Can Bank-led Models Really Deliver on the Promise of Mobile Money?

This note discusses whether banks can make profits while providing mobile-banking (m-banking) services for the mass market. The paper discusses the profitability of mobile network operators and challenges and opportunities for banks in the m-banking space.

Mobile money solutions are widely promoted as the answer to financial inclusion. Many banks across the globe have shown that they are serious about providing financial services for the poor. But banks in India continue to shy away from offering real m-banking services. Conclusions include:

• Banks that use mobile money and agent-based systems can benefit by decongesting banking halls, serving more customers with a range of savings, credit and insurance products;
• One of the keys to success of bank-led models will be to leverage the bank’s ability to offer credit;
• Banks can reduce risk through products like salary-based lending and longer term savings products linked to access to credit.

These products are aligned with the benefits and attributes of mobile phone and agent based systems, since they leverage the convenience and extended opening hours of local agents. They provide opportunities for banks to increase revenue streams, while decongesting banking halls.