Mobile Banking in Africa 2011 

One of the biggest success stories is M-Pesa’s Mobile Wallet in Kenya. For Kenyans, who have limited to no access to brick and mortar banking facilities and face an exponentially growing crime rate in the region, which makes it difficult for locals to manage their cash, m-banking is an innovation that has changed lives.

The reality on the ground is that with lack of infrastructure and numerous sociological and political barriers, the mobile phone has become the one omnipresent device with the least amount of restraints as compared with most other technologies. It has successfully penetrated some of the most deprived economies and simultaneously spurred unprecedented demand in a very short amount of time.

It all started with a simple operational move on the part of the telecoms provider - the inspired idea was the supplanting of airtime for cash. Once M-Pesa managed to convert airtime to money the trend has been growing ever more.

So what does this mean to the industry on the whole? The short answer is that it poses a unique opportunity for individuals and organisations from all over the world. A base-level technology using second-generation mobile devices is soon turning into a war among the industry giants who want a piece of the market. M-Pesa now provides international money transfers between Kenya and other African countries and even the UK.

While mobile banking is still ill-fated in most progressive countries, using pre-paid airtime as virtual currency to pay bills, transfer money, or pay for groceries is fast becoming the norm in some African countries.

There are over 100 million mobile phones in Africa and that number is growing everyday. While this may seem like a big figure it's just a fraction compared to the market that still needs to be converted. Countries such as Kenya, South Africa and much of the North African region are now facing 100 per cent m-banking penetration. In Burundi, the Central African Republic, Eritrea, and Rwanda the penetration is far less, standing at a meagre 30 per cent in comparison. This gap is now attracting big players like ‘First National Bank’, Ceplay, Barclays and many more. Some banks have projected more then 1.25 million transactions a year.

Moving into a new era, the scope for technological and business evolution has widened immensely. Some of the developments that have come out of the rise of m-banking are:

• New business models for operators and competition-led service improvements.
• Next-generation devices are now the most compelling offering in the African market.
• Design/technology shops are looking at setting up divisions in the region aimed at creating new solutions and success stories.
• Using mobile money to aid progressive trade.
• m-commerce to aid better opportunities for the growth of the retail market and boost the agro-based economy.
• m-banking in the view of supporting education, public welfare and health care.

The success in Africa has triggered an m-banking revolution in Asia as well, and one of the early adopters is the Philippines. This growing demand and wide appreciation has prompted some banks to look at mobile money as a threat. But it’s very evident that in the future the same banks will look at the underlined potential of innovation and change tack to create tie-ups with service providers. One such story is that of the Branson Centre of Entrepreneurship and Forus Financial Transaction Services; the two firms jointly launched the Mahala Platform-Free Banking in May 2011. The freemium model is all set to create free banking with only value added service charges, creating jobs and a market for the smallest of merchants and individuals. Mahala is just one of the many new innovations in the m-banking arena in Africa. The next two years are seminal to the growth of m-banking in the region and they will bring much more to the mobile-money arena. You can bet your last dollar of mobile credit on it.