Mobile Financial Services

Mobile Financial Services

In 2020, SARS-CoV-2 (hereon referred to as “COVID” or “coronavirus”) swept across the globe, emerging as one of the defining pandemics of our times. The spread of COVID has had two contrasting effects on mobile financial services. On the one hand, consumer discretionary spending came under pressure at the end of 1Q20 as world activity paused amid shelter-in-place orders. This caused i) a significant decline in sales through physical channels, drastically reducing overall transaction volume and the number of payments being processed digitally; and ii) an increase in unemployment that has caused a temporary (yet lingering) reduction in remittance send volumes around the globe. However, the crisis in the physical world has driven consumers en masse to adopt digital, mobile-first banking, payments, and remittance tools as their access to physical bank locations has been restricted. This mass migration will prove to have a profound impact on the acceleration and rise of fully digital financial services.

Factors Accelerating Adoption of Digital Remittance Services

One key factor in the near term is that cash, according to the World Health Organization, is a proven carrier of disease1 . The WHO has recommended the use of contactless payments instead of banknotes and governments worldwide have taken notice, raising contactless limits and encouraging businesses to go cashless2. The growth in awareness will be cemented by both retailers (who want to keep their customers safe) and customers themselves (who want to minimize the risk of infection via unnecessary contact). We note that it is no longer just early adopters driving this transformation. Amid-COVID, age groups and demographics who were traditionally less inclined to try mobile financial services are reporting materially increased usage of digital payment channels, boosting network effects and lowering existing barriers to entry.3

The current pandemic has also impacted the remittances sector. A sudden spike in unemployment is expected to lead to a decrease in total send volume in the months to come. Additionally, partial or total lockdowns have limited the ability to send and receive money in-person at traditional offline locations, such as Western Union. This has put stress on cross-border financial flows, in particular affecting immigrant populations and their families.

Companies that facilitate this process through a transparent end-to-end digital alternative will be able to maintain service levels through the pandemic, potentially positioning them to win the market. One example we’ve seen within our own portfolio is that of Remitly, a Seattle-based provider of digital remittance services. Per Matt Oppenheimer, Co-founder and CEO of Remitly, “remittances are a lifeline for customers, especially as we face a global crisis that threatens to disproportionately devastate vulnerable people around the world. This, combined with the fact that customers are increasingly turning to digital remittance solutions, has resulted in rapid business growth, both with new customer additions and overall transactions reaching record-breaking levels. Specifically, from May 2019 to May 2020, Remitly tripled our rate of new customer additions, which was a sizable increase from our pre-COVID growth.”

Opportunities in Developing Economies

We further note that this acceleration in the adoption of mobile financial services will be especially notable in developing economies where the unbanked population is larger and there is an even greater opportunity for full digitalization. The combination of high smartphone penetration and lagging digitalization within existing financial institutions makes these users ideal consumers of fintech solutions that leverage a mobile-centric format to facilitate traditional processes (e.g. simple mobile E2E digital onboarding).

These solutions are imperative as the pandemic has created a series of new day-to-day difficulties for cash-reliant citizens in these markets. For example, physical retail stores where people go to pay their bills in cash (e.g. electricity, cellphone, gas, etc.) are now closed or only accept electronic payment methods as a result of COVID-related precautions. This has provided fertile ground for fintech businesses that can solve such common frictions, an example being Argentine mobile banking company Ualá, which doubled issuances in the first month of government lockdown4. We note that Facebook also selected Brazil for their first nationwide rollout of WhatsApp-enabled digital payments, likely because SMBs, many of which are now closed or otherwise impacted by the pandemic, are widely leveraging WhatsApp as a marketing tool to continue selling their products. Another example is Brazil’s challenger bank NuBank, which between March and April, saw an increase of 31% in online purchases with its virtual card, reaching 25 million customers in the process. This has allowed NuBank to greatly surpass the user base of all the leading challenger banks in Europe and the US5.

About Princeville Capital

Princeville Capital is an investment firm focused on backing rapidly growing technology-related companies around the world. The firm looks to support entrepreneurs seeking not only capital, but a value-added partner who can help them fulfill their aspirations to create companies of global scale. The firm has a worldwide network of relationships built over decades of experience investing in and advising rapidly growing companies in the technology sector. Princeville Capital has offices in San Francisco, Berlin, and Hong Kong.


  1. Gardner, Bill. “Dirty Banknotes May Be Spreading the Coronavirus, WHO Suggests.” The Telegraph, Telegraph Media Group, 2 Mar. 2020,
  2. Megaw, Nicholas. “Coronavirus Accelerates Shift Away from Cash.” Financial Times, Financial Times, 27 May 2020,
  3. “COVID-19 and the Financial Services Consumer: Supporting Customers and Driving Engagement through the Pandemic and Beyond.” Capgemini, Apr. 2020.
  4. Mander, Benedict, and Michael Stott. “Coronavirus Boosts Digital Banking as Argentines Lose Fondness for Cash.” Financial Times, Financial Times, 7 May 2020,
  5. Smith, Oliver. “Brazil’s Nubank Reaches 25m Customers across Latin America.” AltFi, AltFi, 2 June 2020, www.altfi. com/article/6655_brazils-nubank-reaches-25m-customers-across-latin-america.