The COVID-19 pandemic was a stark lesson in the power of technology to keep us connected. From online grocery shopping to video conferencing, technological innovations enable us to connect and collaborate from anywhere in the world.
From the consumer’s point of view, the telecommunications industry has pioneered a new era of inclusion as technology becomes more affordable and accessible. However, as the world becomes increasingly digitized, we face the risk of some demographics being left behind, as was highlighted by the pandemic. During the imposed stay-at-home orders, many underserved communities did not have the technology to be able to do certain crucial activities, such as paying bills online or allowing their children to attend virtual schools.
How Can Mobile Phones Close the Tech Gap?
As GSMA director general Mats Granryd explained in an interview with Forbes, mobile connectivity allows us to achieve sustainable development goals. For example, those living with a disability face challenges that could be overcome with the right technology to serve them. Technology can also play a significant role in ensuring that everyone feels like an included and appreciated part of the community.
In many countries, the mobile phone has become a powerful tool in tackling a lack of financial access for low-income families. For example, in Kenya, M-PESA, a mobile-phone-based money transfer service, has demonstrated that the adoption curves typical of information-based technologies such as TV, radio, the internet, and mobile, can also be applied to financial services. Although M-PESA and other mobile payment platforms have only just scratched the surface in terms of what is possible, they are already being used monthly by typical mobile money users.
What Can Mobile Banking Do?
Colin Mayer of the University of Oxford’s Saïd Business School recently published a paper arguing that the real power of mobile will be recognized not merely as a mechanism for reducing banking costs but for building new types of experiences among bank customers. Beyond reducing bank fees, mobile phones also enable customers to interact directly with their bank, initiate transactions, and check balances from wherever they are. This capability is a game-changing opportunity for those living in rural or geographically isolated communities. It can save people the time, cost, and inconvenience of traveling to the nearest town to visit their bank in person.
To be financially inclusive, banks will need to develop customer experiences that allow customers to plan for and attain their financial and expenditure goals. When banks and their customers are connected via mobile phones, it becomes much easier for banks to glean information regarding their client’s financial objectives. The bank can then recommend appropriate services, be they savings, credit, or payment solutions, to help clients achieve those financial goals.
What Can Governments and Banks Do?
Governments in developing countries can drive these improvements by transitioning to digital payments, which are more accessible due to the proliferation of mobile phones and internet use. The World Bank’s latest update to its Global Findex database revealed that 1.2 billion adults have opened bank accounts since 2011, and the share of banked adults reached 69 percent in 2017. Although the World Bank acknowledged that this was “tremendous progress,” the organization also warned that the banking and financial services industry needed to be more inclusive.
Relationships between banks and fintech companies have rapidly evolved over the past few years, sparking debate over the future of the banking ecosystem. Fintech companies have transformed traditional markets, leveraging technological advancements to make financial services more accessible, particularly in countries with fewer human and technical resources.
Over the last decade, there has been a marked increase in access to financial services due to the prevalence of smartphones. In Africa, the world’s least technologically developed continent, over 1.3 billion people have internet access and 80 percent of the population owns a mobile device. For companies like M-PESA, this has been an opportunity for significant growth.
In terms of driving global development, promoting financial inclusion is essential. Providing access to financial services enables individuals to take charge of their finances and invest in themselves.
How Mobile Banking Can Empower a Nation
The ability to effectively manage income and expenditure increases an individual’s prospects of escaping poverty. The growing adoption of mobile phones has facilitated a global increase in internet coverage, creating new opportunities for financial services.
Although World Bank warns that there are 1.7 billion unbanked adults globally, two-thirds of the unbanked global population owns a mobile phone. Providing them access to vital financial services could have a transformative impact on their lives, thereby creating more growth and opportunities in developing countries.