[Kictanet] Phoney finance - Mobile telephony and banking

[alice at apc.org]

I belive Safaricom, ministry infocom and fianance are already in dialogue on 
this one. having said that though, we need to acknowldge that the financial 
regulatory environment is rather complex and also subject to multiple 
regulator domains (consumer protection, payments systems, competition, 
E-commerce, etc) what we need is a regulatory and policy environment that is 
open to innovation. Some of the countries that have implemented "branchless 
banking" have also tended to minimize ICT regulation outside of the general 
commerce regulation. There are many relevant lessons for finance regulators 
to learn from communication regulators who are aiming at widespread 
interconnection for universal access


alice
----- Original Message ----- 
From: "Eric Osiakwan" <eric at afrispa.org>
To: <alice at apc.org>
Sent: Sunday, November 05, 2006 12:54 PM
Subject: Re: [Kictanet] Fw: Final Reminder: Invitation to 
BusinessXchangeForum - Tuesday 31st October 2006.


> Alice, thats a possibility but am privy to much hesitation from the
> financial industry leadership that these guys dont have this license
> or that license and so why are they now providing financial services
> through technology. In some ways they right but in others it is just
> an expression of their inability to deploy such technologies and
> instead of them teaming up with the technology guys to roll the
> eminent African demon would show up again, stop them they are
> stealing our revenue like they did and are still doing when it comes
> to VoIP. Lets curtail that demon that tries to stop innovation and
> growth in Africa. Here is where Prof. Wilson QUAD model applied and
> the KICTANET example is most evident. The KICTANET Leadership should
> bring the various constituncies together and start working behind the
> scenes on how we can make these innovations work to provide banking
> for the unbanked without fighting and killing enterpreneurial spirit
> and national economic growth like we did in the days of VoIP.
>
> Dr. Ndemo, i see the Ministry of Communication and Information
> preeping the Ministry of Finance and the Central Bank about this and
> creating room for dialogue with the other stakeholders to make this
> an excellent co-operation.
>
> Eric here
>
>
> On 5 Nov 2006, at 15:07, <alice at apc.org> wrote:
>
>> Our Safaricom we understand is about to roll out money transfer
>> system using
>> mobile phones. Will phone now turn into banking instruments setting
>> pace for
>> mobile commerce?
>>
>> For people in rural where Bank branches with have high operational
>> costs due
>> to lack of infrastructure (Electricity is in short supply, as are
>> safe,
>> passable roads), are clearly not the solution. Yes this is where most
>> potential micro finance patrons still live. If we are looking at
>> ways to
>> fill a need and to by pass infrastructure problems for bank
>> branches, then
>> the opportunities are abundant for mobile phone holders who are
>> able to
>> transact banking through their mobiles. Not to say that
>> infrastructure is
>> not important but that micro finance clients no longer have to wait.
>> However, there are many challenges (policy and regulatory related) in
>> forging these types of partnerships (mobiles and banking) and
>> proving that
>> mobile banking can work even in the most remote areas and protect
>> vulnerable
>> users......
>> alice
>>
>> ----- Original Message -----
>> From: <bitange at jambo.co.ke>
>> To: <alice at apc.org>
>> Sent: Sunday, November 05, 2006 1:47 PM
>> Subject: Re: [Kictanet] Fw: Final Reminder: Invitation to
>> BusinessXchange
>> Forum - Tuesday 31st October 2006.
>>
>>
>> Dear All,
>> Do you see opportunities in the Economist article below:
>>
>> Ndemo.
>>
>>
>> Phoney finance - Mobile telephony and banking
>>
>> 875 words
>>
>> 28 October 2006
>>
>> The Economist
>>
>> ECN
>>
>> 381
>>
>> English
>>
>> (c) The Economist Newspaper Limited, London 2006. All rights reserved
>>
>> Banking the unbanked, by mobile phone
>>
>> Most South Africans do not have bank accounts. But most do have mobile
>> phones
>>
>> LIFE is now easier for Andile Mbatha, who owns a hair salon in Soweto.
>> Gone are his days of trekking to his bank, which could take two
>> hours by
>> minibus, to send money to relatives. Nor does he keep piles of cash
>> in his
>> salon any more. Last year, he opened a bank account with Wizzit, an
>> innovative provider of financial services. He now sends money to his
>> sister in Cape Town whenever he wants, from wherever he wants, using a
>> simple menu on his mobile phone. Half his customers no longer pay
>> cash for
>> their haircuts. They use their phones to move money from their
>> accounts to
>> his, in a few seconds. "This has taken out a lot of stress," says Mr
>> Mbatha.
>>
>> About half a million South Africans now use their mobile phones as
