• Eric Barbier, CEO and Founder at TransferTo


• 09.12.2015 11:00 am
undisclosed

The unbanked are broadly defined as people who do not have a bank account. If you are unbanked, you have cash only but no bank account to store your money. Today, there are an estimated 2 million adults worldwide without a bank account, according to the World Bank. This, of course, impacts access to further financial services that we take for granted in the west – insurances, lending, mortgages etc. Plus, cash is now considered an insecure, inconvenient and potentially costly means of transacting. Mobile Money accounts, where money is stored, have the potential to operate in exactly the same way as a bank account. In turn, Mobile Money accounts have the capacity to provide users with the access to further financial services that they vitally need.

In most emerging markets, the traditional banks aren’t in a hurry to offer Mobile Money services, for these institutions it is a minimal revenue stream with a high implementation cost. Therefore, Mobile Operators are stepping in to offer the service instead. We can consider those that are currently using Mobile Money accounts as newly banked, in some capacity. The Mobile Operator in the developing world is now operating like another kind of bank-like system which is branchless.

With one billion people across the world set to have access to a mobile money by 2020, and 300 million people using Mobile Money today, at TransferTo we are working with telecoms, NGO and financial institutions to create the largest cross-border payment network of newly banked people across the globe. TransferTo’s Mobile Money Hub is bridging the gap between the world’s financial institutions and newly banked Mobile Money users.

Our solution enables our partners to provide their end customers with the ability to exchange funds in real time to Mobile Money accounts in Africa, Asia and Latin America. Sending Mobile Money across borders becomes as simple as sending a text message. The user's mobile phone number effectively becomes a bank account number, which they can use to make and receive payments quickly, easily and securely through Mobile Money transactions in real-time.

It is possible to store money in a Mobile Money account in order for users to save, but the money doesn’t usually earn any interest. That’s not to say this isn’t plausible, for instance Tigo  allows interest earnings on any user’s savings within Mobile Money accounts. It is promising to see initiatives like this emerge, and hopefully they will go on to flourish worldwide.

Mobile Operators should seriously consider offering lending and saving options to Mobile Money customers in the future, but the only means to do so is by obtaining a banking license. Mobile Operators are gradually becoming globally recognised as financial organisations. This recognition is predominantly thanks to the growth of Mobile Money usage worldwide and the simultaneous reduction in the numbers of unbanked people. Regulators in countries all over the developing world are beginning to appreciate the significance of Mobile Operators in the financial space, comparatively with the banks they are far more nimble and more cost efficient.

Mobile financial innovation has made moving money a right, not a privilege, yet it has to be lucrative for Mobile Operators in order to have a sustainable future. When Mobile Money does become a main stream of revenue with massive adoption, there are multiple revenue opportunities as it opens doors to more sophisticated financial services including international payments, loans, and savings accounts. Evidence from Mobile Operators, money transfer companies, NGO’s and other financial institutions across the world suggests that Mobile Money is contributing to financial inclusion in developing markets more so than any other financial service or government initiative. However all parties need to take a collaborative approach to enable Mobile Money to do more for the world’s unbanked. The regulators are fundamental to the future success of Mobile Money accounts in developing markets, and of enabling the unbanked to access financial services.