Mobile financial services can spur financial inclusion: EY

NEW DELHI: There is an immense potential for financial inclusion especially among the rural population by harnessing mobile technology, observed an industry report released on Monday.

The EY report, titled ‘Decoding mobile financial services’, notes that while over 90% of the villages in India are still without a commercial bank branch, there are over 350 million rural mobile subscribers.

For financial institutions, this high number signifies potential access to a vast market which was hitherto out of reach due to high physical infrastructure costs and economic viability. Alternatively, for telcos, it acts as an additional revenue stream and can help the industry cross-sell services.

“The area of mobile financial services is at the tip of a digital iceberg. Given complementary competencies and infrastructure, they are well-positioned to collaborate, bring synergies and innovation to mobile financial services and meet changing customer demands,” Prashant Singhal from EY Global Telecommunications, said in a statement.

Interestingly, Indian telecom operators are well positioned to take forward the financial inclusion agenda with their wide reach and prior experience in mobile money services, which is easily complemented with existing political will to reach out to the unbanked population.

The report also notes that the m-commerce boom in India is another driver for MFS (mobile financial services) growth. It is expected that the m-commerce market in India is poised to grow by 55% from US$2 billion in 2015 to US$19 billion by 2019.

With the financially excluded population of 47% in India, 68.7% in Philippines and 61% in Colombia, the report says the opportunity for mobile based financial services is substantial. Given the mobile penetration in these regions – India (75%), Philippines (111%) and Colombia (113%), the mobile platform can be an enabler for driving financial inclusion.

Meanwhile, concerns of cyber security and identity and data security must also be addressed effectively to enable the growth of integrated mobile technologies.

“To this end, security measures such as tokenization and biometric authentication are likely to have a strong impact on the digital payment industry. Robust know-your-customer, anti-money laundering and transaction authentication procedures will remain a key focus to combat cyber threats,” Singhal added.