For the past few years, the explosive growth of mobile financial services (which includes mobile banking, mobile payments and mobile money transfers) in Kenya and other countries in Sub-Saharan Africa has indicated that the future of banking on the continent will be through mobile phone accounts rather than brick and mortar locations.  New analysis by Frost & Sullivan into the mobile money market in Sub-Saharan Africa further confirms these predictions.

According to Frost & Sullivan, mobile money is becoming “one of the most exciting areas in mobile communications and is quickly transforming the way in which consumers and enterprises transact.”  Already worth $655.8 million in 2014, the mobile money market in Sub-Saharan Africa is projected to grow to $1.3 billion by 2019.  Ongoing issues with poor infrastructure, a widely dispersed client base, high transaction costs, and related obstacles all contribute to why the inaccessibility of traditional banking facilities will be one of the key drivers of this growth.  In turn, competitive innovations in financial services delivery and growing adoption of mobile money also will be key market drivers.

Companies seeking to put themselves at a competitive advantage would do well to address key market restraints such as restrictions on interoperability and cross-border transactions, inadequate mobile infrastructure and security concerns.  (Governments have a role to play by ensuring that domestic financial regulations as well as regional cooperative agreements enable the adoption of mobile financial services.)  Companies also should explore the wide range of potential applications for mobile money.  Present applications already include utility payments, payment of government employees, public transport and banking and telecoms services but emerging applications include air travel purchases, fuel and tax payments, and insurance claims systems.

Finally, it must be noted that adoption of mobile financial services is a clear example of how business can accrue development dividends.  In its 2015 Annual Letter, the Bill & Melinda Gates Foundation identified mobile banking as one of four breakthroughs that will radically transform the lives of the poor in developing countries.  The Foundation estimates that, in the next 15 years, “2 billion people who don’t have a bank account today will be storing money and making payment with their phones” and that “providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.”