Picture: THINKSTOCK
Picture: THINKSTOCK

THE growth of mobile money will continue at a rapid rate this year, global mobile industry body GSMA said in a recently released report titled The Economy of Mobile 2013.

More than 2.5-billion adults — the majority of whom live in developing economies — do not have access to a formal bank account, according to the World Bank.

This means about 48% of the world’s adult population is not able to access basic financial services in order to save, borrow or transact, says GSMA.

For technology companies such as Gemalto, a global company that provides digital security, it is an important area for growth, especially in Africa, where many people still do not have access to traditional banking or are underserved.

Gemalto vice-president for global marketing communication Hsin Hau Hanna told Business Day in an interview last week that it is easily conceivable that in future people will use cellphones to perform many traditional banking transactions.

He says the conventional retail banking services can be difficult to access for people in many developing countries, but very high percentages of people in those areas often have cellphones. The mobile operators of many countries with modern urban centres like Johannesburg are often ready to leapfrog some developed markets in terms of technology to enable mobile banking and payment, says Mr Hanna.

Gemalto provides the technology platform that enables mobile banking and mobile money transfer for a variety of service providers ranging from mobile operators, banks or even retail merchants.

This month it launched the latest version of its mobile wallet solution, which is a complete suite of secure software and a service platform that enables a range of near-mobile banking, mobile payment and loyalty programmes, all integrated in a single wallet.

Designed for convenience for end users, consumers can link to existing accounts and cards, or set up new services easily.

They can confidently conduct all their banking activities straight from their smartphone, along with transportation, ticketing and building access applications, says Mr Hanna.

GSMA said in its mobile banking report that the prohibitively high cost of a traditional, physical bank branch and the lack of other basic infrastructure, such as point-of-sale terminals, have until recently made the provision of such services impossible to a significant section of the world’s population.

MTN and Vodacom and banks have some form of mobile payment and banking services that they provide to their customers.

MTN has launched its Mobile Money service in 14 countries in partnership with local banks in those countries, says MTN Group head of investor relations Nik Kershaw.

MTN’s mobile money customers have grown from 6-million in 2011 to 9.4-million last year.

In Uganda, MTN Mobile Money customers have grown to number more than 3.5-million, and by the end of last year, the service had transacted volumes of more than $150m.

MTN plans to grow Mobile Money revenue to contribute a larger portion to the group’s overall revenue, Mr Kershaw says.

However, despite the roll-out and investment made by companies, GSMA says mobile money has not grown as fast as some had predicted. One of the most successful mobile money services, which continues to be the model that a lot of research is based on, is mobile network operator Safaricom’s M-Pesa service that was rolled out in Kenya, says GSMA.

Many other services have not yet seen the high level of success of Safaricom, part of the Vodafone Group. Vodacom, majority owned by Vodafone, has launched M-Pesa in Tanzania, which attracted 4.7-million customers by the end of December last year. Vodacom plans to replicate that success in the Democratic Republic of Congo, where the service was launched last year. It will roll it out in Mozambique and Lesotho this year.

Last year, GSMA counted six mobile money services that have more than 1-million active customers globally, three of which crossed the "1-million active" barrier during last year.

However, GSMA says that additional work needs to be done to accelerate the growth of mobile money. It says that companies are facing challenges such as a lack of enabling regulation, a need for further learning, and underinvestment.

With regard to regulation, GSMA says that there are burdensome customer registration rules and limits on the types of companies that can provide financial services. "When such services do take off, enabled by appropriate regulation or partnerships with financial services organisations and supported by best practices and common standards, the potential for growth is significant," it said.

GSMA expects mobile money adoption to rise along with growth in new mobile connections in developing economies. It says the mobile industry is "uniquely placed" to deliver growth in mobile money services to the world’s unbanked people.

According to the report, there are 3.2-billion mobile customers globally. A further 700-million subscribers are expected to be added by 2017 and the 4-billion mark to be passed in 2018.