Cell phones and the banking industry
70% of the population of Brazil, Russia, India and China have no bank account. But how many have cell phones (it is estimated that there are nearly one billion people in all emerging markets)? That’s why investors put eyes on mobile payments. Last week, Actis bought chipmaker MSCC egipicia to dig deep in the activity.
Arthur D. Little predicts that the mobile payments market will be worth 60,000 million for 2015. Anticipates that within five years, the number of people who serve the mobile banking will rise from 32 million today to 290 million. That means there will be more than a million new users per week.
Ambitious goal, no doubt, but mobile payments are a solid foundation.
First, as suggested above, this should allow banks to reach new consumers. The insertion of mobile phones is improving access in Mexico and emerging countries. Thus it is possible that nearly 40% of the population has telephones, but still without access to the bank.
Second, banks can expand very economically. As noted by the FT editor, Sharlene Goff, a few weeks ago, banks can reduce up to 50% of their costs if [for their operations] are based on devices, rather than branches.
Third, can lead to banks to reduce fees and so make the accounts more attractive to consumers who have low incomes and resources. For example, in Mexico, where average annual real return on savings banks is 3.5% for the savings of individuals and 2.8% for commercial, according to the Center for Financial Inclusion.
The most important parts of the report by Arthur D. Little urge those who wish to be competitive in the future to invest now in the local structure of the BRICs. But doing so will require patience: there are many controls, because it lacks the technological and social structure. For if, in India the government has a plan UID, highly ambitious, aiming for every Indian has a personal identification, but is still in the early stages.
However, more and more people in emerging markets is able to decide that the best place for their savings under the mattress is not.