In the global perspective, the trends in digital revolutions are increasing on a daily basis resulting in technologies that are making it possible to solve day-to-day challenges. Seemingly, the traditional banking system excludes many of the world’s poorest regions such as Sub Sahara Africa and South America among others. Hence, the traditional backing system makes it impossible for these people to take advantage of the financial services offered by banks making thus hindering financial growth. However, recent digital developments have played a large role in bridging the gap between financial institutions and unbanked consumers.
The global adaption of smartphones that is expected to even grow in the coming years, particularly in the emerging markets has created new opportunities for mobile financial services. Seemingly, from the current trends associated with smartphones development, and demand, it is evident that these opportunities will increase in the future as mobile phones adapt higher processing power, machine-learning chips, AI capabilities, and 5G Connectivity. Analyzing the case of M-Pesa digital financial services offered by Safaricom in Kenya, it becomes evident that the single contributor to the success of digital financial services is accessibility and spread of mobile phones.
Today, more than 3 billion people are active mobile subscribers which mean that financial institutions that were once inaccessible have a path to financially include the unbanked population. From the case of M-Pesa, it is evident that mobile money services play a major role in transforming the lives of people in emerging economies. Of importance, is that mobile money services introduce a high-volume, low margin business model that when implemented in a mass market approach expands the accessibility of financial services to the unbanked in emerging markets. Therefore, in the future the mobile phones will impact digital finance by:
Transforming the consumer experience
In emerging markets, cash money is still the dominant mode of payment. However, challenges associated with the use of physical cash such as security and problems in distribution had made people in these economies to embrace mobile financial services. Unlike, physical cash, a robust mobile financial system allows consumers to receive and make payments affordable, transparently, conveniently and safely thus transforming the consumer overall experience. The power of the mobile phone boom in the emerging markets has been immediate as the mobile phones have made it possible for everyone to access financial services. Hence, with growing numbers of mobile phone users, the future of digital finance is certain and banks, as well as other financial institutions, have to adapt fast to capture this opportunity.
The current trend in digital financial transactions is that mobile money services players are collaborating and inter-operating with broader mobile services ecosystems to give users the freedom of transacting with other customers using different mobile money schemes. Apparently, this trend is expected to develop more in the future because as people venture more into mobile financial services, the financial services will have to adapt to ensure that they provide the best services that satisfy the consumer needs. Today, the scenario is evident in Tanzania where inter-operating has increased the number of the potential market for mobile-based financial transactions by expanding the number of mobile money receivers and senders. Therefore, mobile phones will have a central role to play in future digital finance as changes in consumer experience will facilitate many people to use mobile money as their mode of payment.
The creation of a robust digital financial ecosystem
In the near future, mobile phones will play the central role in addressing pressing global developmental challenges. Seemingly, the solution of many developmental challenges, especially in developing economies revolves around expanding financial inclusion through mobile financial services. Analyzing the consumer behavior, it is evident that technology has always dictated how a consumer will bank, shop, communicate and live. Hence, the current advancement in digital technology has resulted in increased mobile connectivity, thus resulting in the success of mobile-based financial systems deployments in these economies.
However, there is still many people to reach meaning that mobile operators have a role to play to ensure that they continue investing in services and networks. Similarly, the government must adopt a landscape policy that promotes financial services as a strategy to foster great inclusion. In the future, the increased collaboration and innovation to expand the reach of mobile phones will greatly impact the strength of digital finance by promoting consumer experience of the digital financial ecosystem via mobile devices.
In conclusion, the impact of mobile phones in future digital finance will arise from the need of creating a financial inclusive ecosystem as a strategy to fight poverty, generate employment and boost economic growth in developing economies. Apparently, the increase in mobile phone users globally will play a role in making sure that financial services are available to unbanked consumers through mobile money. Therefore, mobile phones boost digital finance by increasing the customer base and increasing consumer experience as mobile money services are convenient and efficient and offer a safe and affordable form of sending and receiving money when compared to the traditional physical cash.