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Challenges to growing mobile financial services

Mobile financial services can offer potential for social and financial inclusion in cash-centric environments where the poorest struggle to survive and conserve their savings. Reuters

Mobile financial services can offer potential for social and financial inclusion in cash-centric environments where the poorest struggle to survive and conserve their savings. Reuters

Published Jun 23, 2022

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WHILE innovation and mobile convenience were key business drivers for mobile financial services globally, in the developing world ensuring financial inclusion was driving up costs and slowing the time to market, according to software company Breakpoint.

The GSMA’s State of Mobile Connectivity Report 2021 shows that more than 450 million people are not yet covered by mobile broadband, and 43 percent of the world’s population – or around 4.3 billion people – are not using mobile internet even if they live in areas with mobile broadband coverage.

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Breakpoint’s technical director, Deon Erasmus, said developers were constrained by limited functionality on their mobile banking products in order to meet the needs of hundreds of millions of users who only had access to feature phones, or who chose not to use data-hungry apps on their smartphones.

Smartphones account for 68 percent of total mobile connections in 2020, which meant hundreds of millions of people don’t have the devices, data or coverage to move to the richer experience offered by mobile apps.

Breakpoint said that they expected this to be the case for at least another four to five years, and that the transition to mobile apps and 5G would progress gradually. This raised a series of challenges, which could slow innovation and add cost to every new product release.

The firm said the big testing bottleneck was that telcos reported that testing new products for USSD and feature phones was proving increasingly time-consuming and error-prone, with hundreds of product releases or upgrades expected per year.

According to the International Telecommunications Union’s ITU-T Study Groups (Study Period 2013-2016), mobile phones today offer constant communications, even to many of the world’s poorest people, and now they may also become the conduit for these people to access banking services for the very first time.

The organisation said more than two billion of the world’s poorest people lived on less than $3 (R48) a day, while the majority did not have access to any banking services.

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At the same time, the global mobile-wireless infrastructure was expanding.

Mobile financial services (MFS) include services such as mobile-enabled payment systems and mobile banking with security and convenience for transfers, payments and savings through the concept of a ‘mobile wallet’ account. MFS are available in more than 70 countries.

The International Telecommunications Union said MFS could offer potential for social and financial inclusion in cash-centric environments where the poorest struggle to survive and conserve their savings.

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