The total value of mobile money transactions in emerging markets will reach $2trillion by 2027, an increase of over $500billion from 2023; according to a new study from Juniper Research.
Thirty-three per cent market growth will likely be driven by the transition to Payments-as-a-Platform (PaaP), a model enabling third parties to deliver products via mobile money apps. Juniper Research identified PaaP as driving mobile money development, by enabling greater access to users, without mobile money operators needing to develop additional services themselves. This also enables higher revenue for operators, whilst allowing them to meet increasingly sophisticated user demands.
Implementing a PaaP model means mobile money providers can reduce dependency on revenue stemming from customer fees, such as airtime top-ups and P2P transfers. Instead, these providers can gain additional revenue streams from businesses that wish to be featured on extensive service platforms, such as eCommerce platforms.
Juniper Research has also urged mobile money vendors to leverage data analytics to retain customers and fight off increasing levels of competition. It explained that gaining insight into customer behaviour and preferences enables vendors to vastly improve tailored services to their end users.
Combining data with third-party services via PaaP could enable a more personalised service; in turn, increasing customer satisfaction and revenue.
Mobile Financial Services in emerging markets
The research predicted that by 2027, there will be 411 million users of sophisticated Mobile Financial Services (MFS) within emerging markets. This 40 per cent increase is a result of providers offering a variety of services, including microloans and microinsurance, to satisfy growing user demand. The rising maturity of several mobile money markets, growing customer awareness and affluence of users have increased the importance of vendors providing sophisticated MFS; investing in technologies that facilitate it.
Cara Malone, a co-author of the report, explained: “Vendors must implement sophisticated MFS in an effective way, or they will lose ground to rising competition. This can be best achieved through new approaches, such as leveraging existing data that operators hold to enable alternative credit scoring, allowing much greater lending opportunities.”
The report also draws attention to the advancement in digital identity services’ leveraging of data, meaning alternative credit scoring solutions have grown in popularity in recent years. Alternative credit-scoring vendors employ dynamic and incremental data relating to customer transaction patterns and transaction information to assess the creditworthiness of unbanked and underbanked population segments. These kinds of developments are having a significant impact on improving financial inclusion, particularly in emerging markets.