Gates makes mobile banking bet

By 2030, two billion people who don't have a bank account today will be storing money and making payment with their mobile phones, predicts Bill Gates.

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Gates makes mobile banking bet

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

In their annual letter, Gates and his wife Melinda place mobile banking as one of their five "big bets" that will help transform the lives of the poor by 2030.

The poor have traditionally used financial services that are extremely inefficient, such as cash and commodities that lose value, says the letter. But the mobile revolution will give these people more control over their assets.

This is partly because while it has not been economically viable for banks to serve the poor, the ubiquity of mobile phones and the fact that the marginal cost of processing digital transactions is near zero is changing the game.

"By making small commissions on millions and millions of transactions, mobile money providers can make a profit serving poor customers, just as brick-and-mortar banks do serving the wealthy," say the Gates'.

And as basic services get going, there will be competitive innovation that will see greater access to savings, insurance and credit products.

The letter warns that to ensure that mobile banking succeeds work still needs to be done to improve access for women, to craft regulation that encourages innovation and to have networks of physical outlets for converting digital money into cash.

"But in the next 15 years, digital banking will give the poor more control over their assets and help them transform their lives."

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Comments: (4)

A Finextra member 

Pretty safe bet in some respects... Africa is already well on the way/showing the way.  I think the mobile phone thing will happen too in these timeframes. However will regular access be via phones - or the cloud, tablets and Biometrics. maybe  embedded RFID/NFC chips... or jewellery.  15 years is a long time..  Sony released the PS2 in 2000.... consoles have moved on a bit since then!  

A Finextra member 

This is not new news. Mr Gates delivered much of this same thesis at Sibos 2014 in Boston this past year.  Mobility is transformative, giving access to billions. But what it will look like in 15 years, is anybody's guess.

Christopher Williams

Christopher Williams Chairman at RTpay

I have long believed that mobile payments are the answer for any developing country, partly to encourage small business development and cost-effective money transfers, but also to assist in moving the whole payments structure to an auditable, electronic format. That has the important additional benefit of greatly reducing the very high tax evasion which occurs in many such countries - including quite a lot of EU countries as well.

The question i would raise is whether the traditional banks can, or should, provide the basis for such services - my general feeling is they will normally not be the best, or most efficient, solution. Without my trying to be alarmist, I do think there are still many risks for banks in the market - the recent Greek election may have repercussions on banking credit, for instance - so i would favor a government involvement in any solution, but hopefully with technology partners to assist in delivering a reliable payment solution for all.  

 

Whether the optimum answer is for the governments to act as the secure banking provider or whether new technology companies can manage this better, that is the key.    

A Finextra member 

So sad that what Gates and other late-to-the-party) mobile banking sycophants fail to realize is that the technology alone does little if anything to improve the financial lives of low-income consumers. The key is incorporating trusted, local non-bank businesses to act as critical customer cash-in/cash-out interfaces for mobile financial service schemes. Also the word "banking" has little allure for these consumers. They want to perform transactions and protect their money, NOT have relationships with institutions that have shunned them for generations.  

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