Underbanked consumers need minute-to-minute information about their finances, and mobile financial services (MFS) are well suited to deliver it. Although these consumers often have insufficient access to financial services, their access to mobile phones is fairly widespread. This disparity suggests a large opportunity exists for financial providers to effectively serve the underbanked population using the mobile channel. Given the sheer volume of mobile phone usage in the United States, combined with ever-increasing mobile phone functionality, there is vast potential for a robust suite of mobile financial management and transaction tools to strengthen the financial lives of underbanked consumers.

Mobile financial services are conventionally broken into three functional areas: information services, transaction services, and payments (see Appendix A for more details). This framework is helpful in defining exactly what MFS is, but the Center for Financial Services Innovation (CFSI) proposes an alternative MFS framework that parses the opportunities for providers according to the potential benefits for financially underserved consumers. In the near term, MFS can help increase consumer financial capability, make key transactions more convenient, and make customer accounts more secure. In the future, mobile financial services could be used to convert cash-based payments to electronic payments, and could eventually help increase access to financial accounts for unbanked and underbanked consumers.

This list of opportunities conspicuously omits the MFS function that has garnered the most attention, by far, in recent months: mobile payments. In particular, mobile wallets and near-field communication (NFC) payments have generated a great deal of buzz. While these emerging payments models offer some novelty appeal, they face substantial barriers to widespread adoption, including issues related to the business model and revenue potential, customer ownership, infrastructure, the value proposition the payments ecosystem, and consumer psychology. Additional barriers exist for underbanked consumers, notably the fact that mobile wallets and NFC payments are currently structured to support existing accounts rather than new accounts.