Mobile Tech is Key to Providing Banking Services to the 'Unbanked'

By Peter Vander Auwera, innovation lead at SWIFT

In any conversation about mobile banking services in the developing world, it is never long before someone mentions M-PESA in Kenya. It's now a familiar story: in March 2007 Safaricom, the leading mobile operator in Kenya, launched an SMS-based money transfer system that enables consumers to deposit, send and withdraw funds using their mobile phones.

Use of M-PESA skyrocketed, with the system quickly being adopted by more than 35 per cent of Kenya's adult population. And the moral of the story is clear: mobile technology is key to enabling financial inclusion for the 'unbanked'. And it’s the mobile network operators - the companies who already have extensive networks of customers in these markets – who are best-placed to provide the mobile banking services that will finally give people in the developing world the levels of convenience those of us in developed markets take for granted. Right? Well the numbers are certainly compelling.

Of the 6.9 billion people on our planet, just 30 per cent (2.1 billion) have bank accounts. But 75 per cent - 5.2 billion people - have mobile phones. In Africa, bank penetration runs at between 10 and 50 per cent - while mobile weighs in at 40-100 per cent. In Asia-Pacific, the figures are 20-60 per cent for bank penetration and 40-100 per cent for mobile. And in Latin America, it's between 30 and 60 per cent for bank and 60-80 per cent for mobile.

Logic suggests that take-up of mobile banking is inevitably going to be rapid in markets where people have no access to services other than via their mobile phones. And, as has been the case in Kenya, the winners (apart from the end consumers) will surely be the mobile network operators: given the relative penetration of bank access versus mobile access, how could it be otherwise?

The fact is that a sustained approach to enabling true financial inclusion requires more than a few disparate, opportunistic services - however successful. And to ensure all the pieces of the puzzle come together in the way they need to, the mobile network operators need input from other players - including the banks.

The right regulation needs to be in place if mobile banking and payments services are to be really safe for consumers. The banks have the expertise, the robustness and the willingness to cope with the rigours of regulation. When it comes to safety, security and reliability, the banks have by far the best pedigree.

The banks also have the fail-safe, scalable technology platforms to cope with the payments processing demand that the availability of wide-scale mobile banking services in the developing world would create. That is not to say that the banks can single-handedly enable financial inclusion in the developing world either. They need to tap into the strengths of the mobile network operators and the device providers - their agility, and, most significantly, their existing penetration among the customer bases being targeted.

In short, the banks, mobile operators and device manufacturers need to collaborate to realise the full potential of mobile to bring 21st century banking convenience to the unbanked. These players also need to work together to fully understand the needs of the unbanked.

Anyone with an interest in leveraging mobile for financial inclusion needs to put themselves in the shoes of the unbanked. They need to realise that the unbanked are not necessarily poor. And that even the poor need access to financial management tools.

To find out more about collaborative innovation in mobile – and for opportunities to put yourself in the shoes of the unbanked to understand their needs - check out the forthcoming conference - Innotribe - Mobile Payments: Connecting the Unbanked - taking place in Mumbai on 1-2 June, and designed explicitly to bring together global banks and mobile industry players to hammer out the way forward for using mobile technology to enable financial inclusion. 

Image credit: Vojtech Bruzek/Unsplash