Mobile banking inevitable but ATM card will remain useful

During a wide-ranging interview with The New Times at a recent GSMA M360 Africa Series in Kigali, Mr Akinwale Goodluck, Head of the Global Mobile Operators’ organisation in sub-Saharan, sought to dispel the myth that mobile money would cannibalise banks.

He pointed to the fintech synergy between telcos and banks, noting how the significant numbers of people across the region are using “phones to do proper mobile banking.”

This is true, and perhaps more pronounced in East Africa. The sub-region has the largest mobile money market on the continent, accounting for 56.4 per cent of total users in sub-Saharan Africa, according to GSMA.

East Africa is, however, only leading the way, but not for long.

Among a number of predictions by a panel of experts at the M360 Series meet about what the future might hold, it might only take a year for the rest of the continent to catch up.

By the end of 2019, the panel projected the structure of Africa financial services sector will begin to shift due to immense pressure from fintech, blockchain and mobile money. This is given credence by ongoing African Union efforts to roll-out a common mobile money payment system across the continent by the end of this year.

What is certain, however, is that the pace at which the fintech sector and the ecosystem it has spawned are evolving makes the prediction more than a distinct possibility.

For this, Mr Akinwale had a point on mobile banking that I wish to illustrate with a personal example of a situation I encountered recently that may occur to anybody, but the positive outcome of which we should hope to see replicated across Africa.

It happened that the ATM card to my Rwanda bank account expired while in Nairobi. I had taken it for granted that, since the bank has a representative office in the Kenyan city, it would be a matter of simply renewing it there. After all, it now only takes a matter of minutes to have one renewed.

This, however, was not to be. It turned out the rep office is not mandated to offer the service. Renewing the card would have to be done in Kigali.

For one in urgent need of money to facilitate something, the inconvenience this portended is self-explanatory. But, as I came to discover, this requirement is with all the banks in the country, despite most of the major ones having a regional footprint with franchises in all the East African countries. Because of this, I harbour a personal gripe that I’ll revert to in a moment.

Suffice to say the only other options available were either using the relatively more expensive SWIFT (Society for Worldwide Interbank Financial Transactions) transfer or the available mobile banking facility that turned out to have a glitch.

Though glad the glitch was eventually resolved, I will, for now, leave it as a story for another day about the hoops I had to jump to enable the push-and-pull (i.e., cash deposit and withdrawal) facility between the bank and my mobile network operator, and the hefty bank-to-bank costs I had to incur under SWIFT transfers.

The point is the imminent continent-wide mobile banking and the inherent possibilities under the borderless bank-telco links such as technology now seamlessly may afford from the Cape to Cairo.

If we take it as a given that the structure of Africa financial services sector will yield under the predicted fintech pressure in just a year’s time, then it may not matter wherever one is on the continent.

All will be required is the existence of a conducive environment allowing interconnectivity such as we have in East Africa enabling cash transfers between mobile network operators in the different countries.

Along with the AU efforts, such a conducive environment is illustrated in the apparent change of policy in Ethiopia recently to allow the introduction of Mpesa services under the country’s telecommunications monopoly, Ethio telecom.

And, with 135 live mobile money services across the sub-Sahara region at the end of 2017, according to GSMA, a cross-border combination of any number of the services in the region promises immense possibilities under the African continental free trade area (AfCFTA) agreement.

So far the agreement has been signed by 49 countries since launch in March in Kigali.

While a minimum of 22 ratifications is required to enable the AfCFTA to come into force, it aims to break cross-border trade barriers and ensure productive economic activities among the 55 AU member countries.

Still, even as the borders currently obtain continent-wide, traditional banking remains set to retain its edge for a while longer.

Thus the gripe about my bank’s policy on ATM card renewal as an occasional traveller on the continent, by way of which I am also appealing to the other banks with a larger regional footprint.

There ought to be a mechanism to renew ATM cards in the banks’ representative offices wherever they may be in the region.

It is not only a service well deserved of their travelling customers, but, armed with a visa ATM card, one can transact at any bank or point-of-sale at a supermarket anywhere, not only in East Africa but across Africa and anywhere in the world.

Twitter: @gituram

The views expressed in this article are of the author.

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