Wednesday, August 29, 2012

Mobile Money in China. The next big thing?

Everything is big in China. It has the world’s biggest population with over 1.2 billion, it has over 160 cities with a population of more then 1 million, there are over 1 billion mobile subscribers, and millions of people have bank accounts. Despite this, the gap between access to bank branches in urban areas versus rural locations is huge, with only 0.34 banking outlets per 10,000 people rurally, compared to the national figure of 1.34. Further, in an interesting post this week in the Economist, the author noted that there had been almost zero impact from traditional mobile money services in China, despite the benefits that would be derived, particularly given the lack of bank branch access in rural markets, and the massive urbanisation that is currently occurring. Is this about to change, and in true China fashion, when it does change, will it awaken the world to the opportunity of mobile money in emerging markets?

In contrast to the article in the Economist, whilst there has not been much happening in China in the context of ‘M-Pesa type’ activity, there has certainly been a lot of activity in regards to mobile payments. Mobile banking has been present in China since 1999, and all of the major banks including China Construction Bank, Agricultural Bank of China and the Bank of China allow customers to access accounts, make funds transfers and other services through a mix of STK, WAP and 3G data. There have been deals between operators such as China Mobile and the domestic scheme China Union Pay to develop the use of mobile for payments, including NFC and remote payments. Consulting firm McKinsey believe that China is currently at an inflection point with mobile payments set to become a $40 billion industry driven largely by digital content and ticketing, and that competition is going to become intense between banks, mobile operators and third party providers. Much of this activity however will centre on the urban centres, and will not address the need to fill the gap between urban and rural access to banking services.

It is this gap where I think some of the most interesting mobile financial services activity in China is about to start. The regulators in China have been watching markets in Africa and elsewhere for some time now, and have recognised the opportunity that mobile money and branchless banking can bring to help drive financial inclusion. In March 2011 the China Banking Regulatory Commission issued a circular that encouraged financial institutions to look at alternative channels such as mobile to improve access to finance in rural locations, in an effort to assist with economic development in those regions. There has been recent discussion that the People’s Bank of China were keen to commence pilots in rural locations specifically in mobile money, and had issued guidelines that will govern where these pilots will occur, and the participants to deliver the services. The services that need to be provided to customers include airtime top-up, remittance and some payments. The guidelines provide strict requirements for KYC and risk management, and also provide recommendations on the type of agents that should be selected, including convenience stores, mobile phone shops and post offices. PBOC make recommendations on how services should be marketed, and provide an overview on how participants in the mobile money pilot should report their findings back to regulators to aid with future regulation of mobile money. The guidelines are extremely interesting in that they appear to have been drafted with a close eye to other mobile money schemes in emerging markets.

As an industry we should watch China with great interest over the next 12 months to see how these pilots develop, and whether a framework for large-scale extension of branch accessibility can be built. With over 30% of the population unbanked, there is a significant opportunity to drive financial inclusion through mobile, perhaps catapulting China to be the leading mobile money market in the world. For a country where scale is everything, this could be a phenomenal achievement in the history of financial inclusion.  

- Brad Jones


  1. Nice article Brad - that statistic of 1 branch per 30,000 people in rurual China is amazing! Just opened accounts with PBOC last week - so we'll see what comes of that. Rob.

  2. Good insight Brad.

    An interesting tangent is the large international banks are looking to PBOC approval for additional lending and branch licenses in the economically attractive east coast, are being asked to establish banking infrastructure in the western provinces.

    FINO in India has benefited greatly from the push by the RBI to only grant banking license extensions to international banks that support the unbanked. I wonder if China Inc. having now release the 'plan' in their circular via China Banking Regulatory Commission, that we will see PBOC corral both the large domestic & international banks into investing into a common infrastructure.


  3. Asia’s highly competitive cellular industry is built on lots of innovative operators Across Global a total of around 3 billion dollars cellular members are being provided by a huge number of cellular providers. The providers are continuing to drive the industry, growing it by more than 10 percent yearly coming into 2012.
    Asia Mobile Operators

  4. I like your article and it really gives an outstanding idea that is very helpful for all the people on web.Thanks for the information.
    Movil por dinero

  5. My name is KARLA LOVELL from Texas in the USA. For a very long time, i was deep into financial mess untill a friend of mine told me about CONSUMER LOAN FIRM and how she was helped by the company with an Xmas loan at a very low interest rate of 2% and better repayment schedule.She further stressed that they can help me out of my financial difficulties too.Though i never believed her because i have tried lots of BANKS/CREDIT lenders who could not help me out because of my poor credit score.She advised i should give it a try to be convinced,so i mailed them via .Behold it went well and after my explanation, they took me through the loan process and granted me the $67,000,00 as applied with ease on 26th of October 2017, i have a business of mine and my xmas bills became very much easy.

  6. Email Dr. Trust for fast and urgent loves

    I'm Whitney Morgan, from North Carolina. I got separated from my husband 2 years ago. There was no communication between us. I was advised by families and friends to let go, forget the marriage and move on with my life. I didn’t want to marry someone else because deep down, I still love my husband. I was in so much pain and confused, until I read a testimony online on how Dr Trust reunion a broken marriage with the help of his love spell powers. I kept reading so many testimonies on how he helped to stopped divorce and bring back peoples ex-lover's to them, and my faith was renewed. I have to contact Dr Trust immediately, few minutes later, he replied and instructed me on what to do, after meeting up with the necessary requirement, 2 days later after he cast the spell, communication was restored between me and my husband. He actually knees pleading me to forget and forgive him. My relationship is now balance and my husband kept loving me every single day by day. His spells worked wonders and our relationship is now stronger then before, and nothing can separate us again. I visited so many website seeking for help, it looked hopeless, until I came in contact with Dr Trust the real man, who helped me to restore my broken marriage. If you're having similar problem in your marriage, you want your husband or wife to love you again, you have someone you love and you want him or her to love you in return, you are having any challenge in your relationship. Dr Trust SPELL TEMPLE is the solution and answer to your problem, contact him today via Email. or Call or Whats-app him now +2348156885231

    View his website page and see more testimony about him:
    Name: Whitney Morgan
    Country United States
    Big thanks to you Dr.!!!

  7. Good-day, I'm Josef Lewis. A reputable, legitimate & accredited lender. We give out loan of all kinds in a very fast and easy way, Personal Loan, Car Loan, Home Loan, Student Loan, Business Loan, Inventor loan, Debt Consolidation. etc

    Get approved for a business or personal loans today and get funds within same week of application. These personal loans can be approved regardless of your credit and there are lots of happy customers to back up this claim. But you won’t only get the personal loan you need; you will get the cheapest one. This is our promise: We guarantee The lowest rate for all loans with free collateral benefits.

    We strive to leave a positive lasting impression by exceeding the expectations of my customers in everything I do. Our goal is to treat you with dignity and respect while providing the highest quality service in a timely manner. No social security Number required and no credit check required, 100% Guaranteed. Kindly respond immediately using the details below if interested in a loan and be free of scams..

    Call/Text +1(603) 786-7565 thanks

  8. You completed a few good points there. I did a search on the matter and found nearly all folks will go along with with your blog.

  9. This comment has been removed by the author.

  10. It can be difficult to write about this subject. I think you did an excellent job though! Thanks for this!