The convergence of mobile communications and financial services will see more than 1.4 billion people worldwide benefiting from mobile financial services by 2015, according to new research by Edgar Dunn, a specialist mobile banking and payments consultancy firm, in partnership with the GSMA, the global trade association for the mobile industry. By 2015, Edgar Dunn envisages that 1.4 billion people could be using mobile wallets - software that enables consumers to manage their money, including making and receiving payments, using their mobile phone - from about 10 million at the end of 2007.
The GSMA has been working for the past year to help catalyse this market with two major initiatives - Mobile Money Transfer focused on international remittances and remote banking/payments and Pay-Buy-Mobile focused on transactions at point of sale. To further accelerate take-up of mobile wallets, the GSMA is working with Accenture, a global management consulting, technology services and outsourcing company, and Fundamo, a supplier of mobile banking and payments solutions, to establish a hosted mobile wallet platform that will enable mobile operators to pilot financial services rapidly and at low cost.
Following an agreement with the GSMA, Western Union, the world’s leading provider of remittances services, has reached agreements to deploy mobile money transfer services with Bharti Airtel in India and Globe and Smart in the Philippines.
To further accelerate the convergence of mobile and financial services, the GSMA, CGAP, DfiD and the IFC will hold the Mobile Money Summit 2008 in May - a unique event bringing together the stakeholders required for industry and governments to create this new frontier in financial services and inclusion.
“Momentum is building behind mobile financial services and we believe 2008 will be a seminal year for this exciting new sector,” said Rob Conway, CEO and member of the board of the GSMA. “With the help of governments, mobile networks have the potential to bring the many social and economic benefits of financial services to hundreds of millions of people who live beyond the reach of the conventional banking network.”
The Edgar Dunn research also found that the number one barrier to successful deployment of mobile wallets was government regulation. The GSMA calls on governments to ensure that regulation governing the deployment and usage of mobile financial services is proportionate to the risks involved. In particular, governments should:
* Regulate low risk money transfer services, which involve small amounts of money compared with traditional banking services, outside traditional banking regulation.
* Enable non-banks to become an agent of a bank or a remittance provider to facilitate the cash in and cash out activity on both sides of the mobile money transfer.
* Whenever possible, implement regulation on the systems level without interfering with the customer interface.
“We have an immense opportunity to positively impact the lives of hundreds of millions of people by making financial services mobile,” said Sunil Mittal, Chairman of Bharti Airtel and the GSMA board sponsor of the Mobile Money Transfer programme. “However, governments must ensure that proper regulations are put in place and obstacles removed to ensure the growth of this new market to deliver great value to the society.”
Balanced regulation can help increase access to financial services for poor people and is one way to fight poverty, according to a new report on regulating mobile banking from CGAP (Consultative Group to Assist the Poor), a global resource center for microfinance. “Mobile telephony promises to radically transform the way people use financial services in rich countries and in poor ones,” said Elizabeth Littlefield, CEO of CGAP. “Wireless may also allow us to reach people conventional business models never could reach, bringing them for the first time the ability to manage their own household finances, safely storing cash, moving it, spending it or investing it when needs or opportunities arise.”