Telecoms Seek to Unlock Financial Services for 1.7B Unbanked
The digital banking renaissance has laid out a golden opportunity for telecom companies. Although states have largely eased their pandemic restrictions, many habits consumers picked up in the past few years of the pandemic are here to stay, including digital banking. This unprecedented digital shift has brought many new players into a payments industry traditionally dominated by established financial institutions (FIs), such as banks and credit unions. One of the most intriguing new players is the telecommunications industry, which has taken the payments field by storm.
Telecom payments are particularly valuable for unbanked and underbanked households. Telecom companies have an immense accessibility advantage over banks, especially in rural and remote areas. According to the industry’s leading body, GSMA, today, 1.35 billion registered mobile money accounts are processing $1 trillion in transactions annually, or nearly $2 million every minute.
The “Telecommunications Payments Tracker®” examines the latest developments in the evolving telecom payments field and how these systems can help underbanked households attain payments and banking services.
Around the Telecommunications Payments Space
Telecom-enabled payments are growing popular in Nigeria, where they compete with commercial banks and FinTechs to wrest control of an increasingly digitally savvy market. Several major telecoms in the country have already secured banking licenses and are leveraging their existing assets to reach communities that have phone access but are traditionally underbanked.
Telecoms looking to enter the banking world must keep the massive quantities of customer data safe. The Singaporean government recently punished telecom MyRepublic for failing to do so after a data breach that resulted in 80,000 customer accounts being leaked. The fine clocked in at S$60,000 ($41,799) — a light penalty, considering the scale of the breach.
For more on these and other stories, visit the Tracker’s News and Trends section.
Telecom Providers on Leveraging Payments to Help the Underbanked
Underbanked individuals face vast institutional difficulties, especially considering their likelihood of being in dire financial straits. Expanding banking and payment services to these individuals will be crucial to bolstering their economic status, and telecoms are in a prime position to lend their aid.
In this month’s Insider POV, PYMNTS talked to executives from T-Mobile, Boost Mobile, Verizon and BEYON Money about how their payments programs help underbanked families worldwide.
How Telecoms Expand Digital Payments’ Reach
There are many reasons for households to remain unbanked, but financial difficulties are the most prominent factor. More than 60% of unbanked individuals said lack of money was a reason for not opening a financial account, and slightly less than 40% said that financial services are too expensive. Telecommunications payments can be a valuable tool for enabling financial access by linking directly to customers’ devices without requiring the go-between of an FI.
This month’s PYMNTS Intelligence explores how telecommunications-based banking reaches these households and improves their economic potential.
About the Tracker
The “Telecommunications Payments Tracker®,” a collaboration with i2c, examines the latest developments in the evolving telecom payments field and how these systems can help underbanked households attain payments and banking services.