The Value and Opportunity of Mobile Money

(reprint of IQT Quarterly Winter 2011 article) .

There are five billion mobile phones in use around the world, providing unparalleled
access to communications and mobile applications. This is having a profound effect
on the lives of consumers, business infrastructure, and the way governments tackle
challenges. Specifically, mobile ubiquity has brought extraordinary communication
access to those that never had it before.

Now, a growing number of mobile money applications are expanding upon this and, in the process, changing the way traditional bank customers choose to be served, which opens up opportunities to reach an unprecedented number of new customers. With this new access come great opportunities and challenges. The challenges include ensuring security and risk management when offering financial services through these new channels and with this vastly expanded access. In addition, mobile money applications represent an opportunity for governments everywhere to improve financial efficiency and security. The vast majority of people worldwide are unbanked or under-served. In the U.S. alone there are over 40 million families who are underserved by traditional banking models.

Additionally, it is not just consumers that are underserved. The vast majority of sellers of goods and services accept payment by only cash and checks. According to studies from the Philadelphia Federal Reserve, 80 percent do not accept electronic payments today. Some predict recent legislation and economic conditions will mean that this number will increase in the coming years. At the same time, the number of mobile banking users around the world is expected to surge more than 16-fold to 894 million by 2015, according to Berg Insight, an industry research firm based in Stockholm. Clearly, this represents a fundamental shift in how people bank, send and receive money, and pay for goods and services.

What is Mobile Money?

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