The continued rise of mobile banking in Africa
Africa remains to be one of the largest adopters of mobile banking and money services globally. Across the continent, more people are using digital accounts through their smartphones than traditional banking accounts.
Because the majority of the world’s mobile money services are based in Africa, the mobile network operators (MNOs) and mobile virtual network operators (MVNOs), have continued to embrace this opportunity in an effort to increase their user base and revolutionise the digital economy even further. With the networks having such unrivalled distribution and infrastructure, they are suited to reach the most remote people, and these are the people most in need of cost-effective financial services. It’s no secret that communities that sit within the subprime bracket are too often overlooked as customers.
Millions of the poorest Africans are already large-scale mobile phone subscribers, and on the basis, fees are low enough, the mobile networks viewed these people would be effective users of financial services. According to EM, 81.6% of South African internet users used their smartphones to access the internet in 2014. By the year 2020, the mobile money market in Africa is expected to be worth more than $14 billion, says Ibid. Undoubtedly the mobile revolution was already well on its way 5 or so years ago, and African business continues to invest and develop financial technologies to support providers, life-changing solutions and customers.
It all stems from regulation. Mobile operators and telecom companies would not be the mobile money lenders that exist today, had African governments not made it possible for disruptive fintech companies to provide financial solutions for the banks to eventually adopt. By enabling a canvas for new players to enter the market, regulations set the stage for plenty of competition and technology innovation. Even with the supportive regulatory framework, businesses still face many challenges as they head to market. For this very reason, the banks must also collaborate in order to compete.
A fairly recent example of this collaboration is evident across Tanzania, Madagascar and Rwanda. In each of these regions, all mobile money providers are interoperable with one another, meaning a customer subscribing to one service can readily transact with customers on another service. This systemic approach makes the industry far more valuable to customers, which in turn creates a halo effect for the MNO’s and smartphone manufacturers. Banks should be also included so that all financial providers in a country comprise a single, frictionless digital financial system.
Merchants and commercial services will in time join the ecosystem so that customers can pay for all the things they need in life without using cash. It is a different world than the one we live in now, one would argue we are facing a cashless society eventually. Everyone benefits from an economy that includes everyone. Providers benefit from millions of new customers. Governments benefit from more productive and self-serving population. Newly banked individuals benefit from secure and convenient tools for saving and spending money.
Every day, digital financial services are more integrated into African lives and economies. Before long, Africa will be more than the home of mobile money but the evolution must continue and there is still much to be done to get us there.