Mobile Money: A Path for Increasing 

Financial Inclusion?

Paul Galant

CEO Citi Enterprise Payments

Washington, DC

April 26, 2012
Mobile Phones: the new Local Bank?

Source: Yankee Group, Financial Access Initiative

In developed countries approximately 81% of adults are banked vs. 28% in developing 

countries

There are ~5 billion mobile phone users worldwide but only 1.8 billion bank accounts

US

- 91.0%

- 84.7%

Brazil

- 43.0%

- 82.9%

UK

- 91.0%

- 92.4%

Russia

- 69.0%

- 94.5%

India

- 48.0%

- 56.2%

China

- 42.0%

- 53.4%

Africa

- 20.0%

- 48.0%

Gap Narrowing Gap Widening

6.9 billion people 4.8 billion mobile phones 1.8 billion bank accounts 2 – 3 billion underserved
A significant need...

Mobile Money: 800MM potential accounts in 5 years, 

already 100+ services

Addresses the needs 

of 2.5B underserved 

consumers1

...increasingly being 

addressed...

...will generate a large 

number of new accounts

100+ Services 

being launched

# Mobile Money accounts (MM)

1000

0

+51%

2016

807

2015

684

2014

499

2013

326

2012

199

2011

107

2010

69

500

Current accounts 

estimated at 70MM

These accounts are currently mostly stored value accounts that allow person-to-person 

payments, are managed by MNOs, and are untapped by branded financial networks

1Consumers in countries with large gaps between mobile and bank penetration; defined as 

mobile penetration >50% and banking penetration <50%; 72 countries qualify.
Current mobile payments services are 

closed loop with limited functionality

Goal: Mobile Wallets that provide a full range of payments

Cash-in MNO #1 MNO #1 Cash-out

Salary pay/benefits

Transfer from bank

International 

remittance

Merchant pay

Bill pay

Other Mobile

Money services

A full range of payments capabilities are 

needed to provide a “bank-like” experience

Mobile money capability development is primarily focused on providing a rich payments 

experience. Banking capabilities (savings, credit) are generally not within scope in initial 

phase.
Financial Empowerment: the True End Goal of Inclusion

Convert:

Access to products that facilitate receiving 

and sending payments with minimal friction 

and a choice of channels, maximizing value 

of capital to the consumer, and minimizing 

fees paid

Save: 

Products that move consumers from carrying 

their assets “in their pocket” to having their 

money work for them 24/7, reducing risk and 

building a financial cushion 

Borrow: 

Provide consumers with financial leverage 

through credit products to increase their 

opportunities and improve their quality of life 

(mortgage, business, education)

Financial Education:

Access to information, tools and advice that 

help consumers make better choices for 

purchasing, saving and borrowing

Banking:

Critical contributor to 

financial well-being and 

success 

• Current mobile wallet capabilities focus almost exclusively on payments

• “Banking-like” offerings limited to stored value accounts for savings and mobile billing for credit

• Banking relationships provide far deeper financial empowerment, beyond movement of money
Decreasing cost and increasing power is driving growth in 

digital commerce 

~$6,000

1981 1994 2011+

Cost ~$2,000 $25-50

Penetration 1% 10% 75%

Media / device PC Laptop / Internet Mobile Phone

The last three decades have witnessed tremendous progress in global digital connectivity 

and ubiquity

Source: Economist

Growth of mobile phones has 

already outpaced PCs and 

laptops in penetration and 

speed of adoption.
eCommerce will comprise an increasingly larger percentage of payments volumes, 

with Mobile as the fastest growing component of these flows

SOURCE: Yankee Group, Dec 2010; Press search; McKinsey Global Payments Map

Why?

• Phone is more widely accessible 

across the global population with 

5x more phones than PCs

• Phone is a more powerful device 

than the PC

‒ Knows who you are

‒ Knows when you are in/near 

store

‒ Delivers instant gratification

• In store sales are still 19x greater 

than eCommerce

2010

Global Payment

Flows : $600T

eCommerce

Flows: 

$1,700B

Mobile 

Payment

Flows: $10B

2015

Global Payment

Flows: $850T

eCommerce

Flows: $3,420B

Mobile 

Payment

Flows: $550B

CAGR: 

+123%

CAGR: +7%

Total Flows:

CAGR: 15%

Mobile Flows: the Future of Payments
Emerging Markets: Cost and Distribution Models Drive Scale

Affluent

Mass Market

Underserved / Unbanked

Complex financial 

products

(e.g., savings, credit)

Transactional products 

(e.g., salary payment)

P2P

Core product alignment

Core client segments

• As the underserved/unbanked mobile payments customers 

build their financial resources, there is an increasing need for 

banks to enable and underwrite more sophisticated services

• This leads to greater partnership and commercial 

opportunities for banks and MNOs, as well as potentially to 

increased friction 

Key Issue: Banks and MNOs will compete to optimize asset 

structures, customer data, and revenue flows

• In emerging markets, mobile operators leverage their existing 

airtime distribution infrastructure to enable and deliver simple 

peer-to-peer payment and bill payment products which are 

aimed at the underserved/unbanked and mass market segments

• Mobile operators operate these accounts as pre-paid value 

transfers, limiting their exposure and risk 

Key Issue: If risk management is not industrial strength, it can be 

dangerous if payments are driven to open networks

In emerging markets, banks face different economic and access issues to compete effectively for the mass 

market and underserved / unbanked
DATE 9 Complexity and Sophistication

P2P 

Money 

Transfer

Cash-in Cash-out Int’l

Transfer

Salary 

Payment

Bill 

Payment

Retail 

purchase

Cards Credit Savings Lending

Service Evolution High

High

Security VAS Insurance

Transactional Core Payments Core Banking

Comparative product value for MNOs and banks

Driven by simple 

products that leverage 

MNO airtime 

distribution 

infrastructure

Value line for 

MNOs

Value line for 

banks

Driven by complex 

products that leverage 

bank transaction and 

account systems

Diminishing benefits as 

individual actors go beyond 

core product competencies

MNOS have more efficient entry economics but plateau quickly, banks have 

financial sophistication but are unable to get early economics to work

MNOs: Advantages, Up to a Point
The Mobile Landscape: A Closer Look 

Payment Facilitators: 

