How Mobile Is Democratising Financial Services
Two billion people around the world are unbanked; excluded from the financial services system, from bank and savings accounts to credit cards and loans.
Access to financial services is not a human right. It is, however, an important step on the road out of poverty, towards creating sustainable financial freedom and achieving a standard of living that many in Western liberal democracies take for granted.
On the other hand, mobile access is far more common in developing regions, with mobile use in Africa, South East Asia and Latin America reaching American levels, according to recent research from Pew Global. Mobile access is making it easier for those without bank accounts to store and transfer money. In turn, this also makes it possible to obtain credit and start saving. Mobile banking also costs less, which means those who can’t afford high transfer fees and other charges are no longer getting priced out of the market.
Combining mobile access and financial services are unlocking the untold potential for billions of people around the world.
At the same time, this movement into the financial system is making it easier for companies and brands to provide products and services to those who were otherwise excluded from making purchasing choices. Let’s take a look how mobile financial services are disrupting the sector.
#1: A move to self-serve
In the UK, self-serve is forcing banks to downsize branch footprints. Although some in the FinTech and startup community see this as the beginning of the end of branch networks, the financial services sector is simply adjusting to changing trends. Digital means we need fewer branches, but they are still an essential element part of the retail landscape.
However, we also need to acknowledge that self-serve is often an easier option, either for those without the time to visit branches or a poor grasp of the language of the country they are in. Apps enable them to manage their money without needing to call customer service or meet with advisors in branches.
#2: Lower Costs
Mobile banking costs less for companies and consumers. It is possible to make transfers using the same technology we use to send a text. Financial providers can choose to pass these cost savings onto consumers. Whereas challengers, those without heavy cost burdens, are stealing market share and saving consumers a fortune.
Brands can learn from this model, especially if they want to access the same customer-base. From millennials to the formerly unbanked, there are increasingly creative ways to provide services that appeal to them and meet their needs. Low-cost mobile-orientated solutions are a gateway to other products and services you can sell at a higher price point.
#3: AI & Robo-Advisors
Younger consumers are more comfortable with the idea of an element of artificial intelligence, based on machine and deep learning programmes, providing financial advice. Several wealth management startups and more established players are introducing these solutions in pension and portfolio product ranges.
We aren’t at the point whereby a Droid Army will staff your nearest branch, but we are slowly moving towards more sophisticated automation in the financial services sector.
#4: Peer to Peer (P2P) Services
Some consider Uber and Airbnb the crowning achievement of the peer-to-peer ecosystem; also known as the “sharing economy.” However, sharing, particularly in the transport sector, has come under considerable fire in recent years. Although these companies come with impressive market values, they are unlikely to seriously damage the sectors they set out to overturn.
In many respects, we can say the same of P2P financial services. Banks and other lenders are always going to be the first option for many consumers. The beauty of P2P solutions is they provide an alternative for those who wouldn’t ordinarily have the option to borrow money, receive investment, or generate more from their savings.
From self-service to P2P lending, mobile banking is paving the way for billions around the world to access services that were unreachable only ten years ago. This represents a huge potential market for companies of all sizes, providing they carefully tailor solutions around the needs of this emerging market.
If you operate in the DACH region, our whitepaper on data breaches provides important insights for merchants and financial services firms. Download it here.