LONDON—What factors will affect global mobile money in 2020?
One analysis suggests there are at least six factors to be looking for this year. According to WorldRemit, a U.K.-based fintech, those factors include:
- Device usage in the developing world will continue to grow, driving access to finance for millions.
- Greater financial inclusion: More people will discover ways to use devices to manage their financial affairs and will leapfrog straight from unbanked to taking part in the digital economy, without ever having a bricks and mortar bank account
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- Opportunities in the developing world are based on young populations, growing mobile phone usage and poor existing domestic banking services
- Of the 710 million people expected to subscribe to mobile services for the first time over the next seven years, half will come from Asia Pacific and half from Sub-Saharan Africa
- Around a third of Brazilians don’t have bank accounts, because the services are too expensive, branches are too far away, or they don’t trust the institutions
- Diversification of services: As scale of use grows, and digital networks spread throughout developing world countries, it will become commercial for fintech companies to offer a greater variety of digital banking services
- Domestic players in Southern hemisphere nations will strengthen further, expanding the ranks of fintech leaders beyond the usual suspects. “Whether it’s Tencent’s WeBank, the Chinese private direct bank with a $21.5 billion deposit base at the end of 2018, Brazilian digital bank Nubank, which reached 15 million customers in October, or Nigerian digital payments company Interswitch, which became Africa’s second unicorn in November, fintech is spreading throughout Southern hemisphere nations,” the analysis suggests.
- Continued investment in new developing world infrastructure. The growing visibility of the opportunity will drive investment, e.g. a mooted Interswitch IPO, and by longer-term initiatives such as China’s Belt and Road initiative
- More true innovation outside the U.S. Talent will pool in new places and gain confidence and access to funds for R&D, according to the analysis.
- The FAANGs (Facebook, Amazon, Apple, Netflix and Google) and legacy financial services companies will start to partner more with specialist players to expand into new services, especially beyond the developed world markets.
The analysis noted that in April of 2019 Mastercard invested $56 million in Africa-focused e-commerce start-up Jumia ahead of its New York Stock Exchange IPO, and further Mastercard collaborations with African fintechs Zazu, uKheshe and Kasha followed in November and December and with mobile operators Vodacom and Airtel in July and October.
In addition, in June, 2019, Facebook formally announced plans for Libra, Facebook’s own cryptocurrency, to a highly mixed reception, attracting criticism from governments and central banks, while in August, Apple made its Apple card available in the U.S. It is expected Apple will eventually offer the card to its 1.3 billion active users.
- More regulation of Big Tech in finance. New moves could be held back by regulators concerned for ways in which global technology companies could interfere with the operation of governments and threaten the rights and freedoms of the customer, the analysis suggests.
- Smaller players moving in to take advantage. Nimbler companies could exploit opportunities the FAANGs might now be too big and well-known to seize without serious reputational damage at home.
- Partnership between large global technology companies and legacy banking companies on the one hand and digital specialists on the other. This approach to launching additional services will be less problematic culturally than acquisitions and can drive innovation faster than organic launches.
Across our network we see trends that all point to the growing importance of the global South in the mobile money market,” said Tamer El-Emary, chief commercial officer at WorldRemit. “Increased device penetration has driven huge change already, but with much more still to come.”