Global Findex 2014: does access to mobile money = financial inclusion?

Written by Paul Newall

Last week, the World Bank released their Global Findex for 2014, a self-described “bonanza of data on financial inclusion.”[1] The Findex report offers impressive scope and depth of information, and interestingly chronicles the progress of financial inclusion on a global scale. Upon its release, the World Bank pointed to several key findings, highlighting the progress of financial inclusion since their last report in 2011. These points include:

  • The number of people worldwide having an account grew by 700 million between 2011 and 2014. 62 percent of the world’s adult population has an account; up from 51 percent in 2011. Three years ago, 2.5 billion adults were unbanked. Today, 2 billion adults remain without an account. This represents a 20 percent decrease.
  • While just 1 percent of adults globally say they use a mobile money account and nothing else, in Sub-Saharan Africa, 12 percent of adults (64 million adults) have mobile money accounts (compared to just 2 percent worldwide); 45 percent of them have only a mobile money account.
  • 28 percent of adults —1.2 billion adults—in developing countries report they would use their savings in case of an emergency. Yet 56 percent of these adults do not save at a financial institution.

A new aspect of the 2014 Findex was the specific reporting on mobile money accounts, where there was impressive growth, as noted above. The increase in mobile money accounts has positively impacted account penetration around the world, according to Findex. However, as the below image shows, there is much more work to be done.


A new aspect of the 2014 survey, Findex asked respondents about their use of specific mobile money services that are available in their country, such as M-Pesa, MTN Mobile Money, and Airtel Money. The survey defined a mobile money account as “services that can be used without an account at a financial institution” – those using a mobile money account linked to a financial institution are considered to have an account at a financial institution. In Sub-Saharan Africa, the survey found that about 12% of all adults reported having a mobile money account. Within that, about half reported only having a mobile money account. The details are provided in the below image.

However, this designation has brought up an interesting discussion in the Enclude office: Does ownership of a basic mobile money account mean that you’re ‘financially included’?2

An important designation when considering the above question, according to Enclude’s Global Lead on Digital Payments, Khurram Sikander, is the set-up of the mobile money ecosystem: “Is it bank-led, like India, or is it non-bank/third-party led, such as Kenya? While a mobile money account in a bank-led environment makes it easier for regulators to count it as an account in the formal financial system, the accounts or value in a non-bank led environment are hosted outside the formal financial system – even if they are backed in an escrow account at a bank. These clarifications are important as they fundamentally impact the mobile money account’s linkage to formal financial institutions.”

To be considered linked to formal financial services, customers need access to typical services: savings, credit, and insurance, among others. However, Mr. Sikander is highlighting the difference in product offerings from mobile money providers in the different environments. In markets where a customer is able to access some services on their mobile money account – money transfer, cash-in/cash-out, bill payments, using their m-wallet to top-up airtime, basic payments services – but are often precluded from more traditional financial products, such as savings and credit, it is hard to claim these accounts as part of the formal financial system.

On the other hand, products like M-Shwari, a savings product product offered by Safaricom’s M-Pesa and Commercial Bank of Africa to M-Pesa’s Mobile Money customers, can be considered access to the formal financial system. “According to the 2014 GSMA State of the Industry Report, there are approximately 28 million mobile money customers with access to insurance, savings, and credit products,” Mr. Sikander added, “that is maybe a better indicator of inclusion.”

From data compiled by GSMA in their 2014 report, we are able to assess the usage of mobile money products that are available globally. Of all the products used, 62.3% was use of m-wallet for airtime top-up, 25% was P2P transfer, and 8.9% was bill payment. In addition, by value, P2P transfers make up approximately 73% of the value passed through all mobile money products, followed by bill payment at 11.7%. While the numbers may have improved in the time since the analysis was conducted, the numbers still highlight the gaps between mobile money deployments and access to formal financial services.


Enclude’s Managing Director for Capacity Solutions, Roland Person, believes that increased amounts in mobile wallets cannot be seen as mission accomplished: “We recognize financial inclusion as the linking of populations to formal financial services. Mobile money is a suitable channel to reach the un(der)served, but it presently does not offer all the characteristics of full inclusion. That can only be done with linking the person with formal financial institutions and them being able to access the products/services that most benefit their day-to-day lives.”

In the future, perhaps mobile money deployments will expand to offer more formal services, services that we often equate to being offered by banks. However, until they do, mobile money should be seen as a rail to reach the underserved, not an end goal in financial inclusion.

[1] NB: all data and quotes from the below blog are taken from the World Bank’s Global Findex 2014, unless stated otherwise.


One thought on “Global Findex 2014: does access to mobile money = financial inclusion?

  1. Very interesting article Paul..infact I would flip this on its side, does having a bank account imply inclusion? Lets say for instance where an individual has a mobile money account through which they receive government subsidy/or cash4work, would we consider that person financial included even though he does not have a formal bank account…On the other end of the spectrum, what if someone has a bank account but receives not much through it or maybe only uses it as ameans to receive payments from customerswould we consider them included? Fundamentally financial inclusion tools continue to evolve and so whereas brick and morta bank branches represented formal in the past, in the future perhaps digital and mobile will represent formal – where formal here is a KYC’d account. Very eye opening statistics though I must say…

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s