According to a recent estimate by eMarketer, by next year there will be more than 2 billion smartphone users worldwide, with most new adopters in emerging and developing markets where consumers’ primary or sole access to the Internet is via a mobile device. While the ongoing growth in smartphone user numbers is nothing short of astounding, it is mirrored by a similarly amazing rise in the number of individuals joining the ranks of the world’s “banked” population – 700 million in the years 2011-2014.
As measured by the latest Global Findex survey, the addition of more than two US populations in account holders at banks and other financial service providers represents a 20% drop in the number of global “unbanked.” This leap in the ranks of the global “banked” is considered a major global economic and social development breakthrough, with World Bank President Jim Yong Kim citing it as evidence that the bank’s “hugely ambitious goal” of universal financial access by 2020 is within reach.
In addition to simple convenience, according to the Bank and other authorities, such access to the financial system plays a crucial role in job creation, education and helping individuals manage financial risks.
But despite this progress, challenges remain. For example, some of those counted as having financial access are in reality only marginally connected. (More than 40% of Indians with an account reported no deposits or withdrawals in the previous year.)
It may be a coincidence that the number of adults who remain without “financial access” is approximately 2 billion, the same as the number who will soon have access to a smartphone. But it is not a coincidence that the terms “financial access” and “account ownership” are beginning to replace “banked,” since many of the billions enjoying such access for the first time are not doing so via banks.
Instead, account ownership is increasingly coming via non-bank financial institutions accessed primarily or solely through mobile devices. (And not necessarily smartphones.)
This is particularly true in Sub-Saharan Africa, where pure-play mobile money and payment services are seeing phenomenal growth, as traditional banks and non-banking financial institutions struggle to expand or just stand still. For example, the report found that 12% of adults in the region possess a mobile money account – six times the rate globally – with people in five countries more likely to have mobile accounts than one at a traditional “bricks and mortar” financial institution. (We previously wrote about these issues back in October of 2013.)
As such, this represents not only a tremendous opportunity for mobile money to do good, but for firms active internationally in the mobile money business to do very well.