The State of the Branchless Banking Sector
As part of our efforts to promote branchless banking as a way of reducing the cost and expanding the reach of financial services, the Technology Program monitors the uptake of branchless banking around the world. We have recently completed a mapping exercise to estimate the size of the current global market for branchless banking by analyzing all services in Low and Middle Income Countries (as classified by the World Bank) that were live at the end of 2010.
Before we get to the numbers, let me start with a caveat: some of the numbers in this post have large margins of error. Our aim in this exercise was not to get an exact figure for the number of people in the world that use branchless banking, but a sense of the order of magnitude and more importantly the speed at which the market is growing and the regional variations in this trend.
So with that health warning – here are some of the headline figures.
At the end of 2010 our best estimate was that there were 238 million customers registered for branchless banking services, of which we estimate that approximately 185 million were active users. Interestingly, however, only 45 million used the services for saving.
The comparable figures for 2009 are 181 million registered customers, 137 million active customers, and 16 million savers. So these figures have grown by 31%, 35% and 174% respectively. This is positive news as branchless banking providers have not only signed up a third more customers in the last year, they have also made progress in increasing the number of people that are actually using the services.
The biggest services are in Russia (where services use advanced ATMs that allow cash-in as well as cash-out), Brazil (where bill payment at agents has reached almost every municipality), India (driven by the distribution of government payments) and, of course, Kenya (where M-PESA has revolutionized the way people send money).
There are also a lot more actors entering the market. At the end of 2010 there were 96 deployments around the world of which 50 had active customers. At the end of 2009 only 30 deployments had active customers. And perhaps most encouragingly, several services are now starting to reach significant scale. 22 services have over 1 million registered customers (up from 15 at the end of 2009).
There are also significant variations between regions. Below are the numbers of active deployments in each of the world’s major regions:
- Sub-Saharan Africa: 51
- Latin America and the Caribbean: 19
- East Asia and Pacific: 15
- South Asia: 10
- Middle East & North Africa: 1
- Europe & Central Asia: 1
The large number of deployments in sub-Saharan Africa should not be a surprise given the large numbers of small countries and more permissive regulatory environments on the continent. But in the short term at least, it looks like customer numbers are being driven by other regions of the world. We’ll repeat this analysis at the start of 2011 to see if this growth can continue. With 2.7 billion adults in the world who lack access to formal financial services there is still plenty of room for growth.
- Chris Bold