MFS Growth Trend Gaining Steam
BMI View: There is massive growth potential for mobile financial services (MFS) across the developing and developed world, facilitated by the near ubiquitous penetration of mobile handsets. While these platforms will take different forms depending on the market, we see future opportunities for mobile operators in the cross-border remittance space and highlight a number of companies exposed to the MFS trend.
There are large unbanked populations of over 70% in many emerging markets, while mobile phones are nearly ubiquitous, with penetration frequently surpassing the 100% mark. Operators are able to capitalise on this opportunity by offering basic mobile wallets, accessible from featurephones via SMS, which allow users to carry out money transfers, check balances and pay bills without needing to visit a bank branch. Instead, a more convenient system of agents is used, as developing markets tend to have low bank branch penetration, due to the high costs associated with operations. These platforms have advantages over the traditional cash-based systems as they are more secure and cheaper to use, with a growing number of operators looking to introduce their own platforms to capitalise on this opportunity.
In developed markets, the majority of adults already have an account at a formal financial institution and therefore, the opportunities in MFS are different. Mostly, this trend takes the form of mobile banking applications linked to smartphones, enabling customers to access their accounts to perform a variety of online banking transactions. Another area of growth triggered by the mass proliferation of smartphones in mature telecoms markets is near-field communication technology (NFC), as well as the use of mobile commerce applications to buy goods online. Emerging markets have not yet reached that level of sophistication as 3G/4G penetration remains in the minority.
|Unbanked Regions Seeing Growth In Mobile Money|
|Bank Account Penetration (%) & MFS Usage (%), 2012|
|Source: World Bank|