Mobile payments are strategic for banks and corporates in East Africa
As a keen watcher of the East African region, I have followed the unrivaled growth and expansion of financial inclusion to millions from infancy to the current levels that have seen mobile money platforms users surpass those who use conventional banking services. The likes of VodaPesa and Tigopesa in Tanzania, MTN Money, Airtel money and WaridPesa in Uganda, Safaricom MPESA, Airtel Money and YuMoney in Kenya have brought traditional banking service providers back to the drawing board. Although not too late, major banks and large corporates in the region are looking into ways how they can use mobile payments as part of their main business strategy and there is now a firm belief among the bankers that the technology has become mainstream. The new thinking has come hot on heels as the Family Bank in Kenya announced a complete mobile banking platform while others have hinted at a rollout of near field communication technology soon. A Standard Chartered Bank insider recently told me they expect to start working on NFC very soon because of most of their clientele are mostly affluent. Several other banks IT managers I spoke to told me they would be taking a wait and see approach before rolling out NFC after they conclude trials using high end smartphones and phablets.
East African region monetizing mobile survey conducted mid this year shows that more than 90% of the more than 100 major banks and corporate companies surveyed are on overdrive plans on how they can introduce full mobile banking payments without going through the network operators. It seems clear from various research reports and major bank’s extensive experience that mobile payments are set to transform the banking industry and help reach the unbanked population that currently stand at more than half the population. For banks in East African region that are still standing on the sidelines of the race for mobile payments solutions, 2014 will be a critical moment because any continued delay risks the loss of market share and that is why banks who are non-traditional big boys are shaking up the market with major leading banks reporting loss of market share from small dynamic banks. Executives in banking industry are very much up to their armpits in strategies for mobile but those not yet doing so have a bleak future in the industry. Mobile network operators have not hibernated and a network operator in Kenya has advanced plans to develop features which will allow users of its mobile money platform to make payments on Near Field Communication enabled phones and phablets at retailers using the VISA and MasterCard contactless technology and Contador Harrison think this is going to change the market quite significantly and those banks playing catch up have to up their game.
Time when many banks and major companies were skeptical of Mobile money payments and wanted to wait until consumers are more ready for them is over. Now its time for banks in the region to bit the bullet on that one, because consumers are now shifting money where banking service demands for them are easily met. Intense pressure from non-traditional players such as mobile network operator has made banks and other companies move in the direction of mobile payments platforms and other cashless payments. Retailers and other businesses in the region have also showed they are willing to adopt new methods of payment and the prodding from mobile network operators has forced others to innovate in the field. In Kenya, there are advanced plans by several players in mobile money service providers to finally do away with cheques in the country middle and low-end business transactions. I expect that mobile banking strategy will be a big focus in 2014 in the East African region and from my point of view it’s going to get a lot of emphasis from traditional banking service providers. Over the past three years I have seen phenomenal growth and now see new technologies like NFC as enablers and there is an opportunity for banks to create great banking experience otherwise Mobile network operators will likely dislodge them as the most preferred and trusted banking services providers.