Mobile Money: Changing the face of banking
Importantly, the operators’ networks of sales agents vodafone, safarIcoM & M-Pesa
and retail outlets provide a reach that in most emerging
markets is far deeper both geographically and across The M-PESA system is based on agents that
income segments than that covered by traditional purchase virtual currency in exchange for real
banking or fixed line infrastructure. The mobile device money from their own account. Agents earn
is often the only means of accessing previously commissions on deposits, withdrawals and new
unreachable users. These agents and retail outlets form customer registrations. Take-up is driven by the
the backbone of any mobile money ecosystem. remitters (often young men) who provide their
relatives (often older women) with phones so that
This contrasts strongly with more developed markets they can receive remittances.
where mobile is often merely a personalised alternative
means of increasing control and convenience. As such,
The system also allows consumers to send money
there exists a massive opportunity on the receiving end of
to any phone, even non-Safaricom phones. Non-
the remittance to enable stored-value accounts as the first
Safaricom recipients are sent a voucher with
step towards branchless banking for the underbanked.
a one-time PIN, which they take to Safaricom
agents to withdraw cash. At its core, the system
whaT abouT banks?
is a simplistic stored value application that allows
The mobile money argument is just as strong for banks
for checking the account balance, depositing/
as it is for operators. Mobile banking (m-banking) is up
withdrawing cash (thus used as a simple bank
to 50% cheaper than offering financial services through
account), sending/receiving money and top-up of
traditional channels and the unmet need is enormous
4
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a mobile phone.
Banks are uniquely empowered by financial sector
Not only has it brought social benefit to the
regulation to perform certain functions, such as deposit-
local community, but it has had considerable
taking and cross-border exchange. But, as Tim Lyman
commercial success to its parent company. In the
of the Consultative Group to Assist the Poor (CGAP)
first year, Vodafone took a “fee” of 0.8% of the
explains, “Other actors besides banks may be more
service’s total revenues every 6 months, that is
attuned to the opportunities of branchless banking.”
$3.6m from a total of $448m. In the second year,
Branchless banking, including mobile banking, is likely
the period October 1, 2007 to March 3, 2008,
to provide more value to low-income customers who
the fee was set at 0.5% of revenue and capped
have no other options. Banks have traditionally been
at roughly $1.5m. Vodafone, notably the largest
content to focus on the highest income segments,
global mobile network operator, is now looking
viewing m-banking as delivering marginally more
for even more scale by publicly offering to license
convenience or security to these customers.
that platform to other operators where they do not
already have a presence.
However, this view is changing as banks realise that the
growing remittances market has the potential to create
Perspectives on the future | 11
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