Intermediaries that provide an interface to 

existing bank products, but do not hold funds 

or store credit, just “pass through” the 

transaction

(i.e. ISIS)

Stored Value Accounts: 

Store funds to enable the consumer to shop 

with a pre-funded account 

(i.e. PayPal when you load funds, gift cards, 

prepaid cards)

Mobile Billing: 

Allow consumers to pay for goods through 

their mobile bill (currently digital and small 

value goods). 

Virtual Currencies: 

They allow consumers to exchange money 

for points or credits, usually to purchase 

digital goods or services

“Alternative” 

Payment 

Categories

• Plethora of new participants with a focus on innovative payment solutions, many of which fall 

outside the scope of formal prudential and consumer regulation

• “Banking-like” offerings limited to stored value accounts for savings and mobile billing for credit

Compared with bank-grade payments, many of the protections in place for 

traditional ‘bank-based’ payments, are at best optional in the new models, and 

rarely auditable and enforceable.
Mobile Operators vs. Banks: Different Models, Different 

Cost / Benefit Tradeoffs 
U.S. Situation Analysis: mobile payment solutions are 

proliferating but are not ready for broad success 

Broader coordination 

among industry 

stakeholders is 

required to create a 

path to safety, 

soundness, and 

ubiquity as well as a 

predictable 

consumer experience

Danger of a “shadow 

payments system” due 

to inconsistent regulation 

and coverage, which is 

introducing risk to 

consumers and the 

broader integrity of the 

payments system

Standards to improve the 

safety of customer 

credentials have not 

evolved. Issues include 

storage of customer 

credentials and 

information updates Unclear if current 

providers can preserve 

bank competition and if 

small banks have a way 

to participate at all. 

Issues include incentives 

across the ecosystem 

and cost of updating 

customer data

Digital payments have grown explosively, driving convenience, access, personalization and 

innovation across the payments industry, but...

Problem 1

Problem 2

Problem 3

The Solution Moving Beyond Payments: 

Future challenges with offering savings & credit services 

through MNOs and other non-financial institutions include 

AML/KYC and integration with credit bureaus
Mobile Payments Guidelines: Bank Industry POV

• Consumers expect and deserve parity in protection across all payment methods and providers

• To ensure the ongoing safety and soundness of the payments industry, there is a need to define 

consistent regulations, compliance and standards, and to ensure they are applied across all 

participants that enable payments

• This effort should target how and where payment credentials should be: 

Structure and guidelines will help focus the mobile payments ecosystem and ensure its successful 

growth

Action is needed to ensure preservation of a bank’s ability to fulfill commitments to its customers and 

protection of a customer’s right to choose how they want to make payments while promoting an 

environment that will foster participation, competition, innovation and differentiation among banks large 

and small and among all stakeholders in the ecosystem.

Provisioned

• Load customer 

account information 

to one safe place 

managed by the 

issuer in a consistent 

and secure way 

Stored

• Store customer 

account information 

securely and in 

compliance with 

regulations

Accessed

• Allow access to 

customer information 

to approved 

participants
Moving Forward

We have a responsibility to ensure that the above conditions exist in order to 

promote competition and innovation to ultimately benefit the end consumer, fostering 

convenience, accessibility and inclusion.

Opportunity Areas for Improvement

Progress towards broad adoption will rest on establishing a set of guidelines that define the minimal rules of 

engagement for mobile payments, and ultimately for all financial services. As the lead product in driving 

broad adoption, payments are serving as a model for the industry architecture.

Safety Mobile financial systems must ensure the safety of customer data and the security 

of the payments system (e.g., fraud, lost/stolen)

Soundness

The mobile payment system needs to be fully operational and scalable to meet the 

needs of consumers and participating FIs (ultimately globally) 

FIs and merchants need to be able to execute against the guidelines and to enable 

clearing, settlement, scalability, and performance of mobile payments

Ubiquity Mobile payments must be available across all channels and devices to use

anywhere and integration from a merchant and issuer perspective must be simple

Compliance The mobile financial system must ensure compliance with all state, federal and 

industry regulations and guidelines
Conclusions

 Mobile money services are rapidly gaining consumer adoption globally and in the U.S.

 Among U.S. bank customers, there is increasingly broad usage of mobile apps for banking 

functionality

 Current offerings outside of bank relationships are focused on mobile payments with limited other 

bank services covering savings or credit

‒ While MNOs are well-positioned to offer basic payments services across consumer 

segments, they are not effective models for providing more complex banking products

 Mobile money offerings for underserved and unbanked consumers are focused on payments 

capabilities and can serve as an effective entrée into the formal financial economy, providing 

convenience and access to digital goods and services 

 Concerns about safety and security are the most significant barriers to broad adoption of mobile 

payments across all segments of the population

To ensure the ongoing safety and soundness of the payments industry and 

instill consumer confidence, there is a need to define consistent regulations, 

compliance and standards, and to ensure that they are applied across all 

participants that enable payments, and all financial services.