Despite a massive increase in migrants sending money home via digital transfers due to the COVID-19 pandemic, millions of their rural family members struggle to access mobile banking services which could help lift them out of poverty.
The President of the UN’s International Fund for Agricultural Development (IFAD) has called for urgent investments in digital infrastructure and mobile services in developing countries to ensure rural families are not left behind.
“Migrants have shown their continued commitment to their families and communities during the pandemic with more remittances transfers made digitally than ever before,” said Gilbert F. Houngbo, President of IFAD, speaking on the International Day of Family Remittances. “Unfortunately, families in rural and remote areas – where remittances are a true lifeline – the battle to access cash outlets or even more convenient alternatives such as mobile money accounts. Governments and the private sector need to urgently invest in rural digital infrastructure to address this.”
Mobile remittances increased by 65 percent last year, rising to US$12.7 billion. This change was driven by a switch from cash due to lockdowns that limited informal channels and social distancing rules for senders and recipients alike. In spite of the global economic recession due to the pandemic, migrants continued to send money home to their families, with remittances in 2020 reaching $540 billion – a drop of only 1.6 percent compared to the previous year.
However, in many countries, people living in remote rural areas have sparse local access to banking services or limited mobile connectivity. In addition, there is limited availability of agents offering mobile money services such as payouts in cash. Often mobile money service providers are only located in urban centers. This means millions of poor, rural people have to travel long distances to towns or cities, often at significant cost, to receive the cash sent digitally by their migrant family members.
Digital transfers are cheaper than traditional cash transfers, and mobile banking services also provide the opportunity for migrants and their families in their countries of origin to access useful and affordable financial products to better manage their finances, including savings, loans and insurance.
Across the globe, 200 million migrants regularly send money to their 800 million relatives. This plays a crucial role in their lives and livelihoods. Almost half of these families live in rural areas of developing countries, where poverty and hunger are highest. Families use the funds sent by migrant workers to cover basic household needs such as food, housing, school and medical bills, as well as to start small businesses. These resources can often transform both families and local communities.
“While the pandemic accelerated the adoption of digital transfers and mobile money accounts, it also highlighted pervasive gender inequality,” said Pedro de Vasconcelos, the head of IFAD’s Financing Facility for Remittances. “Research shows that women are 33 percent less likely than men to have a mobile money account. We must focus on closing the gap by addressing the barriers that prevent women from accessing and using mobile financial services.”
Mobile Money Transaction Values to Exceed $870 Billion in Emerging Markets by 2026, as the Payments-as a Platform Model Accelerates
A new study from Juniper Research has found that the total value of mobile money transactions in emerging markets will exceed $870 billion in 2026, up from $555 billion in 2021; respresenting growth of almost 60%. Mobile money in emerging markets includes microinsurance, microloans, microsavings and mobile money transfer.
This growth will be driven by the transition of mobile money vendors, such as M-PESA, to the PaaP (Payments-as-a-Platform) model. This model enables mobile money vendors to offer their users access to third-party services such as eCommerce; creating additional revenue streams. The research identified PaaP as critical to increasing revenue for mobile money vendors, as smartphone adoption and user expectations grow. The new research recommends that mobile money vendors focus on building their ecosystems now by agreeing merchant partnerships to correctly leverage this opportunity.
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Microloans Represent Fastest-growing Segment
The new research, Mobile Money in Emerging Markets: Segment Analysis, Vendor Strategies & Market Forecasts 2021-2026, found that microloans will be the fastest-growing segment within mobile money, with growth of over 180% over the next five years. The research identified microloans as a key way in which mobile money service providers can increase their revenue by delivering banking-like services.
Research co-author Damla Sat explained: “While microloans are, by their very nature, small-scale, they are growing rapidly in significance, by enabling users to access credit as financial inclusion rises. By offering these services to users, mobile money services can pre empt competition from banks, while increasing their average revenue per user; creating a virtuous circle.”
Africa & Middle East Leading Mobile Money Development
The research found that Africa and the Middle East will dominate mobile money transaction values over the next 5 years; accounting for 56% of the global emerging markets value by 2026. It recommends that vendors in Africa focus on expanding sophisticated mobile money services, such as microinsurance and microsavings, in order to best address this rapidly growing opportunity.
Kuda Microfinance Bank, Nigeria’s Neobank Hits 2 Million Customer Milestone
Just six months after celebrating a one million customer base, Nigeria’s leading Neobank, Kuda Microfinance Bank announced it has attained a 2 million customer milestone, even with the numerous reports that customers between 18 and 30 years of age are moving their savings to other banks because of Kuda Bank’s adherence to CBN’s cryptocurrency policy.
Founded by Babs Ogundeyi, Co-Founder & CEO, and Musty Mustapha, Co-Founder & CTO, Kuda has been on a consistent growth trajectory since 2020. Largely due to its aggressive marketing and improved overall offerings.
Speaking on the milestone, Bradley Want, Head of Growth & Analytics at Kuda said: “Nigerians seem to be more open to skipping the queues and the hassles that come with being at a physical bank. Everyone knows that it can be quite uncomfortable. We’re taking advantage of this positive change in perception by being where people are all the time and offering them the value they can’t ignore.”
He added that the digital-led bank was also recently in the news for winning the coveted ‘Neobank of the Year’ award at the 2021 BusinessDay BAFI (Banking and Financial Institutions) Awards.
According to him “Kuda picked up that prize just weeks after winning the ‘In-House Legal Team of the Year’ award at the 2021 ESQ Nigerian Legal Awards. The bank’s Head of Legal, Dolapo Akinola, also received an individual ‘40 Under 40’ honour at the same event.
On the back of these successes, Kuda has rolled out its independent Visa debit cards, both physical and virtual, with free delivery nationwide.”
Jack Dorsey’s Square Undergoes Name Change, Now Referred to as Block
Jack Dorsey, the co-founder of Twitter stepped down as the Twitter CEO only a few days ago, and a few days later announced a huge name change for Square. The company which is highly payment-focused will now be referred to as Block, which underlines Dorsey’s interest in the cryptocurrency scope.
Twitter Chief Technical Officer Parag Agrawal was called upon to take Dorsey’s place on the very popular social network, although Jack will remain on the Twitter board until at least the next shareholders’ meeting. There were speculations at the time of Dorsey’s resignation that he had prioritized Square over Twitter.
Jack Dorsey had been operating as the CEO of both Square and Twitter, and had been encouraged to step down from at least one of the companies.
Dorsey is a public supporter of bitcoin, as well as other cryptocurrencies. He recently announced a new business initiative for Square known as TBD5456697, in which the company will deliver decentralized financial services. After this, Jack’s decision to step down from Twitter makes sense given all the existing buzz around blockchain and cryptocurrency.
Square’s name change to Block is also quite logical, considering that the blockchain is the fundamental technology that will power some of Square – now Block’s – businesses. It’s not only the TBD, but also the crypto initiatives and Square payments.
In a press release, the company stated that the new name has a lot of associated meanings which include building blocks, a blockchain, neighbourhood blocks and their local businesses, communities coming together at block parties with music, a section of code and obstacles to overcome.
This name change is similar to what happened with Facebook and Meta, except this one does not come with any negative press. Facebook’s name change was announced by Mark Zuckerberg and others in the middle of a huge scandal concerning the ‘toxicity’ of the company.
However, just like Meta, Block will be a controlling entity over several other businesses. Block will oversee Square, Cash App, Tidal, and the new TBD54566975. There will be no organizational changes and the businesses will not lose their brands. Square’s payment services will still be offered, just like Facebook still exists as a social network.
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