Can mobile technology reduce extreme poverty?
The prevalence of mobile devices (and it’s consumers’ data) in unbanked and underbanked areas is leading to unprecedented financial inclusion and is disrupting traditional banking.
In 2017, The World Bank’s Global Findex Database found 1.7 billion adults don’t have access to financial services. As a result, people are forced to rely on risky means to manage their money.
Digital financial technology, or fintechs, can reach markets that banks historically have not offered financial services to while functioning more flexibly and at lower costs. By using mobile technology and data on customer behavior, services are tailored to niche markets to meet financial needs.
The developing world may be at an advantage here.
The promise of fintech allows for developing economies to sidestep less effective stages of technology. Instead, they can follow an accelerated and unique trajectory.
This phenomenon is called “leapfrogging” and Kenya’s use of mobile banking is a good example of it. Rather than follow the path of building and staffing banks, getting the entire population to adopt its practices, then implementing ATMs, finally followed by online banking, Kenya has leapt to normalizing mobile based services.
The challenge is to build a safe, connected mobile infrastructure to transport funds instantaneously. This is conventionally seen as the precursor for greater accuracy in designing financial services that meet the needs of the unbanked and promises to be a gateway into improving overall quality of life for the poor.
While there are uncertainties in who has rights to consumer mobile data, it’s certain if developing countries launch their own mobile solutions it is a major economic development opportunity.
