What Africa, Latin America and developed markets reveal about distribution-led finance.
Mobile money is one of the clearest examples of financial services succeeding through distribution networks outside conventional banking. Its expansion across Africa and other emerging markets changed how individuals receive, store and transfer money. The lesson matters, but it often gets oversimplified.
A lot of industry commentary assumes the next step is for telecom operators in North America or Europe to offer similar financial services to their subscribers. There are examples of telco-financial partnerships in those markets, but the evidence does not support an inevitable convergence of telecommunications and retail banking. The circumstances that enabled mobile money in emerging markets were different, and those differences decide whether the business case works at all.
What mobile money solved in the first place
In many African markets, the main constraint was limited access to affordable, convenient financial infrastructure. Customers relied heavily on cash, bank branches were scarce outside major centres and domestic transfers could be inconvenient. Mobile operators had established subscriber relationships, prepaid distribution and retail-agent networks. In markets with enabling regulation, those assets could be used to deliver stored value and basic payments at a scale that banks had struggled to reach.
There was never one licensing model. Depending on the country, mobile money has been offered through non-bank e-money issuers, telecom-affiliated licensed entities, banks or partnerships between them. Calling all African mobile money ‘payment-bank led’ is an oversimplification that leads to an inaccurate reading of the reality. Regulatory treatment of agents, safeguarding, KYC and settlement varies by jurisdiction.
The proposition worked because it addressed a real gap. For customers with few practical banking options, mobile phones and agent networks were more than convenient acquisition channels. They were the most accessible route to financial services. The counter-example makes the same point. M-Pesa, so successful in Kenya, struggled in South Africa, where most adults already had bank accounts, and Vodacom closed it there in 2016.
The GSMA’s 2026 State of the Industry report estimates that more than US$2 trillion passed through mobile-money services globally in 2025, with approximately 2.3 billion registered accounts and 593 million active accounts on a 30-day basis. These are global industry measures and include markets outside Africa; transaction value is not provider revenue or the stock of deposits. Even so, at that scale mobile money is plainly a major financial-services business and not a marginal payment niche.
Sources GSMA, State of the Industry Report on Mobile Money 2026
For developed markets, the discipline behind matching distribution economics to customer needs is a more useful lesson than a simplified view of the wallet technology.
The developed-market starting point is materially different
In the United States, 4.2% of households were unbanked in the FDIC’s 2023 survey. Nearly 96% had a bank or credit union account, and many also had cards and digital payment options. A mobile subscriber in the US, Canada or Western Europe therefore usually does not need a telco-branded wallet to gain first access to payments.
Sources FDIC, 2023 National Survey of Unbanked and Underbanked Households
The competitive landscape also differs. Banks offer sophisticated mobile apps, payment cards and deposit products. Specialist fintechs compete on remittance, account management and personal finance. Domestic payment infrastructure is increasingly fast and accessible. A new entrant must convince customers to shift actual financial activity, not merely register for another application.
That is a harder problem than acquiring a prepaid mobile customer who previously relied on cash. Banking customers have salary arrangements, recurring debits, card credentials, beneficiaries, savings and often lending relationships. A telco may have a large subscriber base, but converting that base into primary bank accounts requires a financial proposition that is demonstrably better than existing options.
The size of the telecom audience can obscure this difficulty. High engagement with connectivity does not imply a willingness to transfer deposits or use a new financial service. Account activation, regular inflows and sustained balances are much more demanding tests than downloads or registrations.
European experience provides a useful caution
Orange Bank is worth studying because it had far more going for it than a promising concept. The Orange group had brand recognition, substantial distribution and a retail banking operation in France and Spain. In June 2023, Orange announced its intention to progressively withdraw from European retail banking and entered negotiations with BNP Paribas to support the transition of customers. Orange said the bank served more than two million customers at the time. That figure reportedly included close to a million insurance clients rather than account holders.
Sources Orange, strategic review and withdrawal from European retail banking (2023)
Public information doesn’t show the full unit economics behind the decision, and no single cause explains the outcome. What it does show is that customer reach, a digital proposition and a banking entity are not sufficient conditions for a sustainable business.
The question is whether the additional financial relationship delivers returns that justify the cost of technology, compliance, customer service, capital, acquisition incentives and ongoing competition with established banks. If it does not, a large telecom distribution network is not enough to repair the economics.
There are more limited partnership models in the United States. T-Mobile MONEY is offered with banking services provided by Coastal Community Bank. T-Mobile itself is not the bank. As the previous article noted, the structure shows how a telecom company can offer a financial proposition without building its own bank, but not whether it wins primary relationships or makes money.
