How Kenya Has Emerged as a Mobile Banking Leader – And Why it Matters (Part 2)

For U.S banks, the similar domestic market and competitive dynamics introduced in part 1 point to continued, increasing expansion of mobile payments in new and existing customer segments, as well as in specific types of payments volume.


First, again referencing MasterCard’s study and examining the findings specific to the U.S. reveals considerable customer expansion potential among those familiar or willing to adopt mobile payments who are not actively using: 

US Consumer Sentiment Mobile

Further, Pew Research Center finds that cellphone ownership, an obvious prerequisite for mobile payments adoption, is now nearly ubiquitous in the United States…

Cell Phone Ownership

Source: Pew Research Center’s Internet and American Life Project

…and that web enabled smartphones are quickly replacing those with only telephony/SMS capabilities:

Smart Phone Ownership

While perhaps unsurprising, these findings are particularly relevant as the Federal Reserve found in its March 2013 “Consumers and Mobile Financial Services” study that 48% of smartphone owners used mobile banking in the previous 12 months; this is a 14% year over year increase from the 2011 measure and contrasts with the aggregate consumer sentiment found in MasterCard’s study.  Though not an entirely like comparison as mobile banking includes simple balance inquiries, coupled with the phone ownership trends highlighted in the Pew study the marked increased propensity for mobile usage amongst smartphone owners forecasts large, fast expansion.  Indeed, the Federal Reserve study found Mobile POS transactions recorded a threefold increase from 2011.

Further, while the average American customer draws a stark contrast with the average Kenyan, the challenge of penetration amongst a large un/underbanked population is most apt; a categorization estimated by the FDIC at approximately 50 million in 2011.  And as noted in the Federal Reserve study, this group actually has a higher propensity for mobile ownership and activity:

–          90% of Underbanked consumers own mobile phones; 56% of these are smartphones

–          49% had used mobile banking in the preceding 12 months; this marks a 29% increase in mobile banking from 2011

–          59% of Unbanked individuals own mobile phones; half of these are smartphones

Also notable are the demographic characteristics of the underbanked; as reported in American Banker, the average income amongst underbanked smartphone owners was $52,000, and they skew young (36% 18-24).  Again referencing Pew Research, these findings are interesting given smartphone ownership sensitivity to age and income:

Smart Phone Ownership Age Income

Additionally, underbanked individuals are twice as likely to send wires and three times as likely to send remittances as the average consumer.  This is particularly timely given the current political climate regarding immigration reform, which could cause a marked increase in unbanked consumers, particularly those with a propensity for P2P transfers or remittances. Part 3 will overview and contrast the regulatory and provider market and infrastructure environments between the U.S. and Kenya.

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