How Financial Technology is Impacting Emerging Markets
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How Financial Technology is Impacting Emerging Markets

How fintech is bringing new forms of banking to emerging markets worldwide.

For many of us, the advent of mobile technology has profoundly changed our lives. It has rewired the way we socialize, shop, and do business. But in other parts of the world, especially in emerging markets, people are just starting to feel the ripple effects.

Sub-Saharan Africa is a prime example of this major shift. As projected by GSMA Intelligence, there will be 525 million smartphone users by 2020, up from 72 million in 2013. Data activity is also expected to grow by 20 times during that span. The substantial adoption in mobile platform technology will result in higher employment opportunities and domestic revenues for several countries.


Certainly, much of this movement is bred out of necessity. If you’re in Africa, with a dearth of actual banks across the continent, you’ll need to gain access by other means. Mobile appears to be the best way to connect with people who are remote and don’t have access to a physical location.

Mobile Banking in the Developing World

Where location and convenience were once major limiting factors, users in Africa can now receive services at the touch of a device. "There are no ATMs and branches, and the cost to put in that kind of infrastructure is quite challenging,” says John Owens, senior policy advisor at Alliance for Financial Inclusion. “Mobile gets around that. Electronic money is an important channel and opportunity for basic transfers and payments.

The good news is that customers in these territories are willing and open to adopting new technology and innovation. Already, there is news in Uganda that Barclays is partnering with the UN to distribute salary payments through mobile. In Kenya, there is the case study of M-Pesa, a mobile micro-financing service that opened 7 million new accounts in less than a year. It is perhaps the greatest success story of financial services in the developing world.

Meanwhile, in places like Brazil, the mobile market is large and still growing—at an annual rate of about 22% every year. More than a third of all mobile users in Latin America and the Caribbean reside in Brazil. According to the most recent MEF Global Consumer Survey, the number of Brazilians making any kind of purchase with a mobile phone jumped from 49% in 2013 to 61% in 2014. This was the highest growth recorded among all the countries in the survey.

Even with the saturation of mobile users, the number of mobile transactions remains relatively low. That will soon change. Already there are reports of several initiatives between Brazilian mobile networks and financial institutions to target segments of the population without bank accounts. Further research indicates that more than half of smartphone owners in Brazil regularly access their bank accounts from their devices.

This points to great potential for financial service providers to capture a big segment of the emerging markets. As smartphone users increase around the world, web banking services will be more crucial and needed than ever. Financial institutions will have to empower the customer through innovative online services and self-service capabilities. They will need to implement a mobile financial services strategy that can meet immediate customer needs while providing flexibility for a long-term digital experience.

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Originally published
March 3, 2016
 last updated
December 17, 2021
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