It may seem like a strange concept to see a significant rise in the use of mobile banking in developing countries where technology is usually decades behind the developed world. However, according to results from a survey conducted by the World Bank, there has been a significant increase in mobile banking in areas such as Sub-Saharan African, Asia and the Middle East that is empowering people to better manage their finances and plan for the future.
As some of the poorest nations in the world, it begs the question of how and why mobile banking has come about and how it is helping to overcome financial exclusion and improve prosperity in some of the world’s most deprived regions.
Tackling the issues of financial exclusion
With such large numbers of unbanked people, implementing an effective infrastructure to make banking readily available to the masses is a huge challenge, but the realisation that almost everyone in these countries has a mobile phone, and the usage is ever increasing, has brought to light a solution in the form of mobile banking. Where traditional banking is failing, due to poor infrastructure, lack of access and expensive fees, mobile banking is bridging the gap; making it possible for people living in even the most remote areas of the world to make and receive payments, set up savings accounts and more, all through their mobile phones.
Although at present, many of these mobile banking services provided by mobile networks only offer basic banking services, they are still widely utilised by people. This is because it gives them easy access to banking without the need to pay huge fees to keep the account active and physically visit their bank to make payments, withdraw cash and manage their finances.
The power of mobile banking
It’s the development of mobile banking platforms like those developed by Misys that are revolutionising how people bank today, as they offer a user-friendly application for customers and providers alike that allow everyone to benefit from mobile banking.
It is this capability that is having an empowering effect on the developing world as the realisation that basic functions such as online payments through mobile phones can have a significant impact on a country’s economy. The mere act of having a bank account promotes prosperity and generates revenue within a country. You only have to look at Kenya, who launched the M-Pesa system back in 2007. This generated around $24 billion in mobile phone transactions in 2013, which was over half the country’s GNP through personal and business transactions.
Mobile banking also overcomes some of the negative aspects of dealing in cash in developing countries, where keeping cash in your home or on your person can make you a target for theft and also make awareness of financial spending more difficult to gauge. However, with mobile banking, money is kept safe and secure and provides an easy way to keep track of finances, allowing users to pay utility bills, receive government social benefits and more through online banking.
Mobile banking’s effect on women
One of the other results of mobile banking is the empowerment it has given to women. Previously women have suffered more financial exclusion than men, particularly in developing countries. But the surge in mobile phone network coverage and availability has also seen a rise in more women having mobile phones, thus the capability and access to mobile banking services. Although, this increase does come with a caveat as in certain countries the increase in the use of mobile banking has risen, but the gender gap has remained stagnant. However, the significance of women being empowered by mobile banking has resulted in more women having the ability to manage their finances more effectively, particularly household finances so that they can plan for the future of their families with regards to budgeting for groceries, education and even saving plans.
The increase in usage of mobile banking services marks a positive step in the development of these countries, as empowering the population with the ability to basic banking services will only serve to create a better future of financial inclusion.