By Hisham Isa, Vice President (Marketing)
Mobile is changing the way people bank, particularly in communities where people never banked before.
A BuzzCity survey of consumers in twenty markets across four continents finds that nearly 1 in 3 mobile users find m-banking to be easy and useful.
And there are now at least nine countries where the number of registered mobile money accounts has surpassed traditional bank accounts, according to a report released at the 2014 Mobile World Congress.
Traditional banks have the biggest market share, but young upstarts – non-banks and mobile banks – are catching the attention – and money – of people from Bangladesh to Ghana and Guatemala.
These companies offer a wide range of financial services from mobile wallets that are used to pay bills or send money home to interest-bearing accounts and micro-loans.
Take the case of bKash -- a BRAC Bank subsidiary in Bangladesh that has attracted investment from Money in Motion and the World Bank – and which hopes to become the largest mobile banking company in the world within the next few years.
Already, some 8 million Bangladeshis bank with bKash. The company expects to have 15 million accounts by the end of this year. Making a deposit or withdrawal is simple. It's much like walking into a convenience store and adding airtime. Consumers simply go to an agent – there are 76,000 around the country – who assists with the transaction. Deposits pay between 1.5 – 4 percent annual interest.
bKash is bullish on its growth because it sees a huge market. Some 60 percent of Bangladesh's population lack bank accounts, while there are 110 million mobile users in the country.
In the Philippines, BanKO promotes services to Filipinos who didn't qualify or couldn't maintain accounts at traditional banks. The company -- which is a joint venture between BPI (the Bank of the Philippines Islands), Globe Telecom and the Ayala Corporation -- pays interest on deposits and does not require a minimum balance. It offers micro-savings, micro-loans and micro-insurance via 2000 partner outlets as well as remittance and bill-paying services.
Testimonials on BanKO's website highlight the nature of the 'UnderBanked' who are now being serviced.
"I've long wanted to have my own bank account, but I couldn't meet the requirements of other banks," Monica Majaba tells BanKO. "Good thing in BanKO, I can use my student ID to open an account."
"I used to have an account with another bank, but I lost my savings because of the bank charges for not keeping the minimum maintaining balance," adds Lino Padallan. "In BanKO, I'm sure I won't be charged because there is no maintaining balance. I can rely on my savings in case of illness or when my children need the funds."
From Africa to Latin America
Mobile financial services are making a difference in people's lives.
Jeannette Wibabara, an independent seamstress featured in a video by Millicom, says that she used to spend hours at the bank in Kigali, Rwanda every day to deposit her daily income, a waste of time that also cost her customers. Now, she accepts payment by phone, which she also uses to pay her son's school fees.
Millicom, which offers mobile financial services in a dozen African and Latin American countries, also partners with the international relief organisation Oxfam to better distribute humanitarian aid in parts of Guatemala that have few banks and poor roads.
Millicom - through its Tigo brands -- Tigo Money in Latin America, Tigo Cash and Tigo Pesa in Africa -- provides mobile financial services to more than seven million customers. The strongest takeup has been in Tanzania, Rwanda and Paraguay, where the company says that 54%, 38% and 31% of its customers have taken up service respectively.
These are just a few examples of how innovative companies are servicing the UnderBanked. As I mentioned at the top of this article, nearly 1 in 3 consumers surveyed by BuzzCity find that mobile banking is easy and useful. But there are even more mobile users who think that mobile banking is not available in their market (it usually is) or that they need a special phone to access it (they don't). Banks, merchants and carriers need to step up their efforts to educate the public about the ease, value and availability of mobile financial interests. It's in everyone's best interest.