MOBILE MONEY
When mobile money operators become banks
By Richard Annerquaye Abbey
There ’ s an urgent need for strategic review to ensure mobile is at the top of the banks ’ strategic agenda
BETWEEN 2012 AND FIRST QUARTER 2016 , REGISTERED MOBILE MONEY SUBSCRIBERS INCREASED FROM 3.8 MILLION TO 14.6 MILLION
The story goes that the banks showed little interest some years back when the whole mobile money idea was bounced off them , but this year ’ s Banking Survey by PricewaterhouseCoopers ( PwC ) indicates that the phenomenon has sent banks into a cold sweat , and they are beginning to adopt an ‘ if you can ’ t beat them , join them ,’ approach .
Much as banks consider the Mobile Network Operators ( MNOs ) as partners due to their ease of deposit mobilisation through use of technology , banks are increasingly worried the MNOs will metamorphose into banks , the survey notes .
The concerns come at a time funds deposited with the banks by mobile money operators , which are referred to as the balance on the float , has increased from GH ¢ 19.6 million in 2012 to GH ¢ 581.3 million in the first quarter of this year . According to respondents of the survey , which mostly included CEOs , Chief Financial Officers and Heads of E-banking of commercial banks , mobile money is evolving into “ banking on your phone ,” which provides customers with alternatives to traditional banking , a situation which excites customers more and somehow unnerves the banks .
Despite the proliferation of banks over the past decade , financial inclusion among the population has remained relatively low as banks have largely preferred a brick and mortar system which is mostly concentrated in the urban areas . With mobile money , however , customers are drawn to the ease of access via their mobile phones , not only mobile apps via smartphones , but on feature phones as well via interactive USSD codes . Coupled with that , there are a good number of merchants dotted at most every corner which makes transactions almost ubiquitous . Currently , there are over five million active mobile money subscribers being served by close to 50 , 000 merchants nationwide .
And from the PwC survey , the bank executives fear that the E-Money Issuer ( EMI ) Guidelines -- issued by the Bank of Ghana last year to regulate the mobile money service -- have set the stage for a possible entry into the mainstream banking arena by telecom companies . Judging by the framework for mobile money operations as established by the central bank , respondents of the survey said it is possible for telecom companies engaged in the mobile money space – MTN , Airtel , Vodafone and Tigo , to develop to the point where they can operate mobile money services independently of banks .
“ Telcos will at that point become direct competitors to banks instead of partners and service providers to the industry . To curtail this threat , most banks are quickly building the relevant infrastructure that allows them to partner with telcos to jointly deliver mobile money services . Respondents believe there is enough
32 Business Times Africa | 2016