Mobile Money is the most basic form of Mobile Financial Services (MFS) in emerging markets, which is comprised of a variety of offerings. It's a good model, due to the lack of infrastructure that supports access to services for the un-banked population of numerous nations.
Where building and sustaining traditional financial institutions is very costly, landline telecom and mobile network operators offer a near-ubiquitous and reliable alternative to banking establishments.
The concept is reliant on mobile handsets, taking the form of simple domestic money transfers, or micro-finance services that involve risk decision elements, such as lending and insurance.
Mobile Money Market Development
According to the latest market study by Juniper Research, the total value of mobile money transactions in emerging markets will reach $2 trillion by 2027 -- that's an increase of over $500 billion from 2023.
Growing by 33 percent, the market is being driven by the transition to Payments-as-a-Platform (PaaP), which is a model that allows third parties to deliver products via mobile money software apps.
Juniper's analysts have identified PaaP as driving mobile money application development, as it enables third parties to have more access to users, without mobile money operators having to develop additional services themselves.
This approach also enables greater revenue for mobile money service operators, while allowing them to meet increasingly sophisticated user demands for online financial services.
Juniper has predicted that by 2027, there will be 411 million users of sophisticated mobile financial services within emerging markets across the globe.
This 40 percent increase is a result of providers offering a variety of services, such as micro loans and micro insurance, to satisfy growing user demand in these emerging nations.
The rising maturity of several mobile money markets, growing customer awareness, and relative affluence of the service users has increased the importance of viable vendors providing more modern capabilities.
"Vendors must implement sophisticated MFS in an effective way, or they will lose ground to rising competition. This can be best achieved through new approaches, such as leveraging existing data that operators hold to enable alternative credit scoring, allowing much greater lending opportunities," said Cara Malone, senior research analyst at Juniper Research.
Outlook for Mobile Money Applications Growth
Juniper's analysts have urged mobile money vendors to leverage data analytics to help retain customers and resist rising competition in this rapidly evolving marketplace.
By gaining valuable insight into user behavior and their service delivery preferences, mobile money vendors can provide better-tailored services that adapt to customer needs and wants.
Moreover, by combining this usage data with new third-party services via PaaP, it enables a more personalized service offering, thereby increasing customer satisfaction and greater vendor revenue.
That said, I believe to drive growth in the mobile money arena, these technologies must provide the required integration of desired services through secure consumer on-boarding and reliable fraud risk mitigation.