# Mobile money could pave way for economic stability in emerging economies – but only if banks can collaborate on services
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-11-17
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: Boosting economic development with Mobile Payment Services
Meta Description: Discover how mobile money could lift communities out of poverty in emerging economies, based on research by LSE experts. Learn more now!
URL: https://financedigest.com/mobile-money-could-pave-way-for-economic-stability-in-emerging-economies-but-only-if-banks-can-collaborate-on-serviceshtml

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The rapid adoption of Mobile Payment Services, more commonly known as “mobile money”, across emerging economies could be the key to boosting macroeconomic development and lifting communities out of poverty.

These findings are part of a three-year study at the London School of Economics and Political Science (LSE), analysing the uptake and implementation of Mobile Payment Services offered by banking and telecommunication groups in emerging economies where access to traditional financial services is absent for much of the population.

The study is supported by LSE’s International Growth Centre, the Leverhume Trust and LSE’s Department of Management.

Professor Saul Estrin (LSE), who co-led the research with Dr. [Susanna Khavul](https://www.lse.ac.uk/management/people/emeriti-visiting-staff/skhavul) (San Jose State University/LSE) and Dr. [Adeline Pelletier](https://www.gold.ac.uk/institute-management-studies/staff/pelletier-adeline/) (Goldsmiths/LSE), says,

**“The historically perceived high risk and costs associated with offering financial [services to those in poverty means that many banks have failed to penetrate such markets](https://www.financedigest.com/nanotechnology-to-spell-the-growth-quotient-gq-of-drug-designing-services-market.html "Nanotechnology to spell the growth quotient (GQ) of Drug Designing Services Market"). This has created the [opportunity for telecommunications providers to offer mobile money](https://www.financedigest.com/with-the-end-of-easy-money-there-are-still-serious-opportunities-in-africa.html "With the end of ‘easy money’ there are still serious opportunities in Africa") services as an alternative. Our research showed that mobile payments can help to stimulate economic development by formalising transactions within informal economic structures, building virtual paperchains of [information exchange](https://www.financedigest.com/the-health-information-exchange-market-to-grow-on-a-satisfactory-note.html "The Health Information Exchange Market to grow on a satisfactory note") thus helping to generate trust between users.”**

However, despite its potential, the researchers note there are limits to how far this technology can go in [boosting economic](https://www.financedigest.com/king-charles-coronation-will-be-an-economic-boost-buckingham-palace-says.html "King Charles’ coronation will be an economic boost, Buckingham Palace says") development, as mobile money has traditionally been focused on providing payments and credit services. To ensure financial inclusion for individuals and businesses operating in such regions, and encourage [economic growth](https://www.financedigest.com/addressing-the-credit-gap-to-unlock-economic-growth-in-africa.html "Addressing the credit gap to unlock economic growth in Africa"), the ability to access savings and insurance products via mobile money services is vital.

The research concludes that such services should be generated through collaboration between Mobile Payment [Service providers](https://www.financedigest.com/tech-amigos-provides-unrivalled-aws-cloud-service-support-for-autorama-groups-leading-brand-vanarama-2.html "Tech Amigos provides unrivalled AWS cloud service support for Autorama Group’s leading brand, Vanarama"), banks, governments and other stakeholders.

To encourage this, greater [regulation of the industry](https://www.financedigest.com/strict-regulations-regarding-hygiene-at-industrial-workplaces-to-create-high-demand-for-industrial-dispensers-persistence-market-research.html "Strict Regulations Regarding Hygiene at Industrial Workplaces to Create High Demand for Industrial Dispensers: Persistence Market Research") is needed.

**Dr. Susanna Khavul** says,

“The regulation of mobile money is complex because it spans the intersection of the banking and [telecommunications industries](https://www.financedigest.com/structured-cabling-market-growth-of-it-telecommunication-industry-to-boost-market.html "Structured Cabling Market – Growth of IT & telecommunication industry to boost market"), each of which have vastly different regulatory regimes. The key is to find a [balance between consumer protection and financial innovation](https://www.financedigest.com/balancing-innovation-and-security-within-the-financial-services-industry.html "Balancing innovation and security within the financial services industry") – too much regulation may lead to onerous requirements which cannot be met by the large numbers of people previously excluded from the financial system and may restrict the reach of mobile money, particularly in remote areas.”

The findings of this study were discussed last month at the Mobile Money and Financial Development Conference, hosted by [researchers and the International Growth Centre](https://www.financedigest.com/britains-prince-charles-to-open-new-astrazeneca-research-centre.html "Britain’s Prince Charles to open new AstraZeneca research centre") at LSE.

Panels of experts from academia, government and a number of [global banks](https://www.financedigest.com/be-simple-in-bank-capital-bank-of-england-tells-global-regulators.html "Be simple in bank capital, Bank of England tells global regulators") and financial services providers considered the evolution of mobile money in emerging economies, and agreed upon several actions to encourage progression;

- Mobile money should be seen by service providers as a gateway for financial inclusion and an [integral tool for money management](https://www.financedigest.com/power-management-integrated-circuit-pmic-market-is-projected-to-grow-at-6-4-during-2021-2028.html "Power Management Integrated Circuit (PMIC) Market is projected to grow at 6.4% During 2021-2028"), and should be better positioned as such
- The [technology currently underpinning mobile](https://www.financedigest.com/the-cleanroom-technology-market-to-be-on-the-mobility-move.html "The Cleanroom Technology Market To Be On The Mobility Move") money is not sufficient on its own to bring about financial inclusion for users. Financial development in this area will depend on [carefully constructed](https://www.financedigest.com/the-animal-wound-care-market-to-be-constructively-capsized-by-the-digitization.html "The Animal Wound Care Market to be constructively capsized by the digitization") business processes and the creation of enabling regulatory environments
- Though mobile money does represent one of the biggest [opportunities for financial development](https://www.financedigest.com/fish-protein-market-exploring-future-growth-2021-2031-opportunities-development.html "Fish Protein Market Exploring Future Growth 2021-2031 | Opportunities & Development"), it needs the collaboration of the private sector, governments, and regulators to be effective

The summary of the conference can be viewed on the International Growth Centre’s [website](https://www.theigc.org/event/mobile-money-conference/).


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