|Issue:||Africa and the Middle East 2009|
|Topic:||Mobile banking – bridging the divide?|
|Organisation:||Zain Kenya Limited|
Rene Meza is the Managing Director of Zain Kenya Limited; he has more than ten years of experience in the telecom industry on three continents – Africa, Asia and South America. A Paraguayan, Mr Meza was the CEO of Millicom Tanzania (Tigo) prior to joining Zain. Before that, as its Chief Operating Officer, Mr Meza was responsible for the overall performance of Millicom Pakistan. Previously, Mr Meza held various managerial positions in Millicom Paraguay including Customer Service, Revenue Assurance, Marketing, Sales & Distribution. Rene Meza holds a degree in Marketing & Business Administration from the American University of Paraguay.
In Africa, mobile telephony is transforming once remote villages into thriving markets. Mobile phones not only give people access to voice and data communications, but banking services as well. The mobile phone’s popular acceptance made it easy to introduce the mobile banking services that are transforming local economies throughout the continent by taking the place of a bank for a vast numbers of ‘unbanked’ Africans. In rural area, individuals and business people alike have embraced mobile banking in their day-to-day activities.
When I first landed in Africa a few years ago, my ambition was to influence the lives of as many people as possible through mobile telephony. This was, and still is, a big task but something that I feel very passionate about and believe in fully. The new millennium brought with it phenomenal developments in mobile communication; these new technologies fostered significant economic and social transformation everywhere they reached. In 2003, 13 million new mobile subscribers were added, a figure equivalent to the total number of African telephone subscribers in 1995. When I first visited a market in Tanzania one thing was evident; wireless technology was literally transforming once remote villages into rich trading partners. Farmers in the villages could call their customary buyers using their mobile phones, and traders could get the latest commodity prices; mobile phones were quickly and efficiently changing life in Africa. Indeed, better things were yet to come. With the introduction of mobile banking, a few years later, the mobile phone became more that just a communication gadget – it literally took the place of a bank. Traders in rural area discarded their wallets and embraced mobile banking services as the way carry out their day-to-day activities. This pervasive mobile device, with fewer barriers to entry than most technologies, quickly penetrated some of the poorest economies due to the overwhelming demand for any form of telecommunications. The widespread availability of mobile phones presented individuals with a unique opportunity to access not only voice and data communications, but banking services as well. Mobile phone-based virtual bank accounts with advanced features offer services that compare well with many traditional bank account services found throughout the world. Account transfers, bill payments, cash deposits, withdrawals and, of course, prepaid mobile phone airtime vending were all supported with real-time clearing. Fishermen on the shores of Lake Victoria could transact business with both consumers and with fellow fishermen from the neighbouring islands almost instantly – transactions that previously involved a whole day of meetings along the shore. The people of East Africa and their businesses had moved into a world of real-time financial mobility. In Machakos, a remote town on the semi arid plains east of Nairobi the capital of Kenya, a group of women entrepreneurs had taken the mobility of their wireless gadgets to another level; they had converted the village pay phone booths into mobile banks. During the entire day, using mobile banking applications, these women served as the receiving bank for the hundreds of transactions carried out in the Majengo marketplace in the heart of the town. Mobile devices not only succeeded on the trading front, they also helped fighting the HIV scourge that had been ravaging a nearby slum. Using mobile banking services, people living with HIV could easily order there anti retroviral drugs; this helped bed ridden people who could not obtain medication because they had no way to communicate their need. Users, mobile operators, banks and retailers now depend upon many of the unforeseen benefits of mobile banking. Operators see mBanking as a way to increase traffic, retain customers and improve service offerings. Banks see mobile banking as both a threat and a way to expand their business – depending upon whether they, or their competition, provide the service. For banks that work with mobile operators to provide the service, anyone with a mobile phone can immediately become a banking customer. Mobile banking provides an alternative to carrying cash and increases the cash held within the banking system, it increases security and payment efficiencies and reduces dependency on ATMs and branch infrastructures – all of which reduce operating expenditure. However, the greatest beneficiaries are the users who can effect payments from anywhere to anyone creating a macroeconomic benefit that is not yet measurable, but is most certainly significant. Mobile banking is also helping to overcome geographical constraints. In the greater North Eastern Province of Kenya, which covers over 126,902 km², pastoralists have embraced mobile banking for their businesses. At the livestock market in the town of Garissa, nomadic families are able to sell their livestock, receive the proceeds and carry the money on the ‘Sim cards’ in their mobile devices. The province, known for its banditry, has recorded growing revenues now that people can buy and sell livestock without the worry and risk of carrying cash to the bank. The quick acceptance of this service has surprised us. Customers are regularly making payments from as little as one US Dollar to as much as several thousand US Dollars by using their mobile phones. Although the mBanking service has had its challenges, the main one being security of transactions, it is no longer a fledgling technology. The platform has proven itself as a secure way to do business. Africa’s Mobile phone usage is still growing rapidly. Mobile phones not only provide communications, they also serve as mini-computers, a mobile phone not only makes people reachable it also puts a secure, if somewhat limited, computing device in the palm of their hands. mBanking offers people in developing countries a variety of important applications and does so using technology that is already widely accepted – meaning half the battle is already won. Years ago, I wondered whether the impact of mobile phones on the Indian society and other emerging regions like Bangladesh and Philippines would transform them. We see the answer today, mBanking is a perfect example of how communications, especially mobile phones, can and do transform societies. While, in the developed world most fret about developing elegant and complex mobile transaction systems – the folks in developing regions who need mobile banking most figure out things on their own. The reality is that African businesses are more than willing to try new technologies, which are safe, cost effective and allow them to break traditional barriers. Today, more than three-quarters of African states now have competition in the mobile market and more than 95 per cent of Africa’ users enjoy a choice of operators. Competition has brought users an ever-increasing number of important benefits such as mobile banking – and is likely to continue to do so – thereby paving the way, over time, for the ultimate demise of the lamentable ‘digital divide’.