The GSM Association representing the global telecom industry predicts the number of people using mobile phones for money transfers will grow exponentially in the next few years.
Mobile phone banking has a bright future and mobile operators also see that. And Kenya is one of the places where this is quite evident. The nation's biggest mobile phone provider, Safaricom, says the user base for its M-Pesa mobile money service has doubled in just one year.
Cellphone banking services represent only 4 percent of the company's annual revenues. But the opportunities for growth are enormous, according to Gavin Krugel at GSMA. "What we found is that by 2012 we are looking at a $5 billion industry specifically focused on the developing markets," he stated.
About 3.50 billion people, more than half of the world's population, have no access to banking services - but about one billion have mobile phones.
This is a case of technology catching up with demand, according to Aletha Ling, chief executive of Fundamo, the leading provider of mobile money software.
"This is one of the characteristics of emerging markets. Because there is such a lack of technology, it is possible to leapfrog earlier generations of technology and really launch on new technology platforms," she said.
Krugel predicts the potential of mobile money services to be as big as text messaging, but he says the budding industry faces a number of challenges. "This isn't a cut and paste product. This product, the ecosystem, is different per market, which is an immense challenge, specifically if you're a group like Vodafone or a group like MTN, which is present in tens of markets and you want to mass-deploy this. The second challenge is still financial regulations," he explained.
Operators and banks are still developing security protocols. For now, necessity is driving the market. That and the potential profits generated by providing access to financial services for people who previously had none.