In over 15 years of covering the telecoms sector in emerging markets, it has always been clear to us at Developing Telecoms that the issues encountered in these regions must be addressed with pioneering solutions that factor in the circumstances surrounding them.
An approach that succeeded in developed markets will likely be unviable in emerging markets, whether this is due to a technological issue such as a lack of legacy architecture, or a more fundamental reality – and the shortfall of financial inclusion in many emerging markets definitely falls into the latter category.
The electronic banking model we’re familiar with from developed economies runs into a roadblock when the economy of a market is almost entirely cash-based. Businesses and individuals are keen to ensure their money is protected and their transactions are secure, but if nobody has a bank account and the infrastructure doesn’t exist to provide them, another solution must emerge – and if you’re reading this site, you probably know how well mobile financial services have filled this niche.
Africa has been a particular beneficiary of mobile financial services, but their impact has been felt worldwide, enabling financial inclusion like never before by taking advantage of the ubiquity of mobile phones. Services such as Safaricom’s trailblazing M-PESA have underlined how mobile devices can play an essential role in enabling societal functions that developed markets take for granted. M-PESA is the largest MFS service in Kenya, a country that has long been at the forefront of the development and adoption of mobile finance.
In a sign of the technology’s importance to the wider telecoms industry, the GSMA has announced that for the first time ever, FinTech is one of the four key focus areas for Mobile World Congress 2022. The industry body notes that during 2020, transactions worth US$503 billion were conducted via mobile phones, with the global fintech market forecast to reach US$190 billion by 2026.
The growth path for fintech in emerging markets was already established, but the pandemic has proven an unanticipated accelerator. With society increasingly reliant on connectivity to accomplish vital activities such as banking, robust and mature services such as M-PESA can be relied on to provide secure access to financial services.
M-PESA’s initial trial in 2005 demonstrated that a new model of banking could swiftly gain traction in emerging markets by facilitating financial inclusion through widespread technology. The service launched commercially in 2007 and now generates as much […]
