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Findings from the Mobile Financial Services Development Report

Journal 33: Technical Finance

James Bilodeau, William Hoffman, Sjoerd Nikkelen

The promise of mobile phones has never been greater in empowering the world’s poor to better manage their financial lives and protect themselves against adverse events. Although a growing body of research exists on the development of mobile financial services, little of the available literature investigates these developments across countries. To address this gap, the World Economic Forum along with Boston Consulting Group published “The Mobile Financial Services Development Report 2011.” This report assesses the development of the mobile financial services ecosystem by analyzing more than 80 different variables which measure key drivers of adoption and scale across the institutional, market, and end-user environments. This assessment is at the country level for 20 countries in Africa, the Middle East, Asia, and Latin America.

Access to formal financial services is constrained in the few countries with high adoption of mobile financial services Deployments of mobile financial services are rapidly expanding throughout the developing world and financial services offered through mobile phones have become a part of everyday life for many individuals. However, the overall adoption of these services on a global basis is still limited, and few of these services have achieved profitability [Leishman (2010)]. Figure 1 in this article identifies only four countries with high adoption (> 10 percent of the adult population). Most countries have low adoption values, indicated by their position at the bottom of Figure 1. Although various sources indicate that growth levels for mobile financial services are high [Berg Insight (2010)], enthusiasm about this growth should perhaps be tempered.

Time represents one element to consider when assessing the overall adoption of mobile financial services. As indicated in Figure 2 in this article, countries that have reached higher adoption levels have, on average, been active in mobile financial services for more than four years. The impact of time on the overall adoption levels of deployed mobile financial services is a baseline factor to consider when making cross-country comparisons. Service offerings in some of the larger countries such as India and Pakistan are just now being introduced.

Figure 1 in this article, which shows how countries score with respect to adoption of mobile financial services and a composite measure of access to traditional financial services, also illustrates that larger countries (represented by larger bubble sizes) display low or medium adoption levels (i.e. <10 percent).

Adoption levels are based on the number of opened mobile financial services accounts in each country. This calculation has some limitations, as it does not fully reflect activity and usage, nor does it capture the breadth of services offered and used. The availability of savings, credit, and insurance services offered through mobile phones is still quite limited relative to that of payments. Many believe that services such as savings, credit, and insurance will be the basis for large gains in socio-economic impact [Collins at al. (2009), Dercon (2007), Conning and Udry (2005)].


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