Mobile money is a market experiencing a period of rapid growth, even prior to the accelerated adoption driven by the COVID-19 pandemic.
A 2020 report by industry organization GSMA revealed that there were over a billion registered mobile money accounts in 2019, and almost USD2bil in transactions undertaken every single day.
Mobile money goes beyond simple everyday transactions of purchasing a soft drink, or buying daily groceries, but offers an increasingly innovative solution to financial access in everything from monetary assistance to charity support. More than 60% of mobile money providers studied in the GSMA report revealed some form of partnership with humanitarian agencies in offering financial assistance services.
Mobile money has been a roaring success story for financial inclusion, with more women—traditionally underbanked— accessing financial products and services, and growing penetration in low-income households.
A comprehensive study by the International Monetary Fund (IMF) reveals mobile money has seen rapid growth in low- and middle-income countries, and has surpassed traditional banking services in some markets. Africa is a particular success story when it comes to mobile money access, which is an increasingly valuable foothold to financial services.
Crucially, the industry itself is also increasingly self-sustaining, with 60% of providers analyzed by GSMA showing positive EBITDA in 2019. The growth of mobile payments is bolstering an increasingly lucrative mobile money market.
Of course GSMA’s March 2020 report is a world away from our current landscape. COVID-19 has transformed financial services, with contactless and convenient payments from mobile e-wallet solutions becoming a mainstay of economic activity during this period of social distancing and cautious consumers. Research by the University of Zurich indicates daily downloads of digital finance and financial technology applications increased by as much as 32.8% across 71 assessed countries during COVID-19.
Analysis of seven mobile money markets by GSMA reveals up to 15% of mobile money account users started using these services for the first time during the COVID-19 pandemic. While the report also reveals existing users faced challenges accessing key in-person mobile money transfer and account services, the trend towards accelerating adoption is clear.
Adapting to local need is key to unlocking opportunity
Unlocking the full value of mobile money applications will require solutions that can bridge the digital divide in rapidly emerging, but still early developing markets across the globe. Research undertaken by Pew Research Centre in 2019 estimated more than five billion people globally owned a phone, but that growth is not equal, revealing just 45% of those in emerging markets possess a smartphone, compared to 76% in the most advanced economies.
While mobile data access is an increasingly fundamental part of developing markets in Africa, Asia Pacific, and South America, access to smartphone technology which unlocks more advanced mobile money applications is clearly still beyond the reach of many customers. With 83% of those surveyed in emerging markets owning a phone, it’s evident that a great number of people still rely on 3G or 4G services with a standard feature phone and minimal application services, and many resort to sharing mobile phones in order to manage costs.
Follow-on research undertaken by Pew in 2019 reveals the reality of this digital divide, with more than half (51%) of respondents in the 11 studied emerging markets citing device cost as the greatest barrier to mobile phone use. More than one-third (37%) of respondents noted trouble paying for their phone use.
Mobile money still remains an important economic enabler in such communities, and a pathway to important financial inclusion for the estimated 1.7bil people globally who remain excluded.
Developing inclusive telecoms service provision that adapts to address costing concerns and improve access will help bring this opportunity to fruition. AI and ML solutions can provide a powerful springboard for this transformation, driving cost-efficiencies and underpinning adaptive charging solutions that can adjust to make services affordable for local market conditions.
Driving adoption through accelerating digital transformation
Accelerating digital transformation through 5G deployment, devices, and networks will be pivotal in allowing greater numbers of people to benefit from mobile money applications. 20% of respondents to Pew’s emerging market research revealed frequent problems with a reliable mobile connection, providing a further challenge alongside affordability of services.
5G connectivity provides a pathway to overcome both challenges, offering high-speed and reliable data access alongside new provision potential for communication service providers (CSPs).
CSPs can combine 5G technologies with AI and ML solutions to implement flexible charging, making services more economically viable for the population. Neural Technologies’ Charging-as-a-Service is a solution uniquely designed to address this growing need for adaptive charging functionality.
Embracing more responsive and personalized tariffs not only provides a benefit for customers, but allows CSPs to deliver higher investment returns. The benefit of AI/ML technologies helps further prevent revenue leakage through automated fraud and revenue protection functionalities, and enables operators to capture the significant emerging potential of these markets and previously uncharged or absent services.
What will also be essential in maintaining this market potential is reinforcing and retaining trust in the reliability, and security, of mobile money services. Neural Technologies’ own Mobile Money solution employs the power of artificial intelligence (AI) and machine learning (ML) to protect users and operators utilizing these services.
This solution covers all mobile money transactions, including cash in and out and balance movements, leveraging sophisticated ML analysis to protect against fraud and prevent revenue leakage for operators. Predictive analytical models can quickly detect abnormal behavior, providing real-time and near-real-time analysis that frees up operators and risk agents to focus their efforts on the most critical cases, and delivers clear return on investment through advanced revenue protection.
Mobile money represents a growing opportunity to boost financial inclusion, enhance financial access, and unlock exciting new revenue potential for CSPs and their partners. Adopting the right solutions to provide a cost-effective and efficient mobile money ecosystem is vital, not only to ensure affordable access for the global population, but to deliver fit-for-purpose customized implementations that meet the needs of the local market.