The Evolution of Mobile Phone Banking Services: A tool for Financial Inclusiveness


aaeaaqaaaaaaaahdaaaajdrkmjczmtnklwm1yjutngq2mi04n2jklwyyyzu5ytu4mzdlngI do have a question for you. Is the use of making significant efforts in bridging the gap to universal ? Come to think of it!

Mobile banking is simply the act of performing financial transactions on a mobile device like a cell phone or a tablet to send remittances, pay fees and utility bills. Mobile devices are increasingly being use by people for banking, planning, and financial management. The commonness of mobile devices explains the extent to which they have suddenly become entrenched into our modern digital evolution.

Guess what, about 62% of Americans primarily bank online and 54% of consumers use mobile banking apps according to the Bank of America report on “Trends in Consumer Mobility” published in 2016. According to the Michelle Moore, head of digital banking at Bank of America, there are growing numbers of people adopting and using the mobile devices in managing their finances and navigating their lives. . According to the 2014 World Bank figures, the Sub-Sahara was leading the world with the fastest growth in new bank accounts premised on the penetration of mobile banking. About 12 percent adults in the region had a mobile money account compared with 2 percent globally. Kenya for instance, has championed the cause of Africa’s mobile banking evolution with more than 58 percent of her adult population having a mobile account.

Not long ago in my part of the world, it was difficult to locate a financial institution much more transact a basic financial transaction. There were quite a few dotted around the country. The few ones available were established in the big towns and cities. As time evolves, the number of banks quadrupled but there is still a numberless of unbanked people left out of the formal financial system.

These groups who are mostly from poor rural communities are deprived of basic financial services and have to travel over a long distance from their rural setting to the big cities were the banks are located to transact financial services. Indeed, the hand of the traditional banking isn’t long enough to feed this rural folks.

Cost, time and infrastructural barriers prevent the conventional banks from establishing their branches in these deprived communities to serve the un/under banked customers thereby creating an economic opportunity for the telecoms and banks to deploy mobile to serve this niche market.

It is estimated by the World Bank that about 2 billion working age adults are still left of the formal financial system. Most of these unbanked and under banked people live in remote communities distant from the financial institutions and are therefore practically cut off from the accessing financial services and products.

On the backdrop of technological advancement and as fate will have it, the advent of mobile phones came to answer the fore-said puzzle ,and attempt to wipe out the tears of the un-served customers, and complement the gains chalked by the conventional banks.

In the mobile phone money ecosystem are the telecommunication service providers, banks, regulators, and mobile agents who use mobile technology to reach out the poor in the rural settings at cost effective manner. Customers who are users of mobile money can conveniently check the balance on their wallets, transfer, earn interest on their deposits, and pay utility charges and other services. You don’t have to make a trip to an ATM or financial center either.

Why it matters? The proliferation of the use of mobile phones and other innovative technologies is helping to rope in the unbanked people especially in the rural setting to access financial services at affordable cost. This thereby provides a complementary channel to progress towards a universal financial inclusion. Along the value chain, it is believed that financial access enhances the quality of living as it allows customers banking access anytime and anywhere to save time and their money, and use it for transactional purposes. Again, families can easily plan and take precautionary measures against future uncertainties including deaths, poor farm harvest and illness. Households and small medium businesses with access to a transaction account can use it to conduct financial services that can improve their livelihood and diminish their operational costs. This branch-less banking is also a source of employment to large throng of youth who act as Mobile agents or merchants to earn revenue from the fees charged and commission received. Bank of America, HDFC, HSBC, Barclays, Ecobank, FNB and other banks with mobile phone banking platforms can leverage on it to expand their collection levels and make savings on their operational costs while the telecoms expand their mobile subscriber base and earn additional revenue on fees and charges.

However, adequate security measures must be maintained when using mobile phone banking to minimize the exposure to phishing scams (identity theft) and cyber related attacks by hackers who are sniffing around like vultures with amber eyes desperately looking for carcass.

Universal Financial Inclusion is now a flagship issue for boardroom discussions and a key priority for nations, development partners and policy makers globally. The World Bank group has identified financial inclusion as an instrument for combating the war against poverty and set to achieve a universal financial access by 2020. Member nations have demonstrated frantic efforts by crafting their national policies and strategies to foster universal financial inclusion via public financial literacy sensitization, establishing financial consumer protection frameworks and ICT infrastructural development, to reach out to the hard to reach citizens within the nooks and crannies of their countries with basic financial services.

The G20 leaders also took bold step to promoting access to financially neglected members globally by endorsing the G20 High Level principles for Digital Financial Inclusiveness at the recent summit held in Hangzhou, China, in September  2016.This is to further consolidate the gains reaped from the 2010 G20 Principles for Innovative Financial Inclusion which were earlier adopted in tickling the minds of global leaders and development partners to appreciate the importance of innovative financial inclusiveness. They underscore the relevance of financial inclusiveness to achieving economic growth and prosperity.

Repeated research shows that there is a positive nexus between financial inclusion and productivity, poverty reduction and prosperity. Mobile phone banking penetration is helping in tiptoeing towards the goal of global financial access. Today in the remotest part of the deprived communities in Africa, people with mobile account can access at least more than one mobile phone banking services like reload airtime, send money(remittances), loan receipt and repayment, bill payment, school fees, deposits and withdrawals. Latest survey findings from the 2016 Consumers and Mobile Financial Services report fielded by the U.S. Federal Reserve Board in November 2015 cited that the adoption and use of mobile banking continues to surge with 43 percent of all mobile phone owners with a bank account who had used mobile banking having uptick from 33 percent to 39 percent between 2013 and 2014 among the citizens of Americans.

The rapid growth of mobile financial services is a key springboard to achieving universal financial access. However, the fight to achieving a universal financial access is tense and requires un-relented efforts from all stakeholders including nations, development partners, and policy makers.

[linkedinbadge URL=”″ connections=”off” mode=”icon” liname=”Abdul-Bashit Abdulai”] is MBA, BCOM, CA, CH. FE