Published on : Jun 05, 2015
Earlier it was very tedious for consumers to transfer their money to their family members that lived in rural areas. This involved a major amount of transaction charges. However, with the advent of mobile banking this scenario is revolutionizing the banking in remote villages.
The transfer offices earlier worked at erratic hours and charged exorbitant fees. In many developing nations, a significant amount of residents don’t participate in the formal financial system. These residents don’t have any bank accounts, insurance, or credit cards. For example, in the sub-Saharan African region, around 34 per cent of adults have some kind of formal financial account, as per the World Bank’s Global Findex and the region of south Asia this figure is around 46 per cent. The numbers are further lower among the poorest residents.
According to the World Bank, by encouraging financial inclusion can help to boost economic growth, help shrink the yawning income gaps, and accelerate the entrepreneurial activity.
Nevertheless, the rise of mobile connectivity in several of these nations especially in main African nations due to the mobile phone ownership was able to reach 80 per cent and the digital financial services are turning out to be an increasingly popular approach to the issue of adding a broader range of consumers in the financial system.
The leading player in this movement is M-Pesa, which is a mobile money system that was launched in Kenya by the firm Vodafone in the year 2007. The success of this movement according to the system reports that around 20 million account holders were present in 10 different countries. This movement has paved the path for a new generation of startup companies.