By Kosta Peric
The opportunity to use mobile technology to enable financial inclusion among the world's unbanked population is huge. Of the 6.9 billion people on our planet, just 30% (2.1 billion) have bank accounts, while 75% (5.2 billion) have mobile phones.
In developing markets, mobile banking could bring about a fundamental shift in the consumer experience, giving many millions of people who have never had access to bank accounts or to credit and debit cards the opportunity to quickly, easily and efficiently pay for goods and services and tap into the convenience economy that those in developed countries take for granted.
But it's still not completely clear from which industries the mobile banking leaders will come. And a major stumbling block for the natural providers of banking services–the banks themselves–appears to be ongoing uncertainty about how to really make financial inclusion pay.
Traditional retail banking business models, based on making money from floats and interest – clients with either large balances or a large capacity for credit – won't work for the unbanked segment. So which business models work? And can the banks work within them?
Let's take one of the best-known mobile banking success stories – M-PESA in Kenya. 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% of Kenya’s adult population.
The winner here is clearly the mobile operator. And the business model that has proved so successful is 'pay-per-use'. M-PESA doesn't charge for account opening or maintenance, or require a minimum balance. It charges only when a customer does something, like making a withdrawal or a payment. For banks, is mobile an opportuni [...]
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