The benefits of mobile are multifaceted in emerging markets

The benefits of mobile money services for the so-called "unbanked" in developing markets across Africa have long been extolled. As the latest Ericsson Mobility Report says, "increased connectivity improves the prospect of financial inclusion for the 70 per cent unbanked through mobile money services starting to take form across Africa."

This week, a Bloomberg article also highlighted how mobile phones could now even be used to help the unbanked obtain loans. As the report said, "a quarter of humanity hasn't been able to borrow money" because they have no bank account, no credit score and no financial identity.

Now, there are plans to help these 2 billion people by monitoring their mobile phone use among other things to establish creditworthiness. It seems that several start-ups are prepared to make correlations between how people manage their mobile balances and how they might manage a loan.

The article noted that while this might seem far-fetched to some, others believe they are "opening a new frontier".

"If any one of these models succeed, the ramifications are enormous for both the financial services sector and international development," Paul Christensen, a professor of finance at Kellogg School of Management at Northwestern University in Illinois, told Bloomberg. "A whole new market could open up."

Certainly, mobile connectivity -- which forms the backbone of such developments in mobile banking and mobile money services -- is growing across Africa. As the Ericsson report said, in 2010 there were 500 million mobile subscriptions across Africa; by the end of 2015 this number will double to 1 billion.

A new report from Ovum also said that the number of mobile broadband connections in Africa is expected to reach 1 billion in 2020, up from 147 million in 2014 and 222.34 million at the end of 2015. The spread of 3G and 4G services across the continent, and the increasing affordability of smartphones and other data devices, mean that mobile broadband growth is now outpacing overall mobile growth.

A McKinsey report from 2012 further noted that as "e-commerce and mobile-payment systems spread to even the most remote hamlets, emerging consumers are shaping, not just participating in, the digital revolution and leapfrogging developed-market norms, creating new champions like Baidu, M-Pesa, and Tencent."

Indeed, the innovative start-ups seeking to unlock borrowers in poorer nations are also aiming to prove that changes in mindset and approach can open up new opportunities in emerging markets, helping citizens improve their financial position and ultimately their quality of life.--Anne

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