How Telecom Companies Become Banks: Explaining the Evolution of Payments, Lending, and Financial Services — Mobile Financial Revolution from Africa Vol. 2 —

In Part 1, we outlined the background of how mobile money expanded into a $2 trillion market in just four years, and the role Africa plays in driving that growth.

However, what is truly important is not the expansion of the market size itself. A more essential change lies in the fact that mobile money is beginning to reshape the very mechanisms of finance.

In this series, based on data from the latest GSMA report, "The State of the Industry Report on Mobile Money," we will organize the structure of this change.

Currently, mobile money incorporates functions such as savings, lending, insurance, and payments, and is changing the very way financial services are provided. Furthermore, its influence is not limited to the financial world; it is spreading to various aspects of the real economy, including commerce, corporate payments, and government fund distribution.

At the same time, changes are emerging in the relationship with banks. While mobile money was once seen as a substitute for banks, a new hybrid financial structure is now being formed that expands functions while connecting with banks.

In Part 2, building on these changes, we will organize "how mobile money is expanding financial functions and evolving into a foundational infrastructure for the economy".

Chapter 4: Expansion from "Remittance" to "Financial Functions"

Mobile money initially spread as a simple remittance service for sending funds between individuals. However, its role has changed significantly today.

Beyond the single function of remittance, it is expanding into a service that incorporates multiple financial functions.

The most symbolic aspect of this change is the diversification of services offered.

In 2025, the provision of insurance services by mobile money operators increased by approximately 30% from the previous year, and savings and lending services are also continuing to expand.

Particularly in the lending sector, many operators are providing nano-loans of up to about $20, and mechanisms to meet small-scale, short-term funding needs that were difficult for traditional banks to handle are spreading.

Also, the usage of mobile money is rapidly expanding. In addition to remittances, many financial activities in daily life, such as utility bill payments, receipt of salaries and subsidies, and even international remittances, are now completed on mobile.

In fact, international remittances via mobile money reached a scale of $45 billion in 2025, and its role as an infrastructure for global fund transfers is also strengthening.

What is even more important is the existence of people for whom mobile money is the "only gateway" to financial access.

In low- and middle-income countries, approximately 190 million people use mobile money as their only official financial account.

This indicates that a new form of finance that does not assume a bank account is already becoming a reality.

Supporting this functional expansion is the flexible design of mobile money.

With an account structure based on mobile phone numbers, simple operability, and connection to cash through agent networks, an environment is in place that can be used by a wide range of users.

As a result, mobile money has evolved from a 'remittance service' into a 'platform that integrates multiple financial functions'.

People are now completing a series of financial actions—such as saving, borrowing, paying, and receiving—within a single system rather than just sending money.

What is important is that this change is not an extension of existing banking functions, but is realized under a new design philosophy.

Mobile money has 'decomposed' financial functions and reconstructed them in a simpler, more accessible form, thereby penetrating segments that traditional financial services could not reach.

Chapter 5: Penetration into the Real Economy (Payments and Commerce)

In the evolution of mobile money, one of the most important changes in recent years is 'penetration into the real economy'.

While person-to-person (P2P) transfers were once the center of usage, it is now spreading to the core of economic activities such as commercial payments and corporate transactions.

In fact, person-to-person transfers still account for a large proportion of transactions in mobile money.

Even as of 2025, P2P transactions remain the largest use case, accounting for approximately 42% of the total.

On the other hand, changes are occurring in that structure. While P2P was overwhelmingly central in the past, commercial transactions are now expanding rapidly, and the balance is beginning to shift.

The symbol of this is the rapid growth of merchant payments.

Merchant payment volume reached $155 billion in 2025, recording the highest growth rate of approximately 42% year-on-year.

This indicates that mobile money has become widely used not only 'from person to person' but also in the flow 'from person to business'.

East Africa is particularly driving this growth.

In daily shopping and service usage, paying with mobile money instead of cash is becoming common, and a wide range of players, from small street vendors to small and medium-sized enterprises and even large-scale operators, are being incorporated into this ecosystem.

Also, the acceptance system on the merchant side is expanding rapidly.

Between 2024 and 2025, the number of merchants accepting mobile money increased by approximately 41%, and the number of active merchants is also growing significantly. This means it is not just being introduced, but is being used continuously in actual commercial transactions.

Furthermore, mobile money is also being utilized for payments by companies and governments. Bulk disbursements used for salary and subsidy distribution reached $139 billion in 2025, an increase of approximately 25% year-on-year.

As a result, the flow of funds is being managed more efficiently and transparently.

Due to these changes, mobile money has evolved from a mere 'remittance tool' into a 'payment infrastructure that drives the economy'.

Consumers make daily payments via mobile, businesses receive sales via mobile, and those funds circulate back into the economy.This entire flow is increasingly being completed within mobile money.

What is important is that this change is not limited to certain urban areas. In fact, it is precisely in regions where traditional financial infrastructure was lacking that mobile money has rapidly penetrated and is functioning as the foundation of the real economy.

Current mobile money can be viewed not just as a form of financial service, but as evolving into a payment layer that supports economic activity itself.

Chapter 6: Integration with Banks and "Hybrid Finance"

Mobile money is often spoken of as a "substitute for banks," but in reality, the relationship is more complex.

What has become clear in recent years is a movement toward "convergence," where mobile money and banks are not competing, but rather connecting and integrating with each other.

Symbolizing this change is the expansion of fund transfers between banks and mobile money.

In 2025, bank-to-mobile transfers reached $167 billion, and mobile-to-bank transfers reached $163 billion.

Both recorded growth of over 30% year-on-year, showing that the connection between the two is progressing rapidly.

This movement is bringing changes to the traditional financial structure. Previously, funding for mobile money was centered on cash-in, but now the ratio of direct transfers from banks is steadily increasing.

By connecting banks and mobile money, the movement of funds becomes smoother and more efficient, and the digitalization of the entire financial system is progressing.

On the other hand, the role of cash has not disappeared. In 2025, cash-in through agents reached $430 billion, still accounting for a large proportion.

Also, it has been confirmed that in the mobile money ecosystem, the majority of fund inflows originate from cash.

Thus, current mobile money is not "completely cashless" but has a structure where digital and cash coexist.

Those with bank accounts move funds via banks, and those without bank accounts digitize cash through agents. Both are connected within the same ecosystem.

This mechanism is what should be called "hybrid finance". Rather than shifting completely to digital, it enhances financial inclusion by integrating multiple means while adapting to the real economic environment.

Especially in regions where financial infrastructure is insufficient, this hybrid structure holds great significance.

By connecting everyone—those with bank accounts, those without, and those who can only use cash—to the same financial network, the liquidity of the entire economy is thought to increase.

What is important is that mobile money is not excluding banks, but rather "expanding while incorporating banks".

Could it not be said that this flexible structure is one of the factors supporting its rapid adoption and sustainable growth?

As we have seen so far, mobile money started as a remittance service and has evolved into a financial platform that integrates payments, lending, savings, insurance, and more.

Furthermore, through connections with banks and penetration into the real economy, it is becoming an entity that is restructuring the financial system itself.

However, behind this rapid expansion, new challenges are also emerging.

Issues such as inactive accounts, gender gaps, and imbalances in digital access mean that there are still barriers to overcome for mobile money to truly establish itself as a foundation of society.

In Part 3, we will organize these challenges and explore where mobile finance is headed and its future possibilities.

❚ Serial Series "Mobile Financial Revolution from Africa: The Full Structure of a $2 Trillion Market"

❚ For those interested in the African market and the fintech sector

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❚ Information Source

https://www.gsma.com/sotir/