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Mobile Financial Services Upside in Emerging Markets

Across the globe, the mobile phone is one of the most important technology advancements for developing nations, as an enabler of economic growth. In fact, many of these emerging countries have already seen a rapid adoption of mobile remittance.

Very basic money transfer services can help fuel a local economy. According to the World Bank, there are 80 countries where less than 50 percent of the adult population has a bank account. Mobile money transfers can provide financial inclusion for those un-banked and under-banked citizens.

The total transaction value of Mobile Financial Services in emerging markets  -- including domestic money transfers, deposits on loans, insurance products, and savings accounts -- will approach $500 billion in 2021, that's up from an estimated $198 billion in 2016.


Mobile Money Service Market Development

Juniper Research discovered that by introducing insurance offerings, mobile network operators had the opportunity to substantially reduce customer churn levels. They cite the example of Telenor Suraksha life insurance in India, which has seen nearly 50 percent of its 45 million user base sign-up for these services.

"The model underpinning the Surakhsa scheme -- requiring consumers to top-up airtime on a monthly basis to receive the insurance cover -- should be widely replicated. It enables operators to maintain average revenue levels within low-income, low-ARPU prepaid environments and allows consumers to reap the benefits of micro-insurance," said Lauren Foye, analyst at Juniper Research.

However, the research cautioned that tailoring basic financial service products to the markets is often a challenge. Juniper analysts believe that several early implementations of mobile financial services -- in markets such as India, the Philippines and Nigeria -- achieved limited adoption because offerings were not aligned well with local consumer needs.

Nevertheless, the research highlighted the Asia-Pacific region -- which is currently under-served due in part to the complexity of national regulations -- as having strong upside growth potential for new product launches.

While restrictions have been in place previously, largely due to cultural beliefs, Juniper found that attitudes are changing in under-served regions, with Indonesia acquiring its first ever microloans product in 2017.

Additionally, specialized products have been launched to address religious or cultural requirements, such as Achuwat in Pakistan which provides interest-free loans to meet Sharia law requirements.

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