BACK TO CONTENTS The ‘unbanked’


In developing markets, many of the new payment methods are helping retailers reach previously untapped customer segments, particularly the “unbanked” – those who have never had a bank account or credit. The World Bank estimates around three-quarters of the world’s poor – more than 2.5 billion people – don’t have a bank account. Many are now looking for options other than cash, which is vulnerable to theft, to make their purchases.


In Kenya, over 17 million citizens – more than two-thirds of the adult population – use M-Pesa, which was launched by mobile network operator Safaricom. What started as mobile-to-mobile money transfers, is now being used to pay for everyday purchases.


“It was an African solution to an African problem enabled by government regulators as a way to bring millions of citizens into the fi nancial system,” says Frank Rizzo, Technology Sector Leader for KPMG Africa.”


In other developing markets, traditional banking products are gaining in popularity. The People’s Bank of China reported that fi nancial institutions in 2013 issued 4.2 billion bank cards – 20% more than in 2012. Here, the growth in mobile payment has less to do with competing against traditional forms of payment and more with creating solutions for the unbanked, says James McKeogh, Director at KPMG in China.


CHRIS MYERS HADORN Director, Operational Risk in the US


T: +1 404 979 2317 E: chrishadorn@kpmg.com


Chris specializes in retail banking, commercial banking, treasury services, e-commerce, payments, business strategy, business process architecture/ design, program management, and merger and integration.


IN KENYA, OVER 17 MILLION CITIZENS – MORE THAN TWO-THIRDS OF THE ADULT POPULATION – USE


M-PESA.


FOCUS 32


Even in a developed country like the US, as many as 68 million Americans don’t have a bank account or debit card. Could a mobile solution for the unbanked also work in a mature market?


“Banks have been conservative about going down this path because of the regulatory scrutiny around whether they are providing fair pricing and transparency to those customers,” says Hadorn. “Additional regulatory and government intervention will be required, but there is certainly an opportunity to further penetrate that market and do so on the tenets of trust and value.”


© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.


REINVENTING MONEY


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