Mobile branchless banking in emerging markets

Branchless banking allows the customer to have access to banking services without being reliant on a brick-and-mortar bank branch. Technological advancements and the adoption of a collaborative approach between banking service providers and technology companies are going to forge a new way of doing banking in emerging markets, where transport, electrical and other infrastructure is often underdeveloped.

The advantages of going mobile

Some of the advantages of mobile branchless banking, to both the user and the banking provider, are:

  •  it provides users with 24-hour access to services;
  •  it offers secure and mobile banking opportunities wherever you are;
  •  it generates a limited amount of paperwork;
  •  costs are kept low for both the provider and user;
  •  it facilitates financial inclusion given the levels of cellphone penetration; and
  •  the customer saves on the time and costs of traditional banking such as transportation and time off work.

Front-running mobile banking operators

MoreMagic, a subsidiary of Oberthus Technologies (OT), and mBank recently joined forces to provide a new solution to Africa’s unbanked population. mWalletTM is packaged to attract a large customer base. Oberthur Technologies also recently re-branded themselves as ‘The M Company’ to establish itself in the digital security solutions front for the mobility space.

“We aim at serving millions of clients currently not reached by traditional banking and micro-finance institutions. With its worldwide footprint in the telecom and banking markets and with MoreMagic’s expertise in mobile money, OT is a partner of choice to launch a Mobile Branchless Banking solution. Together, by serving markets that lack a comprehensive banking infrastructure and have a high penetration of mobile telephony, we will further contribute towards financial inclusion” said Arnaud Ventura, co-founder PlaNet Finance Group, co-founder of mBank Group.

M-Pesa (M for mobile, and pesa is Swahili for money) is a mobile phone-based money transfer and micro financing service for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania. Adoption of M-PESA, especially in Kenya, has been an outright success and has acted as the stimulus behind further mobile branchless banking in the rest of Africa.

Western Union, which has physical branches in 50 African nations, is also working hard to ride the mobile banking wave. “We see Africa as being the hotbed or ground zero for some interesting technological advances,” said Richard Malcolm, south and east African regional VP for Western Union.

 “Some of the things that are happening here in Africa, happened here first … We are talking about mobile money transfers, definitely. I am also talking about what we call account based money transfers, so where a person with a bank account can send or receive from their bank account or into their bank account.”

According to Fredrik Jejdling, Ericsson’s sub-Saharan African regional head, banking apps are currently the most downloaded mobile apps in Africa, showing the needs for and popularity of such a service. That said, only about 10 percent of the African population is banked at present, meaning the room for growth in mobile branchless banking in Africa’s emerging markets is truly immense.

David Okwara

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3 Responses to Mobile branchless banking in emerging markets

  1. Misairi Frank Bogere February 11, 2014 at 4:53 pm #

    Well, in the current econmic environment especially in Africa and the challenges of infrastructure that exist in Africa especially poor transport networks, if banks can leverage this as an opportunity for them to exploit and launch reliable and good mobile banking networks, then such financial institutions will increase on their competetiveness.

    The challenge though will be that as they make such investments, they will need push countries to invest in goo fibre optic cables that will support their mobile networks besides their own investments

    • Mogale Olebogeng February 14, 2014 at 9:40 am #

      Great point Misairi. The infrastructure deficit is a major challenge. The great news however is that, with the ever growing infrastructure development in most economies and the developmental agenda of increasing intra-Africa trade, digital channels like mobile have a massive role to play in facilitating trade, not only on the consumer side but also for commercial clients. . So this constitutes an opportunity for the banking industries . We are now hearing of transactions in the region of $1bn being authorised over the mobile. What is also interesting is that although alternative channels are growing, traditional channels such as branch are still pivotal and are an integral part of the future. Our research suggest that most customers in the continent still associate brand strength with branch presence and still believe in a personal touch. A great convergence between the two paradigms is smart ATM like platforms that enable real life interaction between the customer and service consultants. Investment in communications infrastructure will be key but in the mean time basic technology like sms does do the trick for basic banking and payments services.

      • Misairi Frank Bogere November 27, 2014 at 4:44 am #

        Well said, what I can say though is that yes though branch network is still seen as a sign of strength in terms of brand, taking services nearer to the people among other benefits, we have seen branchless services preferred by customers. A case in point is Uganda where actually Mobile Money services by telecom companies has gained a lot of prominence. This is not to say that they are cheaper than banks but the convenience with which it comes with and ability to avoid ques not forgetting no hidden costs that most customers deem their bakers have

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