The total transaction value of mobile financial services in emerging markets (including domestic money transfers, deposits on loans, insurance products, and savings accounts) will approach $500 billion in 2021, up from an estimated $198 billion this year, according to a new study from Juniper Research.
By introducing insurance offerings, operators had the opportunity to substantially reduce churn levels, the report says, citing the example of Telenor Suraksha life insurance scheme in India, which has seen nearly 50% of its 45 million user base sign up since its December 2015 launch.
“The model underpinning the Surakhsa scheme – requiring consumers to top-up airtime on a monthly basis to receive the insurance cover – should be widely replicated,” said research author Lauren Foye. “It enables operators to maintain average revenue levels within low-income, low-ARPU prepaid environments and allows consumers to reap the benefits of microinsurance cover.”
However, the report cautions that a key challenge would be tailoring financial service products to the needs of individual markets. It cited the case of several early implementations of mobile financial services in markets such as India, the Philippines and Nigeria achieving limited adoption where products were often ill-suited to their target audience.
Nevertheless, the study highlighted Asia-Pacific as a region which, while currently under-served in part because of the complexity of national regulations, has strong potential for future product launches.
Whilst restrictions have been in place previously, largely due to cultural beliefs, Juniper found that attitudes are changing in under-served regions, with Indonesia acquiring its first ever microloans product Kashmi in 2017. Additionally, specialized products have been launched to address religious requirements, such as Achuwat in Pakistan which provides interest free loans to meet Sharia requirements.
The report, Mobile Financial Services in Emerging Markets: Money Transfer, Loans, Savings & Insurance 2016-2021, is available here. The whitepaper, Microfinance with Macro Potential 2016-2017, is available to download from the Juniper website together with further details of the new research.