5 Facts on the Unbanked and Mobile Technology

Being unbanked means not having a relationship with traditional financial institutions such as banks, instead relying exclusively on alternative financial services such as check cashers or, more recently, mobile money services. Being unbanked also means facing difficulties in investing and saving for a better life.

The growth of smartphone use around the world has defined the 21st century, to the extent that it appears to be outpacing the rate of financial account ownership in certain regions. Could this promising technology help improve financial inclusion around the world by meeting the unbanked where - and when - they are?

Learn about the unbanked but connected dilemma of the developing world in five eye-opening facts.

1. Smartphone ownership in sub-Saharan Africa is expected to rise to 67% by the end of the decade, while 50% of the region remained unbanked – without access to usable bank accounts – in 2021.

Of course, the situation differs within the region itself. Among, for example, the members of the Economic Community of West African States (ECOWAS), smartphone adoption is projected to grow from 54% in 2023 to 83% in 2030. 

Using the growing presence of smartphones around the world in order to promote financial account ownership in banking institutions could significantly advance financial inclusion for the better.

2. The number of adults saving formally has significantly increased thanks to mobile money fintech, both in developed and developing countries.

High-income countries saw an increase of 14% in formal savings in the last decade, whereas low-income countries saw an increase of 7%. 11% more sub-Saharan African adults in particular saved formally in 2021 compared to 2017, from 15% to 26%. 

Mobile technology continues to improve financial accessibility in the region through its convenience and its security.

3. Digitizing financial services can improve the accessibility of traditional financial institutions.

Thanks to the versatility of their platforms, mobile money services have improved people’s access to digital money across the world, but they are limited in what they endeavor to offer their clients. 

They often lack investment, loans or optimized savings opportunities, for instance. Digitizing the complete suite of banking services has the potential to not only increase the amount of people who own a financial account as part of their financial institution, but also the quality of their financial inclusion.

4. Without access to a bank account and the services and benefits it offers, accessing financial stability and wealth is challenging. 

The unbanked face challenges establishing credit, purchasing property and getting started with a business to only name a few instances. Their savings are limited, in addition to suffering from inflation when kept in cash or idly. 

In the world and within countries at different income levels, the poor are more likely to be unbanked. This means they face all these challenges in addition to already being financially constrained. 

5. Unbanked individuals do not participate in and do not benefit from the growth of the economy.

Relying on cash does more than hinder one’s savings: it also prevents the growth of the economy, with reduced tax revenue for public infrastructure and services for the population of a cash-based economy. 

In turn, the population is left to fend for themselves within an underfunded system.

Conclusion

It is more pressing than ever to address the problem of financial exclusion, especially as it relates to the populations of low-income countries. 

The solution to this puzzle could be found in the exponentially growing mobile finance sector. An alliance between young and promising financial technology and traditional financial institutions – between convenience and expertise – could be significant in the worldwide fight against financial exclusion.

Learn more about the “unbanked but connected” paradox and about our mission here at EZO. Subscribe to our newsletter to be the first in the know when we launch in your country.

‍

‍

Frequently Asked Questions

What Is the “Unbanked But Connected” Paradox?

Despite the widespread and growing availability of mobile technology, many in the developing world are still being excluded from the traditional financial system. Although mobile money services have proven themselves to be efficient in reaching the unbanked, the variety and quality of their services remain to be improved.

What Does Being Unbanked Mean?

The unbanked do not own a financial institution account, relying instead on cash transactions and alternative financial services. If some choose not to entertain a relationship with traditional financial institutions, others are unbanked because they are unable to access them. Being unbanked comes with many challenges.

How Can Mobile Technology Improve Financial Inclusion?

With a growing number of smartphone users around the world, mobile technology has the potential to reach the unbanked where they are, allowing them to easily access basic financial services at their fingertips.