A Phone Number Has Quietly Become a Bank Account for Two Billion People

For most of banking's very long history, opening an account meant physically walking into a branch, carefully filling out a stack of forms, and proving your identity to a rather cautious clerk, a slow process that quietly shut out billions of ordinary people who happened to live too far from a bank or who simply could not meet all of its many demands. Today, however, a remarkably simple idea has turned that whole old model completely on its head, because for around two billion people right across the world, an ordinary mobile phone number has quietly become a fully working bank account in its own right.

Banking in your phone, no app store needed

The clever technology sitting behind this whole quiet revolution is known quite simply as mobile money, and its real genius lies precisely in just how very little it actually requires from the everyday user. Unlike the sleek and polished banking apps that stubbornly demand an expensive modern smartphone and a fast internet connection to work, mobile money can run perfectly well on even the most basic and inexpensive handset imaginable, using nothing more than simple text based menus that work happily on even the very oldest of phones.

In order to send or to receive money, a person simply visits one of the many local agents dotted around their community, often a small shopkeeper or a busy market trader, who can quickly turn physical cash into digital credit and back again in just a matter of mere seconds. This vast and sprawling human network of local agents effectively acts as a kind of branchless bank, reaching deep into remote rural villages and crowded city neighbourhoods where a traditional bank would simply never have dreamed of ever opening its doors.

Two trillion dollars and counting

The sheer scale that this wonderfully humble little system has now managed to reach is genuinely quite staggering to properly contemplate for a moment. According to the very latest industry figures available, there are now somewhere around 2.3 billion registered mobile money accounts spread right across the entire developing world, and the total value of all the money flowing through them in a single year has recently climbed clean past an almost unbelievable two trillion dollars for the very first time ever.

What makes this particular milestone feel even more genuinely remarkable is the sheer breathtaking speed at which it was actually reached in the end. The industry took a full twenty long years of patient and steady effort just to pass its very first trillion dollars in annual transactions, and yet it then somehow needed only four more short years to completely double that figure and sail straight past the two trillion dollar mark, a crystal clear sign of just how incredibly quickly this new way of handling money has truly caught on everywhere.

Africa leads the entire world

While mobile money is now used fairly widely across much of Asia and parts of Latin America too, there is one single continent that towers high above all of the others as the completely undisputed global leader in this particular field, and that continent is of course Africa. The continent is now proud home to roughly 1.2 billion of these accounts in total, which is comfortably more than half of the entire global figure, and it still continues to add brand new users at a blistering pace that the rest of the world can only look upon with a certain quiet envy.

This striking dominance becomes even clearer still when you look closely at the actual money itself rather than simply counting up the accounts. A truly astonishing sixty six percent of all the value flowing through mobile money absolutely anywhere on the entire planet now passes through sub-Saharan Africa alone, amounting to around one and a half trillion dollars in just a single year, with the busy regions of both East and West Africa confidently leading the charge with hundreds of billions of dollars each.

A lifeline for the unbanked

Behind all of these enormous and impressive numbers lies a deeply human story that is all too easy for outsiders to completely overlook, because the real importance of mobile money is not really about the clever technology at all, but rather about the many millions of people whom it finally manages to include. For generations upon generations, vast numbers of perfectly ordinary families were completely locked out of the entire formal financial system, with no safe place at all to store their hard earned savings and no simple way to send money to relatives living in distant towns.

Mobile money has quietly handed these very people a wonderfully practical and genuinely affordable solution almost overnight. A hard working market trader can now safely store all of her daily takings on her phone instead of nervously hiding loose cash under a mattress, a young worker in the big city can instantly send money back home to support his family in the countryside, and a proud parent can easily pay a child's school fees without ever having to make a long, tiring and costly journey to the nearest town.

What people actually use it for

Back in its very earliest and most humble days, mobile money was used almost entirely for just one single simple purpose, which was quickly sending small amounts of cash from one individual person directly to another. While that particular use certainly remains hugely popular right up to this very day, the full range of clever things that people now routinely do with their mobile wallets has expanded quite dramatically over the years into something far richer, broader and more genuinely useful than almost anyone had first expected.

Nowadays, ordinary people everywhere routinely use these handy digital wallets to pay their monthly electricity and water bills, to buy fresh airtime for their mobile phones, to receive their hard earned wages directly from an employer, and increasingly even to carefully save money or to take out small and useful loans. In this quiet way, a simple service that first started life as nothing more than an easy way to send cash has gradually blossomed into a complete financial toolkit sitting right in the palm of a person's hand.

The cracks beneath the boom

For all of its genuine and undeniable success over the years, this truly remarkable story is certainly not without its own fair share of very real and rather stubborn problems that still urgently need to be addressed openly and honestly. Perhaps the most striking of all of them is the awkward fact that a surprisingly large share of all these registered accounts, by some careful counts as many as a full three quarters of them, actually sit completely idle in any given month, which strongly suggests that signing people up has proven far easier than keeping them genuinely engaged.

There are also several other persistent challenges that unfortunately threaten to slow down all of this impressive momentum in the years ahead. Fraud sadly remains a very genuine and deeply worrying problem across many of these markets, while brand new taxes placed directly on transactions in certain countries have regrettably pushed a number of understandably nervous users straight back toward the familiar old habit of simply using physical cash again. Overcoming these real hurdles will be absolutely essential if this quiet revolution is to ever reach its full potential.