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Friday, October 18, 2019

Mobile Financial Services Upside in Emerging Markets

Across the globe, millions of people don't have a bank account -- they're the 'unbanked' masses. Mobile Financial Services (MFS) are alternative financial instruments that allow individuals, without an account at a traditional banking institution, to engage in financial activity via their mobile device -- such as a low-cost smartphone or media tablet.

Since the inception of 'mobile money' services from the telecom provider in Kenya over ten years ago, these solutions have been instrumental in enabling financial inclusion in emerging markets, where large segments of the population have been unserved, or underserved, by traditional banks.

Mobile Financial Services Market Development

With the ability to reach anyone who owns a mobile device and the benefit of rolling out cost-effective agent networks, MFS players have managed to fill a gap which has been a challenge for traditional financial institutions within emerging markets.

According to the latest worldwide market study by Juniper Research, the total transaction value of the MFS market will exceed $1 trillion by 2024 -- that's rising from $580 billion of current transaction value in 2019.

This is a growth of 70 percent and equally promising as the fintech market in mature markets. The upside potential for MFS is significant. Juniper analysts identified a range of untapped opportunities in Latin America for services such as microfinance, microloans and money transfer, as a key driver of MFS growth over the next five years.


Juniper forecasts that the total number of users accessing MFS in Latin America will grow 20 percent on average annually over the next five years. This is predicted to grow twice as fast as saturated markets such as Africa and the Middle East.

In response to the findings of their study, Juniper has urged the mobile financial service vendors to leverage the existing relationships and launch new innovative services in these underserved markets.

It also forecasts that the number of MFS users in all emerging markets will reach 1.2 billion by 2024 -- growing from 890 million in 2019. Africa and the Middle East will account for over 600 million users alone by 2024 -- owing to the high reliance on mobile devices for banking services.

Outlook for MFS Growth in Emerging Markets

According to the Juniper assessment, CICO (Cash In, Cash Out) transactions will be the largest driver of growth for the MFS market -- exceeding a value of $590 billion by 2024. CICO allows users to access traditional banking services, such as deposits and withdrawals, via mobile devices.

Juniper has also encouraged MFS providers to expand their agent networks to rapidly grow their customer bases. It also forecasts that fostering confidence amongst users for CICO transactions will lead to the increased adoption of more comprehensive MFS products, such as microloans and microinsurance, in the future.