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Darla Moore School of Business

Research indicates mobile money and technology benefit emerging countries

Management science professors Sriram Venkataraman and Yan Dong’s research on mobile money and mobile technologies has been published in two recent academic journals.

Along with their colleagues, Sining Song from the University of Tennessee Knoxville and Yuliang Yao from Lehigh University, Venkataraman and Dong published in 2020 “Mobile Money and Mobile Technologies: A Structural Estimation” in the Information Systems Research journal.

Venkataraman and Dong published in 2019 “’Mobile Money’: The Implications of Mobile Money Services on the Value Chain” in the Manufacturing & Services Operations Management journal with their colleagues Chen Zhou, a USC marketing assistant professor, and Moonwon Chung (’19 USC Ph.D. management science) who works with Cleveland State University.

Read below as Venkataraman discusses their research on mobile money and mobile technologies.

What is mobile money? What are some examples of mobile money in the U.S.? 
Mobile money is a technological innovation that combines mobile technologies and financial services to provide convenient and affordable access to banking systems and to improve financial inclusion. Mobile money allows deposits and transfers via mobile phones and withdrawals at a mobile money outlet that’s prevalent in emerging economies. Mobile money is largely absent in the U.S. because a significant percentage of the U.S. population have access to formal banking systems. Mobile money is popular in Africa, South America and Asia, where many people don’t have access to banks. 

How prevalent are mobile money transactions in the U.S.? Globally?
Mobile money transactions are prevalent in South America, Africa and Asia. Among the mobile phone users, about 70 percent in Tanzania, 60 percent in Thailand, 50 percent in Indonesia, more than 40 percent in Ghana, Malaysia and Nigeria and more than 20 percent in Brazil, use mobile money technology. 

What are the implications of mobile money for emerging economies? What is an example of the impact mobile money transactions can have on an emerging economy?
Mobile money in emerging economies is beneficial for both mobile network operators (MNOs) and banks. We find that the launch of mobile money increases profits for both MNOs and banks, and it benefits the end users, especially the poor, old and less-educated population. Additionally, we find that the launch of additional services, such as credit payments, increases profits for banks but not for MNOs.

How do the differing generations of mobile technologies impact mobile money?  
We find that MNOs can sustain their market shares by offering mobile money. Across all technologies, we find that price elasticity of MNOs reduces when they offer mobile money service. Furthermore, MNOs offering 3G and 4G technologies (newer technologies at the time of our study) gain higher market shares by offering mobile money service than MNOs offering 1G and 2G technologies (dominant technology at the time of our study). 

What effect does consumer demand have on the growth or emergence of mobile money transactions or accounts? 
Consumer demand would certainly incentivize MNOs and banks to start offering mobile money service and other value-added services such as credit payments, especially in emerging economies, where a large percentage of the population may not have access to a formal banking system.

Anything else about your research on mobile markets and its implications? 
Mobile money is important both for MNOs and the associated banks to gain profits as well as for social good because it benefits under-served populations.

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