Technology Inequality: Opportunities and Challenges for Mobile Financial Services

Abstract

Technology has been a pivotal and successful enabler of financial inclusion. However, even with each technical evolution, sets of technical, cost, competition, capacity and access challenges persist.

CFI Fellow Leon Perlman looks at the advantages, disadvantages and challenges that fasten on the existing and evolving technologies, bearer services, access platforms and user devices for mobile financial services (MFS) in Technology Inequality: Opportunities and Challenges for Mobile Financial Services.

His on-the-ground research conducted in 12 different countries finds that smartphone-enabled MFS is not an impending panacea for financial inclusion.

Due to the slow spread of reliable, high-quality 3G coverage and sufficiently capable smartphones, the majority of MFS will be accessed on feature phones, using Unstructured Supplementary Service Data (USSD), SIM Application Toolkit (STK) and java-applets, rather than internet-enabled smartphones, for the forseeable future.

Keywords: Digital Financial Services; Mobile Financial Services; Mobile Money; M-PESA; Competition; IMSI Catchers; USSD; STK; Smartphones; Feature Phones; financial inclusion