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As Mobile Money Takes Root, New Products Bloom

Smartphones are helping create an entirely new class of customers around the world. Thomas Mukoya/Reuters


With smartphones readily available and falling in price, entrepreneurs are building a host of financial services previously off limits to millions of people. This is about more than an increase in WhatsApp and Twitter users, these smartphones are the tools for an entirely new class of customers around the world. When it comes to financial inclusion, millions at the bottom of the pyramid now have the power to start saving, sending, and using money securely. This is nothing short of a financial revolution, and mobile money is the gateway to this radical change.


Recently released figures from GSMA, the corporation behind the annual Mobile World Congress in Barcelona, reveal the scale of the industry. In 2017, mobile money direct revenues rose to more than $2.4bn.The sector is now processing an average of $1bn per day. In East African countries like Kenya, Rwanda, Tanzania, and Uganda, 66% of the adult population uses mobile money on a regular basis.


That last statistic is particularly important. The millions of unbanked people in East Africa who previously relied on fiat money and expensive remittance transactions via multinational companies like Western Union can now move their money digitally. Once they are locked into mobile wallets, a variety of bespoke fintech products are then at their disposal.


I recently met with Matt Coquillon, the co-founder of a Cape Town-based startup called Mama Money that facilities mobile remittances from South Africa to several African countries as well as India. The company primarily targets the millions of Zimbabweans working over the border in South Africa. Free of brick-and-mortar shops, Mama Money offers remittance fees of 5%, compared to the industry average of 18%. But that’s just the tip of the iceberg.


With customers using the platform to remit money home each month, Mama Money identified an opportunity to offer fintech insurance products in addition to its remittance service. For many Africans, being buried in their homeland is a top priority. When someone dies outside of their country, friends and family struggle to raise funds to repatriate the body for burial. Working with an insurance company, Mama Money created a digital burial insurance product built into their platform. For many of their customers, this is the first insurance product they’ve ever had. This is a profound development born out of the rapid growth of mobile money platforms in Africa.


And it is that simple. Smartphones have enabled platforms that create revolutionary opportunities for those at the bottom of the pyramid to transform their economic position in life. With mobile money, people can save; they don’t have to worry about the security of their money (unlike cash) and they have access to other financial products for the first time.


As my colleague Rick Twelves noted this week, blockchain technology and cryptocurrencies could further transform the mobile money space, especially in the realm of remittances. The overall takeaway, however, is that mobile money has created an entirely new customer base with remarkably little infrastructure investment. By 2050, some 2.2bn people could be added to the global population, and more than half of that growth will occur in Africa. With such rapid population growth forecast within this new customer base, the opportunities are boundless.


As emerge85 continues to explore the implications of inequality in fast-growing emerging markets, financial inclusion and mobile money are a critical field of opportunity. The innovators in the industry are local startups and entrepreneurs that understand their markets and the solutions people need on the ground. We look forward to spotlighting these changemakers and uncovering new opportunities.