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By Jason Kohn, Contributing Columnist

In my last post, I talked about the future potential for fixed wireless broadband to stimulate economic activity in developing regions. But there’s an even more powerful way that mobile operators and infrastructure are helping to improve the lives of everyday people in developing economies right now: mobile financial services (MFS).

Basic Banking Infrastructure

For commerce to thrive, you need the basics: the ability to transfer money easily from one party to another. But in developing countries with little or no banking infrastructure, much of the population has had to rely on cash, especially outside major cities.

A recent study by the Boston Consulting Group for Telenor Group found that 2.5 billion adults in developing countries (approximately 72 percent of the population) are “unbanked,” with no access to traditional banking or financial services. For these people, saving or transporting money, getting a loan, and other basic financial transactions can be extremely cumbersome.

But, the study also found that nearly as many people in these countries do have mobile phones. Now, millions of people are using those phones, and their cellular billing accounts, as banking tools.

There could be up to two billion mobile phone users who are currently unbanked that could be served through mobile financial services. Overall in the five countries covered in the study, mobile financial services has the potential to reduce financial exclusion by five to 20 percent through 2020 and increase GDP by up to five percent.

The same study suggests that mobile banking could reduce the number of unbanked in Pakistan by 20 per cent by 2020, allow 142 million people in India to open savings accounts, and increase tax revenues in Bangladesh by US$500 million.

History of Mobile Banking

The first large-scale mobile baking rollouts deployed in South Africa and the Philippines. According to the GSM Association (GSMA), 13 million people in these countries now use mobile banking services.

Another early mobile banking success is the M-PESA service launched by Safaricom, a Vodafone partner, in Kenya in 2007. Today, M-PESA is the largest mobile banking service in the world, serving 13 million users in Kenya, Tanzania, South Africa, and Afghanistan.

Mobile banking services are also now operating in Uganda and Senegal. All told, more than 40 million people now use mobile financial services worldwide, according to the GSMA.

Transforming the Economics of Healthcare

One of the most exciting possibilities for mobile banking, and perhaps the best example of the direct effect it can have on people’s lives, is in healthcare. A recent PBS report, for example, highlighted how organizations such as the World Food Program are using mobile conditional cash transfer programs to help poor families get children vaccinated.

A fascinating new report from the World Economic Forum cites World Health Organization (WHO) claims that inadequate healthcare financing mechanisms are one of the biggest challenges to improving health outcomes for the poor.

Healthcare providers face the challenge of how to pay unbanked and remote healthcare workers in a timely and safe manner. In rural areas, healthcare workers often spend time walking to other localities to pick up cash when they are paid. The time spent on administrative tasks could be better used serving patients.

The report goes on to detail some of the many mobile banking services that could help improve health care services and outcomes in Africa and the developing world, including:

In all cases, MFS holds the potential to have profound, immediate effects on people’s lives. Credit the telecom service providers investing in developing countries, who are building the infrastructure to make these changes possible.

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3 Comments.


  1. Very interesting article. Here are some statistics that show how is the mobile industry represented in South Africa… what do you think about this? http://bit.ly/pASh4Q

       0 likes

    • @Sandra, thank you for sharing that online resource.

      I believe that the device options for mobile banking in developing countries likely start with lower-cost feature phones, but also include some smartphone applications. I’ve noticed that the entry price-point for smartphones continues downward, so perhaps over time we’ll see more of these devices in the mix. Meanwhile, this is one of those scenarios where low-tech solutions gain the most adoption — because they’re targeted at the largest portion of the total addressable market.

         0 likes

  2. That’s fascinating stuff–especially the conclusion. Amazing how quickly mobile networks are expanding in Africa, to the point that a country representing almost all the market a few years ago is now less than a fifth of it.

    I also think the suggestion at the end is right on target. It’s fertile, fast-growing markets like those on the African continent that are going to spawn the really interesting mobile innovations, and maybe the next generation of affordable personal computing devices.

       0 likes

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