This is the second in our series of blog posts about the Fintech trends to watch out for in 2017. Here, we explore the growth in the use of mobile devices to transfer money overseas.
Mobile money well and truly established itself in 2016. So says the ‘State of the Industry Report on Mobile Money’ published by the Groupe Speciale Mobile Association (GSMA) in February 2017. According to the report, the industry processed more than $22 billion in transactions in December 2016 alone. Mobile money operators completed an average of over 43 million transactions per day, while the number of mobile accounts surpassed 500 million1 .
The potential impact that mobile money could have on financial inclusion is considerable. The same report says mobile money is now available in two- thirds of all low- and middle- income countries. In Sub- Saharan Africa, more people have a mobile money account- 277 million in total- than a traditional bank account. To put this figure into perspective, there were only 200,000 such accounts 10 years earlier2.
We believe mobile remittances will continue to grow for two key reasons.
According to another report published by the GSMA called ‘The Mobile Economy 2017’, smart phone adoption is rising around the world, especially in developing regions. In Asia Pacific, the proportion of the population with a smartphone is expected to jump from 51% in 2016 to 63% by 2020. The report predicts the Middle East and North Africa will climb from 46% to 64% while Sub- Saharan Africa will nearly double from 28% to 55%.
Connectivity is expected to improve too. The report forecasts an additional 2.3 billion mobile broadband connections by 2020, with 4G connections to account for 41%3.
The other reason we expect mobile money to continue growing, as we discussed in this post about the cost of global remittances, is it’s one of the cheapest ways of sending money internationally. According to the December 2016 issue of the World Bank’s ‘Remittance Prices Worldwide’ report, the average cost of transferring money through a mobile operator is 2.86%. A bank charges an average of 10.90%, over three times as much4. Of course, Xpress Money is cheaper than both of these options, with a global average cost of just 2%.
One factor which might hold back the growth in mobile remittances is security. People need to feel confident sending money by mobile, and they must try to stay a step ahead of fraudsters. In the next blog post in this series, we’ll look at the latest measures being used to protect mobile transfers.
Written by Sudhesh Giriyan, COO, Xpress Money