By 2030, 2 billion people who don’t have a bank account today will be storing money and making payment with their phones.
This is according to the Co-founder of the Bill and Melinda Gates foundation, Bill Gates who also observed that by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.
According to Gates, the situation is that traditional banks cannot afford to serve the poor because of their costs. That’s why 2.5 billion adults don’t currently have a bank account. In villages where people borrow or save in tiny denominations, building and maintaining a bank branch just doesn’t make sense. And when most people think about financial services specifically for the poor, they think of microcredit, such as small loans to businesswomen in poor countries.
Indeed, small loans have helped millions of people, but loans are only one of the financial services the poor need, interest rates are relatively high, and these services have reached only a small fraction of the poorest.
The companies pioneering mobile banking find it profitable to serve the poor because the marginal cost of processing a digital transaction is near zero. And because so many people in developing countries have mobile phones — more than 70 percent of adults in many countries are subscribers now — the volume of transactions can be very high.
“By making small commissions on millions and millions of transactions, mobile money providers can make a profit serving poor customers, just as brick-and-mortar banks do serving the wealthy. Once these services get going, then there will be competitive innovation in offerings like special savings or credit plans related to farming or education,” said Gates.