Publisher: Berg Insight

Full Report Rate: from €1000

Publisher: http://www.berginsight.com/ShowReport.aspx?m_m=3&id=117

Executive summary

Mobile financial services are causing a significant transformation in the financial services,
payments and international remittance industries. The mobile phone is changing how
customers conduct their financial activities, leading to an extended reach and increased
operational efficiency among financial service providers in emerging markets. In the longer
term mobile money services are facilitating the increasing share of digital transactions in
emerging markets, where cash transactions still dominate. A growing share of international
remittances is being electronically disbursed into mobile money accounts. Mobile phones are
also being increasingly used to send remittances.

Berg Insight defines a mobile money subscriber as a person or business who has registered
for a mobile money account. Mobile money accounts comprise accounts from which
transactions such as person-to-person transfers or bill payments can be made using a mobile
phone. Berg Insight’s definition of a mobile money account does not encompass services
limited to information services and simple transactions such as airtime top-ups and transfers
between own accounts. It does not include services that use mobile operator billing as a
payment source.

Mobile money services are increasing the availability and access to financial services for
lower-income segments of the population, which previously has not been possible to serve
profitably. The mobile phone will be the first digital banking channel for a majority of the
unbanked populations in many emerging economies. The number of live mobile money
deployments has grown at an explosive rate over the past two years. Berg Insight’s in-depth
study of the industry indicates that there are currently around 300 mobile money deployments
live in emerging markets. Over half of these have been launched by mobile network operators
and third party service providers. The remaining deployments have been launched by
financial institutions.

The number of mobile money subscribers in emerging markets is forecasted to grow from
133 million users in 2010 at a compound annual growth rate (CAGR) of 40 percent to reach
709 million users in 2015. The total value of mobile money transactions will simultaneously
grow at a CAGR of 54 percent from US$ 25 billion in 2010 to US$ 215 billion in 2015. Asia-
Pacific is expected to become the most important regional market, accounting for more than
half of the total user base.

The global remittance market has grown rapidly over the past decade. In 2010 remittances
through formal channels amounted to US$ 440 billion, of which, developing countries
received an estimated US$ 325 billion. The vast majority of these transactions are still cashto-
cash transactions, but the share of digital transactions is steadily increasing. Driven by the
development of mobile money systems in emerging markets, Berg Insight estimates that
US$16 billion worth of international money transfers will be received with mobile phones in
2015. Similarly, US$ 5.5 billion worth of international remittances will be sent using mobile
phones in 2015.

International airtime transfer is a rapidly growing niche within the overall international value
transfer market. It is a low margin high volume business, with a small number of leading
service providers in the field. There are a large number of smaller vendors who have joined
the airtime transfer market more recently. Berg Insight estimates that the total value of
international airtime transfer will grow from US$ 130 million in 2010 at a compound a CAGR of
67 percent to reach US$ 1.67 billion in 2015.

Many new companies have entered the mobile money industry as technology vendors in the
past year, including the likes of Ericsson, SAP and Gemalto. The competitive landscape is
intense with around 70 vendors competing in the industry, of which many need to reach a
critical mass of deployments over the next two years in order to stay in business in the longer
term. Yet, the level of consolidation among technology vendors serving MNOs and third party
service providers is high, with around 75 percent of mobile money deployments running on
the platforms of five leading vendors. In contrast, the landscape among vendors providing
financial institutions is highly fragmented with no clear leaders.