>> a bank.
>> Besides sending money to relatives and paying for goods, they can
>> check
>> balances, buy mobile airtime and settle utility bills. Traditional
>> banks
>> offer mobile banking as an added service to existing customers,
>> most of
>> whom are quite well off. But Wizzit, and to some extent First National
>> Bank (FNB) and MTN Banking (a joint venture between Standard Bank
>> and a
>> mobile-phone network), are chasing another market: the 16m South
>> Africans,
>> over half of the adult population, with no bank account.
>> Significantly,
>> 30% of these people do have mobile phones. Wizzit hired and trained
>> over
>> 2,000 unemployed people, known as Wizzkids, to drum up business. It
>> worked: eight out of ten Wizzit customers previously had no bank
>> account
>> and had never used an ATM.
>>
>> Mobile banking is just one example of a wider phenomenon in South
>> Africa.
>> With its odd mix of advanced capitalism and developing-world
>> economics,
>> the country is successfully luring people who hitherto dealt only
>> in cash
>> or barter to the world of formal finance. A simplified kind of account
>> called Mzansi was launched in 2004 to reach the unbanked, and portable
>> banks and ATMs have been rolled out in townships and in the
>> countryside.
>> To this fast-changing scene, mobile-phone banking looks to be a
>> promising
>> addition. Millions of South Africans send money to their relatives in
>> other parts of the country. And most of these sums, which add up to
>> about
>> 12 billion rand ($1.5 billion) each year, still move informally.
>>
>> South Africa is not the first place to use mobile-phone banking:
>> countries
>> such as Japan, South Korea and the Philippines have had it for a
>> while.
>> But the potential is probably bigger in the developing world, and in
>> countries in which migrants remit money to their families in
>> relatively
>> poor homelands. In Greece, a European Union member that is now
>> awash with
>> migrant labour, Albanians or Bulgarians often send money home by
>> putting
>> crumpled banknotes in the hands of a trusted compatriot, who takes
>> a cut.
>> If they could do it all by pressing buttons, they would.
>>
>> In most of Africa, meanwhile, only a fraction of people have bank
>> accounts-but there is huge demand for cheap and convenient ways to
>> send
>> money and buy prepaid services such as airtime. Many Africans, having
>> skipped landlines and jumped to mobiles, already use prepaid
>> airtime as a
>> way of transferring money.
>>
>> They could now leap from a world of cash to cellular banking. In
>> Kenya, a
>> pilot scheme called M-Pesa is being used to disburse and pay micro-
>> loans
>> by phone. Meanwhile Celpay, which FNB bought last year from Celtel, a
>> mobile-phone company, is offering platforms for banks and phone
>> companies
>> in Zambia and Congo. In countries like Somalia, with chaotic
>> conditions at
>> home and a huge diaspora, cash transfers by phone would be a boon.
>>
>> For banks, persuading people not to use branches for simple
>> transactions
>> such as balance enquiries or transfers should reduce operating
>> costs. So
>> far, they charge the same for mobile as for traditional banking,
>> though
>> Wizzit says its services are at least a third cheaper than those of a
>> traditional bank.
>>
>> But drawing the unbanked into the joys of cell-finance isn't always
>> easy.
>> Many think banking too expensive and complicated, and helping new
>> customers become financially literate takes time. The technology
>> remains
>> clunky in some cases, with downloads requiring dozens of text
>> messages.
>> Several rival platforms are still in the fight, but so far those that
>> emphasise simplicity and ease-of-use over state-of-the-art
>> technology and
>> security have made the greatest strides. A lot also hangs on
>> putting in
>> place the right laws and regulations. They need to be tight enough to
>> protect vulnerable users and discourage money laundering, but open
>> enough
>> to allow innovative mobile banking to grow.
>>
>> If the transfer of money by mobile phone-between countries as well as
>> within them-takes off, it could have implications far beyond the
>> salons of
>> Soweto. In 2005, according to the United Nations, global migrants
>> remitted
>> $232 billion, of which up to 20% was lost on the way, mostly in bank
>> charges or fraud. If cellular transfers could slash that figure,
>> mobile
>> banking would prove to be a good call.
>>
>>
>>
>>
>>
>>
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>
> Eric M.K Osiakwan
> Executive Secretary
> AfrISPA (www.afrispa.org)
> Tel: + 233.21.258800
> Fax: + 233.21.258811
> Cell: + 233.244.386792
> Handle: eosiakwan
> Snail Mail: Pmb 208, Accra-North
> Office: BusyInternet - 42 Ring Road Central, Accra-North
> Blog: http://blogs.law.harvard.edu/eric/
> Slang: "Tomorrow Now"
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