Financial Inclusion and the Developed World

One tech narrative that has gained momentum in recent years is that the mobile internet economy is done. The rationale for this narrative is that the tech incumbents of the day — Facebook, Apple, Amazon, Netflix and Google aka FAANG — have deftly transitioned into the mobile age, using their distribution, network effects and consumer loyalty as leverage against would-be disruptive competitors. It leads technology pundits to debate what the next internet wave will be — Voice, AR/VR or something else entirely. Obviously, the growth of new social media services like TikTok and new commerce platforms like Shopify and Square have proven this thinking to be limited at best.

To believe that mobile internet economy is over to believe that there is no more innovation to be had. It’s a belief rooted in the ignorance of abundance, seeing one’s pervasive and diversified use of the internet as exhibit A of mobile’s saturation and obvious end-state in sight. Globally, smartphone ownership hasn’t even reached full penetration, with much of the world’s smartphone users still relying on 3G connectivity.

The Digital Divide

The abundance of technology and computing devices in our society has created a false sense of internet access that belies the reality facing many Americans. According to a recent Pew study, 1 in 5 American adults making less than the $30,000 annually are smartphone-only, meaning that their smartphone is their only means of internet access. Contrast this with adults in households making $100,000 or more — 66% of adults in this cohort own a smartphone, PC, tablet and broadband access.

Lower income Americans rely on their mobile devices much more than middle and higher income Americans to traditional desktop PC tasks. The cruel irony is that some of the most crucial services for lower income folks — employment applications, bill payments, financial services — are also some of the least mobile-friendly products to use. Couple that with the fact that services built specifically for smartphone use, like mobile commerce, are geared towards higher income consumers (think Apple Pay and Google Pay). These consumers are more likely to be digitally prepared to take advantage of internet services, furthering the gap between the haves and the have-nots.


If mobile has reached maximum penetration among American consumers, it may be due to the fact that total addressable market for mobile-first services has been arbitrarily constrained by the digital divide. A significant portion of the U.S. population over-indexes on a single device as their lone, digital lifeline to increasingly digital world. Given that so many folks in the entrepreneurial/startup community and most tech incumbents (excluding Square and Amazon’s respective financial inclusion efforts) have failed to recognize this opportunity, it’s no wonder the mobile saturation narrative and the claims of mobile app fatigue persist.

Arbitrage Opportunities in Accessibility and Financial Inclusion

A growing number of technologists and analysts are hunting for the next great computing platform, while ignoring the business opportunities we have left in the mobile internet. This creates a very large and valuable arbitrage opportunity for mobile-first accessibility and financial inclusion services.

There’s a wave of new services geared towards providing a great mobile internet experience for consumers in developing nations, such as Reliance Jio in India. Jio accommodate users in India that, until previously, had a prevalence of slow mobile networks, expensive data plans and basic Android devices. By understanding the needs of its users, Jio has built both the internet connectivity and the products running OTT that reduce the barrier to adoption and usage for internet services. In 2018, The Financial Times had a great write-up of Jio and the impressive internet services it has built:

Over the past two years, more than 200m Indian phone users have flocked to take advantage of arguably the greatest corporate gamble in the country’s history. Mukesh Ambani, India’s richest man, has spent $32bn building up his telecoms company Reliance Jio — the biggest private sector investment in India’s history — as he fights for dominance in the world’s second-biggest telecoms market by user numbers. Much of that money has been spent giving away free access to what Jio says is now the world’s largest mobile data network, with its clients consuming about three times the amount of data of an average European customer.

The launch of Jio has helped to engineer a socio-economic revolution in India. For the first time, millions of Indians are able to access the internet to register for benefit payments, download school textbooks or simply watch India beat Pakistan at cricket. The rapid growth in the telecoms network has encouraged some of the world’s biggest retail and technology companies to plough money into the country. Walmart this year announced the world’s largest ecommerce deal by buying 77 per cent of Indian online retailer Flipkart for $16bn. Google is beefing up its India team, while Netflix says it hopes to add 100m customers from the country.

Many U.S. consumers face similar obstacles to internet access and services as consumers in developing nations. Offering inclusive internet services in the U.S. could be just as valuable a growth story for U.S. public companies as are initiatives in the developing world. Potentially, moreso since the U.S. has higher levels of discretionary income, even amongst lower income consumers.


Financial Inclusion and the Developed World

Financial services is another area where mobile innovation globally is far beyond what is offered to U.S. consumers today. Merchant payment rails such as mPesa in Kenya allow consumers to transact peer-to-peer payments via smartphone or in-person with mPesa agent. Though the U.S. has a robust payment rails system, mobile payments adoption is nowhere the level it is Kenya. Kenyans have long had a pressing need to safely and securely transfer money between parties; mobile just unlocked the potential to meet that need at scale. While there are many non-transferrable factors that led to mPesa’s popularity and ubiquity, the deep understanding of consumer needs and pain points, and the insights gained are an example for U.S. firms to follow.

As I mentioned earlier, Amazon and Square are two of the few public companies taking financial inclusion seriously. These companies view financial inclusion as an opportunity to increase their user base and revenues as well as financially empower low-income consumers. According to a 2015 FDIC National Survey, 19.9% of American households are underbanked and 7% are unbanked, meaning the households have little to no ongoing relationship with a financial institution. These households are excluded from many accredited financial services that could make their lives materially better off, forcing them use other financial services at higher interest rates and onerous loan terms. As the saying goes, being poor is expensive.

After noticing this segment of the U.S. population and its growing financial needs, Amazon launched Amazon Cash which allows consumers to use select brick-and-mortar retailers to deposit cash into their online Amazon accounts. This service circumvents the need for a bank account or checking account, so that consumers can shop directly on Amazon for a variety products and services offered by the e-commerce giant.

Square’s Cash App has amassed 30 million U.S. users, with 54% of Cash App users having a credit score of less than 600. Between April 2019 and June 2020 transaction volume for Cash App users with the lowest credit scores grew by 2.5x versus 1.6x for overall users. It doesn’t take much imagination to see the massive opportunity for Cash App and Square: to become the defacto financial institution and mobile commerce destination for 100s of millions of unbanked and underbanked U.S. consumers. This would significantly increase Square’s revenues, profits and market cap.

The examples above are just a few of the many opportunities left in the mobile internet. These examples are also risky attempts to solve hard and non-obvious problems, where the market creation and value capture require a long-term focus. An eye for convenience and intuitive design – hallmarks of the last phase of the mobile internet – are necessary, but not sufficient. Success in the next phase of the mobile internet will require real empathy and an authentic understanding of the lower levels of Maslow’s Hierarchy of Needs. At the end of day, the pervasive narrative that “mobile internet economy is done” might be masking a reluctance to go that deep, real, and empathetic with users.