How mobile banking is fueled by emerging markets

In these markets, the mobile phone may be the primary – and often only – access consumers have to the Internet. In addition, many of these consumers don’t have access to traditional banking institutions. Carriers in these areas primarily rely on pre-paid, pop-up mobile banking applications direct from the consumer’s bank account for money transferring, Devlin said. This is where companies like Amdocs find their sweet spot.

Amdocs works with emerging markets to actually use the mobile minutes themselves as currency. In markets such as Sri Lanka, parts of Africa and other low-GDP regions, the vendor’s network-based platform lets, for example, a worker in rural Liberia transfer $2 of airtime to his wife who is downtown. She can barter these minutes at the grocery store for $1.80 worth of goods or whatever exchange rate the carrier puts in place. Like writing a check in the US, that airtime actually has a value attached to it. Haim Kantor, vice president of sales and marketing for Amdocs, said the service was instituted to answer the question: How can carriers utilize the wallet share they have with their customers who make only $2 per day?

“If all they can get is the airtime, they won’t get the wallet share they can today,” Kantor said. “These are the companies we don’t talk to about video messaging. Necessity is the mother of all inventions, and the clear issue we see in countries like that – talking specifically about the emerging markets, the low GDP countries – is they have no banking systems.”

A system like this might not work in the US due to regulatory constraints, but Kantor can envision US mobile users converting mobile minutes into a song or ringtone or any purchase from the carrier itself that is directly tied to the mobile handset. According to Juniper Research, about 2.1 billion mobile subscribers will be opting to use this “pay-by-mobile” option for digital goods – ringtones and full tracks – downloaded to their handsets by 2013. “Essentially, if you have a handset, you can become a merchant,” Kantor said.

Taking a different approach to the unbanked population, AccountNow provides MasterCard and Visa prepaid accounts and other bank-like services to people who do not have established credit or traditional banking relationships. While it is focused on the US, many of its customers come from the emerging immigrant market. The company is looking to expand into Central America as well as into mobile banking, to serve its user base of unbanked citizens. The ability to transfer money mobile-to-mobile is of particular interest to this demographic as well, but founder and Chief Operating Officer Matt Montes expects this piece of the equation to still be years out.