By Ashlyn Bai, Stephen Liu, Christian Yu
Introduction to Mobile Banking
Mobile banking did not emerge from nowhere. Like most major shifts in financial history, it rests on foundations that governments and regulatory institutions had already built. The rise of the Bank of England in 1694 and the creation of the Federal Reserve in 1913 were moments when states stepped in to define how money moved, who controlled it, and under what rules. Mobile banking fits into that same historical pattern. It is not simply a byproduct of smartphones and app stores, but the result of institutional decisions about who is allowed to participate in the financial system.
A clear example appears in places like Kenya. After the introduction of M-Pesa, the share of Kenyans with financial accounts rose from 42% in 2011 to 75% in 2014, while inclusion among the poorest citizens grew by more than 200% in three years. This expansion depended on regulators allowing non-bank entities to issue electronic money and operate mobile payment platforms. Research covering more than 71,000 adults across 78 countries shows that similar regulatory reforms increased access to formal credit, raising the probability of borrowing by about 22%, with especially strong effects for women and lower-income groups. Technology enabled the system, but policy made it possible.
Still, the story does not end with access. Mobile banking expands participation in formal finance, particularly for people living far from bank branches. A non-spatial model of banking can remove real barriers. But broader access does not necessarily mean equity. As more users depend on the same payment networks and mobile money operators, those platforms accumulate significant influence over who receives credit, on what terms, and who is excluded.
Despite widespread mobile phone ownership, about 1.3 billion adults worldwide still lack financial accounts, even though many already have the basic requirements for digital banking such as phones and identification. This suggests a deeper institutional problem. Technology can make financial access possible, but weak regulatory systems, uneven infrastructure, and unequal resources limit how widely those benefits are realized.
Taken together, the history of mobile banking looks less like a sudden revolution and more like a continuation of earlier patterns. Where governments build stable regulatory frameworks and invest in digital infrastructure, mobile banking can expand participation. Where those conditions are weaker, the technology fills some gaps but leaves others intact, while the institutions running the networks gain increasing control over the system itself.
The Role of Government in Mobile Banking
Now, mobile banking has often been framed as a result of rapid technological innovation, but its emergence is also the outcome of institutional design and government involvement in financial systems. As stated in the section above, new financial forms have not appeared in isolation, rather, they have been enabled by governments that create the legal, regulatory, and infrastructural conditions necessary for innovation. Mobile banking follows this same historical pattern, reflecting the importance of government involvement in shaping financial systems.
An example from a case study we discussed in class was the creation of the Bank of England in 1694, which was established by the English government to finance wartime debt and stabilize public finances. In exchange for lending to the state, the Bank received privileges such as note issuance and a central role in the financial system. Over time, it evolved into a key institution responsible for managing payments and credit. This case illustrates a broader principle emphasized in this course, where financial innovations depend on government-backed institutions that provide credibility and structure to financial markets, similarly to how mobile banking requires governments to establish legal frameworks for data protection, digital payments, etc.
The development of mobile banking also parallels the creation of the Federal Reserve in 1913 which was designed to stabilize the U.S. banking system after repeated financial crises. The Federal Reserve introduced tools such as the discount window and open market operations to provide infrastructure necessary for efficient financial transactions. In the same way, modern governments and central banks are required to play a crucial role in enabling mobile banking by supporting payment systems and regulatory frameworks for fintech firms.
In addition to infrastructure, governments have shaped mobile banking through regulation and competition policy. By allowing new entrants, regulators have encouraged innovation while maintaining financial stability. This reflects the recurring theme in financial history that governments must balance innovation and risk. The experience of earlier banking systems demonstrate that poorly designed institutions can lead to instability, and the demise of the financial system.
Ultimately, the creation of mobile banking is not solely a technological development but part of a broader historical pattern in which governments enable financial transformation through institutional frameworks. As seen through the examples of the Bank of England and the Federal Reserve cases, governments have to facilitate the rise of modern banking by establishing legal, technological, and regulatory conditions necessary for financial growth.
Mobile Banking: Its Access, Inclusion, and Power
While government bodies offer the framework that allows for the existence of digital banking, mobile banking has more complex effects on access, inclusion, and power. Mobile banking is a tool for increasing financial inclusion by minimizing the importance of geographical distances, and it is also a tool for maintaining power through networks and institutions.
One of its key advantages is that it makes financial services less dependent on physical locations. It allows people living in rural areas to access these services, where traditional banking infrastructure may be limited. In Michelle Anne Mok’s study of the Canadian banking industry, she writes of a shift from a “spatially-oriented banking approach to a non-spatial approach.” This is because transactions became more a function of “alternative delivery channels” rather than the traditional branch network. Mok also reports that the branch network she studied was shrinking, indicating that access to finance was already becoming less dependent on a physical location before mobile banking became universal. Similar to fiat-based monetary systems, it relies not only on convenience but also on trust in the institutions and regulatory frameworks that support it.
Although this increases accessibility, it does not mean that there will be less inequality. In Wuraola Peter’s study of women entrepreneurs in rural Nigeria, she finds that “financial inclusion and access to resources remain challenges” even in areas where technology-based money services are available. Her work also highlights the value and limitations of informal credit providers in filling the “institutional voids in banking practices and technology-enabled money services.” This is significant because it indicates that technology-based financial services can increase access while still limiting many users through weak institutions and uneven resource distribution.
The history of mobile banking is not just a technological advancement,but also part of a broader pattern in the history of banking. This is where banking has developed by creating new avenues of access and also maintaining old patterns of dependence. In this respect, mobile banking resembles earlier commercial and state-supported banking systems, which also widened participation while concentrating authority in the institutions that managed money and payments.
As more people use the same digital platforms and payment systems, these networks have more power because they determine who gets access to financial services and on what terms. This means that mobile banking can be used to increase inclusion while at the same time increasing dependence on the institutions and systems that control digital financial platforms. However, the speed and scale of these relations have changed over the years. Mobile banking can expand access to financial services more broadly, but it does not remove the institutional conditions that influence participation. Ultimately, mobile banking is a reflection of the possibilities and limitations of financial advancement.
References
BAC, bac-lac.on.worldcat.org/oclc/1294013475?lang=en&resource=folderlist. Accessed 16 Mar. 2026.
Brazzel, Diana. “How Mobile Banking Is Transforming Africa.” Harvard Kennedy School, http://www.hks.harvard.edu/faculty-research/policy-topics/public-finance/how-mobile-banking-transforming-africa. Accessed 16 Mar. 2026.
ProQuest Dissertations & Theses Global, about.proquest.com/en/products-services/pqdtglobal/. Accessed 17 Mar. 2026.
Staff, Knowledge at Wharton. “How Mobile Money Fosters Financial Inclusion.” Knowledge at Wharton, Knowledge at Wharton, 15 Dec. 2023, knowledge.wharton.upenn.edu/article/how-mobile-money-fosters-financial-inclusion/.
A Global History of Banking 
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