Evaluating Mobile Money as a Tool of Financial Inclusion: A case study of Urban Youth

Abstract

With the help of mobile money, 700 million adults in the world became account holders between 2011 and 2014. The major question however is whether mobile money had the potential to extend full spectrum financial inclusion beyond the most commonly used services of airtime purchase, bill payment and airtime purchase. The survey was out with an aim of evaluating the success, failures and potential of mobile money as a tool of financial inclusion. The study used the cross-sectional design by assessing the current capacity of mobile money against the envisaged uses as a tool of mobile money in order to reveal its ability or inability of mobile money to extend its success to a broad range of financial services. The findings revealed that users would most prefer mobile based insurance services compared to mobile based savings or credit service. It was however found that the market has high belief in the scalability of mobile money into other services currently not offered. The key stumbling blocks existed in services that must be outsourced for example insurance and credit where unique partnership models between formal providers of these financial services and the MNOs needed to strike win-win partnerships. Secondly, even if mobile money‘s potential in extending outreach and simplifying complex processes that involve movement of money and data exchange was largely viewed to be eminent, the ultimate hurdles were identified within those processes that required human decision making and physical evidence or presence of the provider and consumer of the financial services. Such processes included the assessment of collateral, the assessment of creditworthiness and the recovery of credit facilities that go bad, risk assessment and processing of claims. The study did not exhaust questions regarding the role of financial literacy in affecting the potential uptake of the alternative mobile based financial services, effect of competition in the mobile money industry on uptake of the services and the impact of mobile money on conventional banking services uptake.