MOBILE MONEY has been the preferred segment of interest for many financial giants. Statistics alone would give us an idea behind this reasoning, there are 70% mobile phone users among the 7 billion inhabiting on planet earth, however a mere 30% of this populous have bank accounts. This clearly provides a range of options not only for customers who use banking but also for consumers who don’t use banking. The current mobile payments systems is around 40 million spread across the globe. A recent research says that mobile payments system will generate more than 1 trillion transaction value by 2015.
In the recent years, mobile payment system has grown with explosive rate. Mobile payment system has been hugely successful in providing banking services to millions of people in the African region. The Kenyan giant M-PESA is the most successful money remittance system with more than 15 million users in 29.2 million mobile phone subscribers, which handles almost $500 million transactions a month in Africa. It also provides us with the evidence that the Kenyans have readily adapted to the new mobile payments options. Mobile financing is also speeding up in Kenya which allows p2p mobile lending. A new concept of airtime on loan product and clearing of fines have also been launched by Safaricom. Faini Chap is a joint effort of Safaricom and Kenyan Judiciary to pay fines promptly while avoiding long queues.
Again the sources from Communication Commission of Kenya (CCK) provides strong evidences of growth in total deposits of mobile money by 4.8 percent (US$ 2.19 billion).
Mobile phones are also in trend to receive remittances from family members abroad. This proves why mobile money has done so well in Somalia, a country which barely has a government, but where a third of adults said they used mobile money last year. Somalia is one of the countries that most depends on remittances (from the source The Economist). This demonstrates the value of leveraging mobile technology to extend financial services to large segments of unbanked people.
Considering the facts, we along with a local vender have decided to enter in the Eastern African market to serve banked and unbanked population in the region. However a bouquet of variable challenges are yet to be addressed in the domain of mobile money. Studies reflect that new initiatives always have a higher tendency to fail in a particular region.
Financial institutions have to take care of all regulatory compliances while moving into multiple partnership modules. The regulatory issues are still posing hurdles in some countries due to it’s uses in money laundering. I follow most of the blogs related to Africa and I have also realized that the scalability, complexity and high cost are the major hurdles for mobile money. While Inter-operability has also played its part to oppose the emergence of mobile financial system.
World Bank assessing a position to compete in the Kenyan mobile money market raised quite a few eyeballs a few months back. However to endorse competition there is a lot that still needs to be done in the regulation and interoperability domain.
I believe that there an imminent gap analysis between what is being offered and what the actual requirements are would be a niche starting point. This would help in targeting consumer behaviour and eventually ignite the creativity and innovation in mobile money.