This week, the World Economic Forum comes to Latin America. From financial innovation to women’s empowerment to reducing poverty, the ambitious agenda looks to set the region on a course to deliver economic growth, poverty alleviation and more.
While it might not be explicitly mentioned in the agenda points, I hope mobile money comes up – and often.
For the past few years, mobile money technology has advanced rapidly to create solutions for the unbanked. However, in Latin America, all too often there have been excuses why the region’s unbanked could not or would not be able to enjoy the same services.
It has been argued that traditional banking was just too strong in Latin America. There are already so many traditional financial services offered at kiosks and small shops so mobile financial services weren’t necessary. We have been working closely with them to find ways to integrate new mobile money technology for the benefit of consumers.
Some have thought that regulators have been slow to adapt and others have accused mobile operators of being unwilling to invest in providing the new technology to Latin American markets.
It is time to move ahead and work together – operators, financial organisations, NGOs and governments – to make the mobile money revolution happen for Latin America. It is already happening in some countries and the lessons learned in those markets can be used to drive the revolution across Latin America.
According to the GSMA, mobile money accounts grew by 50% in Latin America in 2014 alone. This presents a huge opportunity. And mobile money can play a pivotal role in addressing many of the challenges the meeting participants will discuss, including:
- Inclusive growth: over half of Latin Americans have no bank account. With mobile phone ownership on the rise, mobile financial services can bring these underserved populations back into the formal economy, so we can start to focus on closing the gap between the haves and have-nots. A recent Institute for Money, technology and financial inclusion study in Bolivia showed that Mobile Financial Services led to an increase in nutrition, more education and increased investment opportunities for those who participated.
- Gender parity: mobile financial services have empowered women worldwide to save, run small businesses and achieve financial independence.
- Growing local SMEs: small entrepreneurs in more remote areas can access financial services even if they are not close to a traditional bricks and mortar bank. Their formal admission into the financial system increases security and stability.
- Revolutionising basic service delivery: In Guatemala, we’ve partnered with Oxfam to get aid money directly to earthquake victims. More and more Latin American governments are seeing the power of mobile to deliver critical government services to their citizens efficiently.
- Increasing transparency and reducing corruption: In the Democratic Republic of Congo, we’ve worked with the government to use mobile money to pay civil servants directly, reducing corruption by cutting out middle men. These transactions are traceable and transparent.
- Redesigning cities for resilience: From allowing passengers to pay for bus fares with their mobiles to reducing crime with a cashless society – mobile financial services can play a major part in designing Latin America’s smart cities.
- Financial innovation: Mobile phones provide a new platform and increased flexibility for reaching new populations with more sophisticated financial services. For example, in Paraguay we partner with Swedish insurer Bima to offer micro insurance to over 80,000 customers, many of whom have not previously been able to access such policies.
It is time for Latin America to catch up. We see a huge demand from consumers and small businesses for mobile financial services. It is time to consider the transformative power of these pioneering financial innovations for the region’s populations – particularly the unbanked, small businesses and women.
It’s time that we nurture the early success we see in Latin America and support its growth. These initiatives benefit all parts of the economy, financial institutions have more access to cash previously stored, the financially excluded play a more inclusive role in society, businesses are able to reach more customers, innovative services are created, the digital cash-less society brings greater security and growth benefits to everyone.
The World Economic Forum on Latin America 2015 takes place in Riviera Maya, Mexico, from 6-8 May.
Author: Greg Reeve, Chief Operating Officer, Mobile Financial Services at Millicom
Image: A woman talks on the phone in front of a closed mall in Caracas, Venezuela. September 12, 2009. REUTERS/Jorge Silva