The Rise of Mobile Money: Enabling Children and Youth’s Access to Financial Services

This blog post was written by Opelo Matome, Network Advisory Services Intern.

As a follow-up to the previous post on the challenges and opportunities of FinTech, CYFI has recently taken stock of the latest trends and figures of the mobile money industry, highlighting the progress in the developing world and offering a set of recommended practices to help children and young people access mobile financial services easier and safer.

Mobile money and young people

We live in a digital age, where we constantly seek and consume information with just the click of a button or the tap of a screen. This digital revolution means that the production and use of cellular phones and other mobile devices is steadily sweeping its way across the globe. Herein lies a unique opportunity for people, especially young people, to use technologies such as smartphones to find and create solutions to challenges around access and use of appropriate financial products and services.

Mobile technology is particularly important when considering financial inclusion of children and young people. Two-thirds of the world's population has a mobile subscription; this fraction is projected to increase to three-quarters by 2020, with regional penetration rates ranging from 50% in Sub-Saharan Africa to 87% in Europe. Perhaps even more interesting is the fact that mobile phone penetration rates in developing countries are higher among youth (15-24yo) compared to rates among those who are 25 or older. This is why it is particularly important to engage this demographic and tailor FinTech and mobile banking solutions towards their specific needs.

The rise of global investment in FinTech suggests that the industry is expected to grow, thus has the potential to make a significant social impact. Furthermore, as smartphone usage and smartphone penetration increases, so does the opportunity to offer more complex FinTech solutions to the socio-economic challenges such as financial inclusion. This means that the market for mobile money and mobile banking technologies in the developing world is expanding, presenting a unique opportunity for financial service providers (FSPs) to develop youth friendly savings products and other financial services using mobile applications.

The future of mobile money

So, what about smartphones? Having a cellphone allows you to access basic mobile banking and mobile payment tools, tools that have previously been very successful in increasing access and use of banking products and services. However, smartphones open up a plethora of new opportunities, mainly the use of applications with multiple features and functions.

According to the Groupe Spéciale Mobile Association (GSMA), leaders in research in the mobile telecommunications industry, smartphones account for over half the world's mobile connections. In 2016, smartphone penetration was 65% in MEDC countries. By 2020, the developing world is expected to add 1.6 billion smartphone connections to the mobile eco-system, and smartphone adoption is expected to increase to 62%, with China, India and Indonesia leading the pack. In the next two years, Smartphone adoption in Latin America and MENA is expected to reach 70% and 62%, respectively. We see a similar upward trend in Sub-Saharan Africa, especially amongst young people. Currently, 41% of 18-34 year olds in Sub-Saharan Africa own a smart phone, with "Younger, Educated and English Speaking Africans" noted as most likely to own a smartphone. Furthermore, in a recent report, McKinsey Global Institute projects that smartphone penetration in Sub-Saharan Africa will reach 50% by 2020.[1] In South-East Asia, technology is already being used as a way to facilitate mobile banking activities with between 70% and 76% of millennials in Thailand, Singapore and Malaysia receiving some form of their pay via an app or functionality on their mobile phone.

Many have already been quick to catch onto this trend, with startups from Australia to London to Kenya creating smartphone applications that teach financial education and promote financial inclusion for children and youth. Other studies have shown that texted reminders increased savings in Bolivia, Peru, and the Philippines by up to 16 percent.

Making mobile services accessible

Even though a range of mobile financial services are available, practitioners and service providers canhelp young people to more easily meet the requirements for accessing financial services; ensure a client-centered needs-based design of the financial service; encourage consumer confidence in product usage through education; reduce physical safety risks for youth taking into account quality, accessibility and stability of services. Furthermore, using an already established network of mobile banking agents e.g. small kiosks, grocery stores, pharmacies and post offices can help increase young people's access to money and savings.


[1] McKinsey Global Institute. (2016) "Lions on the Move."

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