New research highlights an increasingly “banked” world

Billions of people, primarily in developing countries, have historically had neither bank accounts nor access to electronic payments.  When saving and making payments, they have had to rely on cash.

This is rapidly changing.  According to the recently-released World Bank Global Findex, in 2014, 62 per cent of the adults worldwide had a formal account with a financial institution or mobile money service – a dramatic increase from 51 per cent in 2011.

This upswing in financial inclusion has been facilitated by a growing middle class in many developing countries and easily available technology, in particular the mobile phone.  However this growth has taken a different path in different regions.

Some of this growth has been through mobile money in sub-Saharan Africa.  Most notable has been the much-lauded M-Pesa in Kenya, which relies on SMS messaging and agents to enable domestic money transfer.  As a result of M-Pesa and its imitators and competitors, today in Sub-Saharan Africa, 12 per cent of adults (64 million adults) have mobile money accounts.

Mobile money has also been successful in other places, for example Cambodia.  In 2014, 13 per cent of Cambodian adults have a mobile money account.  Mobile services such as Wing, originally launched by ANZ in Cambodia in 2009, have proven highly successful in supporting money transfers.  Recently Wing gained a specialised banking license.

However, Cambodia has been somewhat of a special case in our region.  While mobile money accounts are also used in countries such as Singapore and Malaysia, the usage rates in South and East Asia are very modest when compared to those found in sub-Saharan Africa.

The bigger story throughout Asia has been the growth in accounts with financial institutions – particularly in places such as China, India and Indonesia – which record growth rates well above the global average.

Percentage of population over age of 15 with an account with a financial institution

Source: World Bank Global Findex

While not downplaying the significance of M-Pesa and the African mobile money revolution, a quiet but potentially more profound revolution has been happening on our doorstep.  Over the past few years, hundreds of millions of people in Asia have taken up a formal bank account and the ability to make electronic payments for the first time.

The “banked-unbanked” gap between developed countries, such as Australia, and our near neighbours in Asia is rapidly closing.  What this will mean for the global payments market is difficult to predict.  However, a “banked Asia” will bring both challenges, and opportunities, for the years ahead.