Mobile’s role in microfinancing appears to be growing, which isn’t particularly shocking. Mobile finance solutions are increasing in popularity due to the ability to perform banking actions with the mere touch or swipe of a smartphone, and many microfinance institutions have implemented m-banking platforms to reduce costs, improve customer service, and extend their reach in rural areas.
M-Banking Financial Service Options
Microfinance institutions offering m-banking provide services such as loan repayment, account balance checks, and voluntary savings deposits. Countries that already feature mobile money networks find m-banking provides microfinance clients with the flexibility they want to manage deposits and payments, resulting in money saved and improved financial security.
M-banking has also proved helpful to women in the developing world, as they frequently do not have formal bank accounts, and yet are often responsible for overseeing their families’ finances.
Inexpensive and Efficient
Limited capacity and costly operational expenses are among the issues plaguing many microfinance institutions. Mobile finance solves these issues by allowing for microfinance service offerings on a cheaper, more efficient scale. Additionally, MFIs act as agents for mobile network operators and banks. This subsequently allows microfinance institutions to educate themselves on mobile finance options, minus the outrageous investment costs.
Another benefit is the ability to take advantage of mobile phone penetration in the absence of an m-banking network. MFI clients can use their phones for non-cash purposes.
MFIs interested in using mobile banking options also do so with the intention of drastically improving operations by reducing service delivery costs and cross-selling their other products. This is designed to substantially increase efficiency.
The Future of African Economics
Financial technology, or ‘FinTech,’ could potentially revolutionize economic situations in many African countries. More than two-thirds of the population of sub-Saharan Africa owns cellphones, but only one-third has bank accounts. Cash is still the main currency, yet more and more startup companies are putting their marks on the financial landscape.
African FinTech companies include M-Pesa, the Kenyan money transfer system used all over Africa, as well as 22Seven, the Cape Town-based mobile app that links to user bank accounts and makes it easy to track spending, make investments, and create customized budget plans.
Nomanini is another option. The wireless device looks like a game console and links cloud service software so informal vendors can process transactions easily from any location. Zoona is yet another African financial service that transfers money via cell phones. Other financial tools and services include Cellulant and GetBucks.
The Bitcoin Element
Bitcoin is a form of mobile money featuring no tradable or inherent value and is therefore a welcome addition to Africa’s financial options. Currently BitX is more popular in Southeast Asia than Africa, but it’s entirely possible that it will catch on among African nations, especially given its African bank origins.
What does it all mean? Mobile money is a viable option applicable the world over. As long as mobile banking and financing options are safe and secure, their popularity is highly likely to increase.