Tap the market before your competition

Imagine using the ubiquitous little electronic gadget in your hand to do everything you want at the press of few buttons – paying bills, booking tickets, transferring cash, and saving money. Are you wondering what’s so new about it? Well, what is ‘new’ is that the unbanked in emerging markets are using their basic mobile devices to perform these activities, but through non-banking channels. According to the Berg Insight, in 2010, there were 133 million mobile money users in emerging markets, which is expected to increase to 709 million by 2015.

Now, that presents a huge potential!

Emerging markets are the drivers of growth in the post-crisis global economy. These are also markets that have a higher percentage of poor population who do not benefit from the formal banking sector – also called the unbanked. According to McKinsey, there is one bank branch and an ATM for every 10,000 people in these markets. At the same time, every second person in these markets has a mobile phone. It is therefore, the convenience factor and reach of services that has made mobile money a popular alternative among the unbanked.

However, a total financial inclusion of this unbanked population requires an end-to-end integration of banking services with mobile technology. This requires banks to partner with Mobile Network Operators (MNOs) to reach out to the unbanked who have mobile connections. This channel, while it helps in the financial inclusion of the unbanked, provides banks with a cost-effective alternative for extending banking services to parts of a country where providing traditional banking services is otherwise expensive.

Mobile banking for the unbanked in emerging markets is a huge opportunity that banks should pay significant attention to. They should look at profitable ways to partner with telecom network operators to offer apt banking products and solutions to the target consumer through the mobile money channel. Start with the understanding of the local consumer behavior – socio, economic, and psychological aspects of their environment. Identify the right technology that will uncover the full potential that lies with the unbanked in a region. There is no one solution for all consumers. This is an opportunity for the banks to tap the untapped, whose power to purchase and consumptions are on the rise. And the ones, who make a move now, will reap the advantages of the first mover.

Share with us the initiatives you have taken to tap the rising powers of the unbanked.

Economics,Emerging markets,paying bills,transferring cash

About the Author

Anand Kale has over 16 years of industry experience in IT industry with 10 years into enterprise and consumer mobility space. He has led more than 5 Mobility consulting engagements in the past and currently heads the presales and solution architecture group for Mobility in Banking and Financial Services

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