Cash and mobile banking can be sound proposition in emerging markets

IT WOULD seem odd to put the two together: cash and mobile banking. But the strange bedfellows make a good business model for expanding into banking in emerging markets.

A McKinsey report this week showed that in cash-based economies, mobile banking providers can significantly raise profitability by ramping up the number of digital transactions each time cash is put into the system.

The reality is that cash is not going away in this markets. McKinsey pointed that even in Norway, 17 per cent of all payments are transacted in cash. There are also concerns that a fully cashless society further marginalises those who are not part of the banking system. This is a significant risk in emerging markets.