Sources T-Mobile MONEY, account terms and banking partner
The distinction between a telco that owns a bank, a telco that partners with a bank and a telco that simply distributes a card is therefore material. These arrangements may share branding but involve very different regulatory obligations and financial exposures.
Latin America sits between the two models, but is not one market
Latin America is often cited as the natural bridge between African mobile money and financial services in developed markets. The comparison holds only up to a point. Banking access, cash use, domestic payment infrastructure, fintech competition and regulation vary significantly across the region.
The World Bank’s Global Findex 2025 reports that about 70% of adults in Latin America and the Caribbean (excluding high-income economies) had a financial account in 2024. Mobile-money account ownership increased from 22% of adults in 2021 to 37% in 2024. Unlike in Sub-Saharan Africa, many mobile-money users in Latin America also held a bank or similar account. These regional averages conceal considerable differences across individual countries.
Sources World Bank, Global Findex Database 2025; World Bank, Global Findex 2025, mobile-money account distribution
That finding challenges the simple idea that mobile money always replaces a missing bank account. In parts of Latin America, digital wallets and mobile services increasingly complement conventional bank accounts, improving the way customers initiate payments, use funds or interact with merchants. Brazil’s Pix instant-payment system is a good illustration: it changed how people pay largely through existing bank and fintech accounts rather than through operator-led wallets.
That changes the strategy. Where access remains incomplete, low-cost onboarding and cash-in/cash-out can be significant differentiators. Where accounts are already common, the competitive issue may be acceptance, interoperability, payment experience or merchant services. Product design and the required partnership structure should reflect those differences.
Distribution is valuable only when it solves an economic problem
In every one of these markets, having enough customers to launch a wallet is the easy part. The difficult part is using that distribution to reduce material cost or solve a persistent problem that banks and payment providers have not addressed adequately.
In Africa, prepaid distribution and agents helped overcome physical access barriers. In a developed market, a similar network might instead support particular segments such as recent arrivals, younger customers or people receiving variable earnings. But the usefulness would depend on the actual financial need. A telecom retail store may be a credible onboarding channel without being an economically sensible cash-out location. A loyalty benefit tied to a phone bill may improve retention without establishing a primary bank account.
A developed-market strategy should therefore start by measuring the customer problem and the achievable change in behaviour. Can the arrangement reduce acquisition cost? Does it improve account activation or salary inflows? Does the partner control a relevant journey, such as device financing, relocation or payroll? Can the bank retain the customer when the initial need has passed? Those answers have to come from evidence, not from subscriber counts.
The business economics also require a clear division of responsibilities. A bank can provide deposits, cards and payment services while a non-bank partner supplies distribution and experience. The arrangement must still address complaints, reconciliations, AML/KYC responsibilities, consumer disclosures, data access, contingency arrangements and financial losses. Supervisors in the US and Canada explicitly stress that banks retain responsibility for outsourced or third-party activities.
Sources Federal Reserve, interagency third-party risk-management guidance; OSFI, Guideline B-10: Third-Party Risk Management
The result may be a strong partnership, but it is not the same business as a telecom-led e-money issuer operating in an underbanked market. Treating them as interchangeable leads to poor investment assumptions and compliance surprises.
What the next chapter is more likely to involve
I would expect mobile financial services in developed markets to emerge selectively around propositions with a specific advantage: cross-border customer onboarding, payments tied to a recurring commercial relationship, merchant collections, earned-income access or differentiated loyalty economics. Some will be distributed through telecom operators. Others will be led by banks, platforms, merchants or specialist fintechs.
What these have in common has little to do with ownership model or technology stack. It comes down to the ability to provide a service at an economically attractive cost, with sufficient frequency and relevance to sustain usage. Where the customer already has satisfactory banking services, the new proposition must demonstrate additional value. Where a relationship is still being established, the distribution partner may have a better opportunity to acquire it early.
It would be a mistake, however, to assume that embedded distribution necessarily creates customer ownership. A bank providing regulated accounts behind another brand might earn attractive infrastructure fees but have limited opportunity to build direct retail relationships. Conversely, a partner may control engagement while carrying little of the regulated balance-sheet risk. Both models can be viable, but they should be evaluated according to their actual economics.
For banks, this fits the argument I have been making throughout this series. Financial-services growth will depend increasingly on recognising where customer relationships begin, what financial activities make them useful and how those relationships develop over time. Distribution can improve this process, but it cannot substitute for a sound product, prudent risk management and a credible commercial case.
The original mobile-money expansion succeeded because it matched financial needs, distribution reach and workable regulation. Its next chapter will be written in markets with very different starting conditions. The winners will be the ones who start from those conditions, not the ones who try to run the same playbook everywhere.
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