Technologists at leading digital money transfer company WorldRemit have pooled their insights into factors that will affect global mobile money in 2020, to offer the following predictions:
1. Device usage in the developing world will continue to grow, driving access to finance for millions.
- Opportunities in the developing world are based on young populations, growing mobile phone usage and poor existing domestic banking services.
- Of the 710 million people expected to subscribe to mobile services for the first time over the next seven years, half will come from Asia Pacific and half from Sub-Saharan Africa (GSMA Intelligence: The Mobile Economy 2019).
- Around a third of Brazilians don’t have bank accounts, because the services are too expensive, branches are too far away, or they don’t trust the institutions (Global Findex Database: The Unbanked 2017).
In 2020, we could see:
- Greater financial inclusion. More people will discover ways to use devices to manage their financial affairs and will leapfrog straight from unbanked to taking part in the digital economy, without ever having a bricks and mortar bank account. Payments
- Diversification of services. As scale of use grows, and digital networks spread throughout developing world countries, it will become commercial for fintech companies to offer a greater variety of digital banking services.
2. Domestic players in Southern hemisphere nations will strengthen further, expanding the ranks of fintech leaders beyond the usual suspects.
In 2019 we continued to see the emergence of major fintech players beyond the traditional developed world:
- Whether it’s Tencent’s WeBank, the Chinese private direct bank with a $21.5 billion deposit base at the end of 2018, Brazilian digital bank Nubank, which reached 15 million customers in October, or Nigerian digital payments company Interswitch, which became Africa’s second unicorn in November, fintech is spreading throughout Southern hemisphere nations.
In 2020, we could see:
- Continued investment in new developing world infrastructure. The growing visibility of the opportunity will drive investment, e.g. a mooted Interswitch IPO, and by longer term initiatives such as China’s Belt and Road initiative.
- More true innovation outside the US. Talent will pool in new places and gains confidence and access to funds for R&D.
3. The FAANGs and legacy financial services companies will start to partner more with specialist players to expand into new services, especially beyond the developed world markets
In 2019 we saw some of the world’s largest technology companies and banking services providers make a push into mobile money in a bid to further monetise their existing customer relationships and trust:
- In April, Mastercard invested $56 million in Africa-focused e-commerce start-up Jumia ahead of its New York Stock Exchange IPO, and further Mastercard collaborations with African fintechs Zazu, uKheshe and Kasha followed in November and December and with mobile operators Vodacom and Airtel in July and October.
- In June, Facebook formally announced plans for Libra, Facebook’s own cryptocurrency, to a highly mixed reception, attracting criticism from governments and central banks.
- In August, Apple made its Apple card available, in the US for now, but with the potential for the company to make it more widely available, to more of its 1.3bn active users. This dwarfs the customer base of the largest bank in the world, Industrial and Commercial Bank of China, with its 567m personal customers.
- In November Visa paid $200 million for 20% of Interswitch.
In 2020 we could see:
- More regulation of Big Tech in finance. New moves could be held back by regulators concerned for ways in which global technology companies could interfere with the operation of governments and threaten the rights and freedoms of the customer.
- Smaller players moving in to take advantage. Nimbler companies could exploit opportunities the FAANGs might now be too big and well-known to seize without serious reputational damage at home.
- Partnership between large global technology companies and legacy banking companies on the one hand and digital specialists on the other. This approach to launching additional services will be less problematic culturally than acquisitions and can drive innovation faster than organic launches.
4. The flows of trade will shift and significant new corridors will emerge.
In 2019, economic and political borders were strengthened or disputed by many developed world nations and countries, but Africa was a bright spot for free trade:
- In May, US President Donald Trump banned US firms dealing with Chinese firms including global ICT solutions provider Huawei.
- In November, Apple complied with a new Russian law by describing the Crimean Peninsula territory annexed by Russia as part of Russia in its Maps and Weather apps for Russian users.
- 54 out of 55 African states signed up to the African Continental Free Trade Area (ACFTA), which encompasses 1.2 billion people and has an output of more than $3 trillion.
In 2020, we could see:
- Increased national investment in technology to secure Critical National Infrastructure. The Chinese Communist party has just ordered state offices to replace all foreign PCs and software. Whether third nations opt into US or Chinese ‘spheres of influence’ or attempt to make their own bespoke combinations secure, putting a secure national stamp on solutions will be the order of the day for many nations.
- More intra-regional migration. While borders in the Northern hemisphere have hardened to South-North immigration, flows of people within southern hemisphere regions continue and will grow. With ACFTA, the free movement of goods and services will be underpinned by freer movement of people and currencies.
- More ‘South-South’ commerce. Transsion (Chinese), Samsung (South Korean) and Huawei (Chinese) were the African smartphone market leaders in terms of shipments in Q2 2019. All are Android-based devices, rather than using Apple’s iOS operating system, and the newly launched Huawei Mate 30 contains no US parts. Next year trade will build further on the growing commercial links and technology infrastructure behind this and other South-South trading relationships.
Commenting, Tamer El-Emary, Chief Commercial Officer at WorldRemit, said:
“Across our network we see trends that all point to the growing importance of the global South in the mobile money market. Increased device penetration has driven huge change already, but with much more still to come. At WorldRemit we look forward to embracing further shifts in what we believe will be the year of the Southern hemisphere.”
