Preparing for the Mobile Transformation in Money Movement
If you live in an emerging economy, you’re more likely to own a mobile phone than to have a bank account. Given this reality, financial institutions in these markets are using mobile banking and payment solutions to extend access to financial services to underserved consumers.
In the U.S. and other developed countries – with an abundance of bank branches – mobile banking is seen as a convenient new channel and a complement to traditional banking relationships. However, in emerging economies where formal banking reaches only about 37 percent of the population, mobile banking and payment solutions are a lifeline for consumers and a cost-effective channel for financial institutions. According to McKinsey & Company, for every 10,000 people, developing countries have one bank branch and one ATM – but 5,100 mobile phones.
Limited access to financial services can lead to significant and costly consequences, including an inability to save or borrow funds to help grow a business, send children to better schools or purchase a home. A cash-based economy also often means transactions that are not secure or reliable, and may take an inordinate amount of time to complete.
Those without access to financial services are not part of the formal economy, with far-reaching implications for their governments. Tracking how money moves, administering benefits, collecting tax revenue to subsidize social programs, and preventing the funding of illegal activities are directly tied to financial inclusion.
“When governments are able to electronically transfer benefits to those in need via a mobile device, it’s revolutionary,” says Sunil Sachdev, managing director, Payments, International Group, Fiserv. “In developing markets with poor infrastructure and where people just don’t have time to stand in a queue, the mobile bill payment value proposition is also quite powerful – positively affecting not only the person making the payment, but also the biller and the bank branch network.”
Sachdev will discuss ways to reach these untapped consumers at GSMA NFC and Mobile Money Summit, joining international telecom and payments executives focused on key developing markets. And while emerging markets offer greenfield opportunities with the potential to transform economies, there are similar opportunities and implications for developed countries, including the U.S. market where 17 million adults don’t have a checking or savings account.
“With increased regulation and compressed margins for financial institutions globally, enfranchising more consumers into the banking system through a mobile payments infrastructure is a growth opportunity,” says Sachdev. “Reliance on carrier-independent, bank-centric mobile banking and payments solutions will help financial institutions prepare for the inevitability of a global mobile payments boom.”
At the GSMA NFC and Mobile Money Summit, Fiserv is also hosting an educational session for financial institutions on the four pillars of money movement: paying yourself, paying other people, paying billers, and paying merchants and retailers. Sachdev and Ginger Schmeltzer, senior vice president for Emerging Payments at Fiserv, will outline how financial institutions can prepare for a mobile payments transformation that is poised to change how consumers and businesses transact globally, in both emerging and developed markets.