Promoting financial inclusion is essential to drive development around the globe. By having access to financial services, individuals can more easily invest in themselves (health, businesses, education, etc.) as well as manage their income, which increases their possibilities of escaping poverty. The growing adoption of mobile phones and internet worldwide has created new possibilities for financial services. According to the World Bank, there are 1.7 billion unbanked adults globally. However, two thirds own a mobile phone, which can facilitate their access to financial services.
Mobile Phones and Financial Inclusion
Digital financial services are key in fostering a universal financial inclusion. Mobile phones, in particular, play an important role here. For most of us, it is inconceivable to use SMS to pay bills, for instance. However, in many countries, this is a reality. Mobile money accounts are extremely popular in less developed economies and have been crucial to reduce cash transactions.
Smartphone owners, on the other hand, have easier access to a variety of services, from traditional banking, to disruptive fintech alternatives. The 2017 Gallup World Poll data points out that 93% of adults in rich countries own a mobile phone. The number drops to 79% in developing economies. Still, the numbers highlight the importance of mobile phones in the financial revolution.
What is the Situation on Brazil?
There are over 50 million unbanked adults in Brazil. However, that does not mean they do not have access to any sort of financial service. According to the Brazilian Central Bank, 90% of adults in the country have access to financial services.
In addition, IBGE points out that 92.3% of Brazilian households own at least one smartphone. In fact, these mobile devices are also extremely important for digital inclusion in the country as well, as currently nearly 40% of connections to the internet are carried out exclusively through smartphones in Brazil.
A study by the Brazilian Central Bank and Delloite identified that 21.9 billion financial transactions – out of a total of 65 billion – were carried out on mobile banking (bank apps) in 2016. Furthermore, the bank apps were responsible for 57% of all digital transactions, which can be explained by the increased use of smartphones to connect to the internet as opposed to desktop.
Fintech companies in Brazil, as well as around the globe, are important players in promoting financial inclusion. Innovation is key, but it does not necessarily mean high tech. For instance, PagBrasil has created an exclusive technology for its Boleto Flash® and Boleto Express that allow consumers to easily view and pay their boletos on their mobile devices as well as in-app. The payment method itself is well-established among Brazilian consumers, particularly those without bank accounts or credit cards. However, it was not adapted to the new reality where consumers mainly use their mobile phones to access the internet and the m-commerce already represents 30% of all e-commerce transactions.