Latin America’s Mobile Money Agents are the Drivers of Real Financial Inclusion
Financial technology has been pivotal in the push for universal financial inclusion, but Fintech needs human agents to integrate the world’s 1.7 million still-unbanked adults. Digital financial platforms require real people to help introduce their financial services to populations that are particularly excluded, people who may have limited literacy, numeracy and have never used traditional financial services. This personal interface is a vital part of mobile banking in the developing world, where many new and potential users aren’t yet technologically savvy.
Great news for the spread of digital finance is that amongst the 1.7 billion unbanked adults worldwide, over 1 billion have a mobile phone, and mobile money agents are uniquely positioned to help increase financial participation and accessibility for app users.
Mobile Deposit Centers within the Uulala financial service ecosystem, mobile agents can bridge the technological gap and ease the transition from cash-only to digital transactions. They can build trust and help new users navigate the platforms, allowing them to take proper advantage of digital financial services.
Mobile Money: A Brief History
Asia was the first region to introduce mobile banking by cellular, beginning in 2001. SMART Money, in partnership with Banco de Oro, allowed mobile customers in the Philippines to buy airtime, to send and receive money, and to pay bills through SMS (text) messages. In 2004, Globe Telecom launched G-Cash, which was the first mobile-only money service.
M-Pesa, launched by Safiricom in Kenya in 2007, was the first mobile money service in Africa, experiencing a rapid rise and broad adoption in the country, filling an unmet need for secure financial services. Like its counterparts in Asia, M-Pesa allowed users to send and receive payments through encrypted text messages, pay bills and work with mobile money agents to complete cash deposits and withdrawals. M-Pesa has now evolved to offer a more comprehensive digital financial platform. It currently boasts 19 million active users and over 130,000 mobile agents spread across the continent.
In Latin America, Brazil introduced mobile money agents in 2005, and other countries in the region followed suit. Despite a slower start than Africa, by 2011 most LAC countries, including Mexico, Argentina, Paraguay, Bolivia and Colombia had mobile agent networks covering the majority of municipalities in the country. This is especially relevant in rural parts of the region, where the closest ATM or bank branch could be 20–50 kilometers away.
The mobile money industry is now processing over $1 billion U.S. in transactions per day and has 690 million registered accounts worldwide.
Mobile agents are more than just a face of finance
Mobile agents are generally entrepreneurs who have local knowledge, usually down to a community level. They may personally know a large number of potential customers and understand the needs of community members better than someone at a bank relatively far away.
Power Users are agents who have been empowered by Uulala to offer financial services, such as cash conversion and microloans, and to charge a fee through the app for their services.
Although Uulala’s ecosystem is self-sufficient, offering a full suite of financial services from digital bank accounts to microloans, there may always be a need for cash-in, cash-out (CICO) points. In fact, Global CICO transactions increased from $39.93 billion in 2012 to $192.93 billion in 2017.
Mobile agent networks have become common throughout the region, especially as mobile agent network coverage has continued to expand. Brazil’s agent network now covers 99% of the country and Mexico, Colombia, Peru, Venezuela, amongst others have also adopted the agent banking model to much success, using it to spread mobile banking through Latin America.
Real financial inclusion is not just a bank account
According to the World Bank’s Global Index on Financial Inclusion (FINDEX), there was a significant rise in account ownership worldwide between 2014 and 2017. 69% of adults now have either an account at a financial institution or a mobile money account, up from 62% in 2014. However, while the nominal inclusion rate is 69%, only 55% of accounts are active, hosting at least one transaction in the past year. Of those, there are also a significant number of account owners who use it only to cash paychecks or withdraw funds that are deposited digitally by an employer.
Distrust of institutions and a lack of financial literacy can hinder financial participation, but mobile agents can offset that by helping to build trust. An in-person interaction can be invaluable in helping new users develop a better understanding and relationship with platform features and capabilities, increasing both the number of active users and the services they use. This can lead to real, sustainable financial inclusion.
