In Fast Company magazine this month, Irin Carmon wrote about 32 year-old Nehemias Navas-Perez, a landscaper from New York who sends a couple of hundred dollars to his family in Guatemala every month.

Remittances, she says, account for approximately 11 percent of GDP in small countries like Guatemala. In fact, in 2011 the World Bank reports there were $483 billion in remittances worldwide.

In a new report released earlier this month, the World Economic Forum stated that not only can (WEF) widespread adoption of financial services help individuals feel financially included, but it can save billions of dollars a year. The report, entitled Galvanizing Support: The Role of Government in Advancing Adoption of Mobile Financial Services was developed in collaboration with The Boston Consulting Group (BCG).

Yet despite the understanding of the benefits of mobile financial services, wide-scale adoption has yet to be achieved. One reason: no-one has stepped up to the plate to co-ordinate activities across the various actors and ensure integration.

“Mobile financial services represent a fundamentally transformational opportunity to connect billions of people to the formal economy,” said William Hoffman, Head of the Telecommunications Industry, World Economic Forum USA. “A renewed commitment by all stakeholders to not only discuss the potential of mobile financial services, but to actually use it, is needed to ensure the promise of this opportunity is realized.”

It’s not only individuals who send money abroad through wire transfer companies such as Western Union. The report shows that, within emerging economies, government disbursements account for about $1 trillion per year - and an estimated 20 per cent of those funds (or $200 billion) - fails to reach the intended recipients due to mismanagement, fraud and/or corruption.

That’s why mobile financial services are so critical. By using mobile phones to transfer money, the transaction is secure, authenticated, reliable and personalized, which minimizes the chance of leakages, the report says.

The report further highlights key strategies governments can adopt with regards to mobile financial services to help reduce costs and risks and connect individuals to the formal economy.

One of the benefits of mobile financial services is that governments can use them to distribute money for welfare programs and salaries of government employees who do not possess bank accounts.

“Governments in the developing world have a huge opportunity on their hands. However, it needs dedicated focus from government and private sector alike,” said Neeraj Aggarwal, a New Delhi-based partner at BCG. “A few countries, like India for example, have started taking steps to enable the full potential of mobile financial services, but there is still a long way to go. These first experiments can have significant learnings not only for India but also for other developing economies.”

(Photo ©  Jolanda Flubacher for World Economic Forum)