18_G15_InSight_Money

Global Issue 15

Global Insight Making Money Move Does M-Money spell the end of the financial system? Don’t bank on it Mobile banking is expected to be worth US$223 billion worldwide this year. But it does have its limitations – unless a stable digital currency can be established, traditional banking will still have to play a part Richard Walker Mobile payment systems represent the fastest-growing financial innovation of the era. They are bringing millions of excluded people into the global financial economy, making a reality of the financial global village, and along the way they are also giving a real scare to some of the world’s biggest financial institutions. But do mobile payments or ‘M-payments’ herald the end of conventional banking, and perhaps even conventional money itself? That’s not likely. In fact, mobile payment may even end up lending new strength to old-fashioned banking. The dollar and the euro won’t suffer too much either – they might well end up more powerful than ever before. But as mobile payment becomes something closer to the norm, there will be an almighty struggle between those companies that already make money from transactions – like banks and credit card managers – and newer companies, such as mobile phone networks, online serviceproviders, and computer-makers, who all want part of the action. One thing is certain – mobile payment is a growing phenomenon. Forrester, a new technology research company, forecasts that in the US alone mobile payments will be worth US$90 billion a year by 2017, compared to a little over $12 billion last year. The World Payments Report from Royal Bank of Scotland forecasts the total of global M-payments to be $223 billion in 2013 – a growth rate of a little over 50 per cent a year over the last three years. But it is growth from a low base: $223 billion is a very tiny slice of the world total of non-cash transactions, which Boston Consulting Group estimates to have been $331 trillion in 2010. So M-payments are a small part of the financial universe, but they are growing. In terms of the number of transactions, they are mushrooming fastest in emerging economies, although, inevitably, there is more growth in the value of transactions in developed economies. But it is not the mere expansion of transactions that is getting banks and governments hot under the collar about M-payments. What is driving the debate is the 18 l www.global -br ief ing.org thi rd quar ter 2013 global


Global Issue 15
To see the actual publication please follow the link above