When it comes to strengthening our financial security, Americans' relative wealth means more access to banking and the kinds of innovative technologies that put financial management and security at our fingertips. In the U.S. and much of Europe, smartphone use is becoming ubiquitous, and virtually every major bank offers app-based banking services.
Even in the U. S., however, access to basic banking services isn't as widespread as it may seem. One in 12 American households lacks any kind of deposit account, according to a recent report by the Federal Deposit Insurance Corporation. In much of the rest of the world, access to formal financial services of any kind is even harder to come by. An estimated 2.5 billion adults lack consistent, reliable financial services, according to data from the World Bank. For three out of four of the world's poorest individuals – those who live on less than $2 per day – access to basic financial tools is nearly non-existent. But there is hope.
A wide range of companies from established banking giants to innovative startups are developing mobile payment technologies that will revolutionize the way we manage and spend money. For example, MasterCard's Mobile Money Partnership Program is a partnership with mobile services providers Comviva, Sybase 365 and Utiba to enable unbanked and underbanked consumers to purchase goods and services via their mobile phones as well as transfer funds and pay bills. These innovations create opportunities to break down the barriers of time, distance and cost associated with delivering financial services to the poor.
Using these advancements to increase access for the poor is challenging, but the inroads are there. Mobile phone use in the developing world is on the rise, with more than 6 billion subscriptions worldwide and estimates that mobile phones could outnumber people worldwide (as is already the case in the U.S.) by as early as this year. The challenge arises in developing solutions that work for all users, not just those who can afford costlier smartphones.
There is a temptation among businesses to write off the low-income market as an unlikely source of revenue. But the four billion people at the "base of the economic pyramid" – people who earn less than $3,000 a year – comprise a consumer market worth $5 trillion, according to a report from the World Resources Institute. In addition to the financial opportunity, there are obvious societal benefits to expanding mobile payment technology to the underserved.
The World Bank notes that improving access to banking for the world's poorest could boost economic growth and opportunity. Empowering the poor to save and invest in themselves and others – through technology as simple as text- or Tweet-to-pay – will create opportunities to get people out of poverty. While putting a bank on every corner is unrealistic, mobile phones allow access to the same services bricks-and-mortar banks provide at a fraction of the cost and at a greater convenience to the consumer.
The mobile banking industry is ready for leadership on the issue, and indeed some of the biggest players in the industry are already working on the mobile wallet solutions that don't require users to have pre-existing banking services. Visa, for example, is working to provide prepaid accounts that are available directly on mobile phones.