FinTech, Education & Savings: Reaching the Unbanked in Emerging Markets
Mobile money services (MMS) are spreading rapidly across much of Africa, Asia, Latin America and the Middle East, reaching over 60% of the world’s developing countries. The number of registered mobile money accounts has grown to just under 300 million globally in 2014. As this represents only 8% of mobile connections in markets where MMS are available, there is significant potential for future growth.
This untapped and potentially huge industry is also coupled with the imminent arrival of affordable smartphone technology. This will deliver new user experiences that will enable millions to view, learn, understand and eventually acquire banking services beyond the current convenience of basic mobile payments.
Key to many unbanked people in developing countries is the limited access to micro-savings services at formal financial institutions, forcing low-income individuals to find other ways to save. The average customer balance is over $10 for 40% of mobile money accounts. This makes alternative savings propositions attractive to the unbanked, since their existing savings options tend to be risky (for example, investing in animals, commodities or other goods as a means of saving). Moreover, people on low incomes can find it difficult to save cash, in part because the money is always readily accessible, meaning they have to continually exercise self-control.
The combination of mobile money services, next-generation smartphone technology and new micro-savings products will be revolutionary in the delivery of financial tools because they can help educate consumers to save in ways that fit their daily realities. Eventually, additional services, such as mobile credit offerings and personal financial management tools will create additional business opportunities in developing countries.
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