Mobile savings and credit: Riding the rails of mobile money

The post is the final part of a series looking at key findings from the 2014 State of the Industry Report on Mobile Financial Services.

In a previous post, I looked at mobile insurance and how commercial and distribution models are shaping services. Today, I will take a closer look at mobile savings and credit services that are riding the rails laid down by mobile money deployments.

Mobile savings

Mobile technology can help people with low incomes to store value in a secure and convenient way. There are two basic ways you can save using a mobile phone (see Figure below), both of which are gaining traction. First, the mobile money account itself can be used for cash storage, regardless of whether it is issued by a bank or mobile operator. Second, the mobile money account can act as a gateway to other dedicated mobile savings instruments.


Balances on mobile money accounts used for cash storage

For the first time this year, the MMU Global Adoption Survey explored how many mobile money customers have a positive balance in their mobile money account, as well as the average balance on those accounts. It is important to note that balances reported were a snapshot taken on 30 June 2014 and do not represent an aged balance. In the survey, 47 mobile money services reported this figure, showing 54.5% of mobile money accounts with a positive balance on 30 June 2014. 

Dedicated savings accounts linked to mobile money

Deposit-taking institutions are designing savings accounts specifically for the underserved to be accessed via mobile (such as M-Shwari), and these are becoming available around the world, building on the deployments of mobile money services. According to the MMU Deployment Tracker, 26 dedicated mobile savings services were live in 22 countries globally in December 2014, with two new services launched in 2014.

Several banks and mobile operators have formed partnerships to launch individual savings products tailored to the needs of mobile money users. Examples include Commercial Bank of Africa’s and Safaricom’s M-Shwari service in Kenya, and Steward Bank’s and Econet’s EcoSave service in Zimbabwe. There are also several financial institution/bank-led dedicated mobile saving services, which are paired to the provider’s mobile money services. These include Nationwide Microbank’s MiCash in Papua New Guinea, Housing Finance Bank’s mcash in Uganda and Bank Sinar’s Sinar Sip in Indonesia.

Almost 10 million dedicated mobile savings accounts have been opened worldwide, of which 60% hold a positive balance. As of June 2014, funds worth USD 70 million were held in the mobile savings accounts for services that participated in the survey. This indicates that mobile money is able to mobilise a fairly large amount of money that was not in the formal financial system. 

Mobile credit becoming more widely available

Mobile credit services are becoming more widely available as more providers enter the field. Of the 37 live services to date, 12 launched in 2014. Of the services that MMU tracked, five of the 12 new launches were by partnerships between a financial services institution and a mobile operator. The remaining seven were led by banks and financial institutions using the mobile channel to extend their reach. Mobile credit services are now available in 20 countries globally. 

Increasing the accessibility of mobile credit with innovative credit scoring solutions

Historically, banks’ and microfinance institutions’ biggest challenge has been knowing if a customer would repay or default on a loan. As financial services providers lack the necessary data to gauge creditworthiness, they tend to pool low-risk and high-risk customers together, limiting the viability of affordable products. Mobile operators can help address this challenge by combining their data, and in some cases mobile money transactional data, with credit scoring algorithms.

Credit scoring models using mobile operator data have resulted in lower numbers of non-performing loans (loans that have defaulted or are close to default). For example, Safaricom says that non-performing loans make up just 2.2% [1] of the total loans made by its M-Shwari service, compared to an average figure for Kenya in 2013 of 4.9% [2]

Different approaches to mobile credit

In the nascent mobile credit market, one size doesn’t fit all. Different kinds of players are taking different approaches that are gaining traction in different market segments (see Figure below). Each model uses mobile phones to make it easier for individuals to borrow small amounts of money that they agree to repay within a specified period of time.


Read the entire sections on mobile savings and credit in the 2014 State of the Industry Report on Mobile Financial Services.

[1] Safaricom Limited HY14/15 Presentation. Available at

[2] The World Bank, available at

Join the Conversation (one comment)

  • The State of the Industry Report is a truly fascinating read full of useful data such as these. I am curious, though, whether there have been any studies of how long, on average, value is kept in MM accounts, which would provide a better understanding of the extent to which MM is being used as a platform for savings. Furthermore, what will the advent of services like Tanzania’s Tigo Wekeza entail for MM and savings?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.