How mobile banking is fueled by emerging markets

While most wireless technologies start in developed markets and eventually make their way to emerging markets, mobile banking is one area where developing countries may be leading the way. In regions like the United States, mobile banking is quickly gaining traction as a complement to online services, but in many emerging markets, the technology is already a staple for unbanked consumers.

“I think [mobile banking] is maybe one application where some of that knowledge will come back and be used in different ways here,” said John Devlin, lead analyst at IMS Research. “Here, I can walk into a branch very easily, drive to a cash machine, do Internet banking or telephone banking and mobile banking now, whereas if I’m in Northern Vietnam, for example, mobile may be my only means of access without traveling two hours to a bank. It just makes it more convenient.”

IMS Research has been tracking the growing trend towards mobile banking – what Devlin calls a “key addressable” at the moment. The technology has gotten a lot of attention from banks and operators as a way to increase quick usage of the phone in everyday situations, he said. Considering that the addressable market is anyone in any country with a bank account and a phone, the potential is attracting banks and carriers alike. This has been shown to be especially true in emerging markets, including parts of Asia and Africa, where banking penetration is much lower than in the US.

"Mobile is often a key access point for end users [in emerging markets],” Devlin said. “That is probably where the greatest traction is at the moment, driven by greatest necessity. People want access to financial services, and they do want to be able to transfer money either internationally or nationally, between friends and relatives. For that reason, the mobile penetration is far higher than other banks, and the presence is much greater."