Mobile Money Accounts Mushroomed in Regions with High Proportion of Unbanked Population

Mobile Money Accounts Mushroomed in Regions with High Proportion of Unbanked Population

The cumulative number of mobile money accounts at the end of each year by region, without North America, where mobile money accounts are not utilized. This does not include customers perform on-site transactions without registered accounts.

Data source - GSM Association

By 2010 almost half of the world’s adults, 2.5 billion, were adults without an account at a formal financial institution, mostly in Global South. This situation has greatly improved, largely thanks to the booming of mobile money accounts from Africa, to Asia, and to Latin America. Mobile money services include transferring money and making payments using a mobile phone, without the need for a formal account at a financial institution.

The fast spread of mobile money accounts is an excellent example of how we can speed up digital technology adoption by lowering the skill and technological threshold. For example, M-PESA innovated on the back of existing infrastructure to provide cheap accessibility. It utilized SIM cards rather than apps, allowing basic phones to offer financial and other essential services. M-PESA uses a dense branch network, with 40,000 branches in Kenya alone, including remote villages, which makes account registration easy.

Lee and Teo (2015) attribute the success of M-PESA and services such as Alipay in China to the “LASIC” principle: these services have low profit margins (L), they are asset light (A), and their design is scalable (S), innovative (I), and compliance friendly (C). In essence, scalable accessibility and affordability are key to unlocking the potential of a low skill threshold of mobile payment adoption for financial inclusiveness.

For more information about digital technology for development, please check Luohan Academy’s publication <Digital Technology and Inclusive Growth>. The executive summary can be downloaded here, and the full text is available on Amazon.

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