies)

Surajit has more than 25 years of experience in Mobile Financial Services and Telecom Technologies and Products. He is an avid lover of French cuisine and loves to blog about Mobile Technologies and the history of telecom in India.