In the next 15 years, thanks to digital banking, people, including those currently unserved by traditional banks, will have more control over their money and other assets, leading to better lives.
By 2030, two billion people around the globe can store money and make purchases digitally with the use of mobile phones, according to the recently-issued Gates Annual Letter by Bill and Melinda Gates. By then, too, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.
The companies pioneering in mobile banking, it was explained, will find it profitable to serve the poor because the marginal cost of processing a digital transaction is close to zero.
“And because so many people in developing countries have mobile phones — more than 70 percent of adults in many countries are subscribers now — the volume of transactions can be very high,” the letter adds.
The volume in transactions – which can number in millions – will justify extending the service, even if commissions per transaction is marginal. “Once these services get going, then, there will be competitive innovation in offerings like special savings or credit plans related to farming or education.”
It was noted that at present, 2.5 billion adults do not have bank accounts because banks cannot be expected to set up branches in places where people borrow or save in small denominations.
The letter pointed out that financial services specifically for the poor usually takes the form of microcredit which is only one of the financial services the poor need and where interest tend to be relatively high.
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