The three billion new middle-class opportunity: The successes and technical challenges of mobile financial services in emerging markets

Abstract

Since its launch seven years ago, mobile money in Kenya now transmits more than 43 per cent of Kenyan GDP each year. With an expected three billion new middle class in the emerging markets by 2030, the mobile phone is being used to leapfrog traditional retail banking and payment approaches, much as it has done for telecommunications. This paper reviews the opportunities for retail banking and payments in the emerging markets, gives examples of mobile phone-based financial offerings and focuses on the practical matter of how institutions can reach users with mobile phones. Lastly, the author examines who will benefit from this fundamental industry shift. Readers are introduced to the subject of mobile financial services in the emerging markets with particular value for retail banking and payments practitioners interested in expanding their businesses through the mobile phone, but frustrated by the limitations of mobile operator partners and noise from vendors.