Eric Barbier, CEO TransferTo
We talk about the ‘unbanked’ – a section of society that does not have access to banking services. However, widespread mobile phone ownership, and the subsequent rise of Mobile Money mean that this phrase may soon become obsolete. As financial institutions, mobile network operators and money transfer businesses work increasingly closely together, the GSMA predicts that there will be one billion Mobile Money accounts across the globe by 2020. Perhaps then, we will stop considering being ‘banked’ as a gauge of financial inclusion. It simply won’t be necessary.
Mobile Money is blurring the definition of what it means to have a bank account, and is driving financial inclusion in developing and undeveloped countries, where traditional banks are reluctant to invest their efforts. In most emerging markets less than 50% of the adult population has access to a bank account, whereas over 80% of adults have a mobile phone. With these statistics in mind, telecoms providers have seen the opportunity to take advantage of their widespread agent locations and network coverage to tap into a whole new customer base, irrespective of how rural or remote the end users may be.
This technology is helping to make moving money a right, rather than a privilege. As digital saving and spending continues to gather pace, we are now seeing a deeper level of analysis into the demographic from this service. Despite the recent impressive gains in financial inclusion, figures suggest that the benefits are not equally shared by men and women. According to the World Bank’s 2014 Global Findex Database, 700 million new bank accounts were opened between 2011 and 2014, yet the gender gap for that same period remains un-changed at 9 percentage points in developing economies. This gap is now under the spotlight, with high-profile organisations such as Women’s World Banking and the Bill and Melinda Gates Foundation working to ensure that digital financial services solutions suit and appeal to the needs of women.
This isn’t to suggest that separate services are created specifically, or exclusively, for women, but rather to make sure that the distinct preferences of different groups are taken into account. The GSMA’s 2014 State of the Industry report reveals that just 23% of respondents know the gender composition of their customer base. Two thirds admit that they had not given particular consideration to women as a distinct market segment, and 56% did not feel informed enough to give an opinion as to whether women prefer or need different distribution channels to men. For an audience in the developed world, used to extremely targeted – and often even personalised – marketing and services, this lack of insight into a customer base might seem surprising.
It’s clear that there’s more work to do to ensure that low-income women are able not only to access a phone, but feel able and confident that they have a safe and convenient place to save and build assets. 80% of experts interviewed by Women’s World Banking described savings as “the formal financial service most likely to appeal to women”. This highlights a real and practical need for mobile operators to better understand their customers – particularly as Mobile Money offerings become more sophisticated. This sector has evolved from fulfilling a basic remittance function – typically sending money from ‘rich to poor’ – to an increasingly interconnected ecosystem of mobile network operators and financial institutions, from microfinance to alternative banks.
The explosion of Mobile Money services has brought extraordinary benefit to developing economies, though this steep innovation curve has also brought fragmentation. There are now over 270 Mobile Money services available worldwide, pushing the issue of interoperability to the top of the agenda for the sector. As major mobile operators jostle to grow their international money transfer businesses, the focus on cross-border transfers will ignite this debate even further.
In a fast-growing, and constantly evolving sector, with different players competing to commercialise and expand their offerings, it can be all too easy to lose sight of the end target – the user. Whether businesses of individuals, failing to grasp their needs and use cases risks undermining the potential of a technology which brings extraordinary potential for change.