Microfinance Focus, May 26, 2011: While in recent years mobile financial services have gained impetus as one of the key drivers of financial inclusion, relatively few people today in developing markets are using them, says the recently released Mobile Financial Services Development Report 2011.

Studying over 100 variables across 20 countries in Africa, Latin America and Asia, the report in its first edition highlights that only a few smaller countries have seen adoption of mobile financial services reach more than 10% of the adult population. Services deployed at scale in these countries are focused primarily on payments.

Released by World Economic Forum in collaboration with the Boston Consulting Group, the report intends to provide a tool for decision makers to achieve scale in mobile financial services by gauging challenges and opportunities of the sector.

Assessing factors responsible for initial adoption of mobile finance, the report identifies a sheer absence of alternatives rather than supportive institutional or market environments as the key driver. Among the countries which have relatively high level of adoption, very few are well positioned due underdeveloped institutional and market environments.

Philippines and Brazil top the list in terms of readiness due to fairly mature nature of mobile financial services deployment and extensive retail agent network respectively. A well-developed agent network appears to be a threshold requirement for achieving scale, the report says.  The government of Philippines has also played a supportive role by using mobile financial services to distribute social payments and collect taxes.

With a vast distribution network and service levels higher than that in any other country, the report findings claims Kenya to be the market leader in mobile financial services. The country has an enabling regulatory environment for the provision of mobile financial services and has relatively high availability of decision-making data to further catalyze its development. The report further highlights that once accustomed to its services, over 89 percent of M-PESA users, a Kenyan mobile money application, are using for saving purpose.

The report’s findings reveal that services like mobile savings, credit and micro-insurance are still in their early stage and require regulators, market and customers to work together to achieve scales.

Mobile Financial Services Development Report 2011