Jo Crawshaw, the general manager of MEF Africa, indicated that there are solutions being considered and maintains that regulators will be at the heart of them.
“There could possibly be an option of having a bank-agnostic layer – you can allow wallets to plug into an operator and bank-agnostic layer so that the consumers really do have that option to be able to bank with whomever they like regardless of the operator. I think that’s certainly where the conversation is going at the moment,” Crawshaw told ABN Digital in an exclusive interview.
“In Africa as well there’s a possibility of regulators being able to reach their financial inclusion goals via mobile money and I think that’s going to be big for them. So if it’s going to be driven, it will be from a regulator side.”
According to a mobile money report by the GSM Association, 2.5 billion people in developing countries are still lacking a viable alternative to the cash economy and informal financial services, yet 1.7 billion of them have mobile phones.
Players in the mobile money industry have not fully tapped into this unbanked market because there are still a number of policy and regulatory deficiencies.
“How it’s going to be driven and if it will be certainly remains to be seen but I think from a regulatory point of view, the South African regulator certainly has shown a willingness to consider regulatory amendments to enable this to happen,” said Crawshaw.
It is widely believed that mobile money has the ability to drive economic and social growth via digital corridors but since the emergence of these services, there has been a blurred line between the roles of mobile operators and banks.
Crawshaw acknowledged that getting the two to work together, in this kind of environment, would be challenging due to their deep cultural and commercial differences.
“Traditionally banks and mobile operators work in different spaces but with the rise of mobile money, they’re now competing in the same space. A big word that’s being thrown around at the moment is interoperability,” she said.
This interoperability between mobile operators and banks is compulsory to advancing the emerging mobile services industry, and to easing the challenges that impede it.
“I think education for unbanked consumers is going to be big – making sure that consumers are aware of the fact that there are options out there for mobile banking. I think providing affordable solutions, minimum entry hurdles, is going to be big for consumers as well, providing payment solutions that aren’t dependent on proximity of local bank branches. So that’s from a consumer point of view,” Crawshaw explained.
“From a commercial point of view – interoperability, allowing wallets to plug into an agnostic layer, and also possibly point-of-sale terminals and payment methods put in to accommodate and facilitate in the commerce space.”
Another challenge that Africa faces is its infrastructure deficit. This deficit plays a significant role in the viability and success of mobile money services, as well as its investment prospects.
“Geographically, you’ve got a low presence of bank branches in rural areas, ATM penetration is lower, bank charges are often a hindrance and I think FICA requirements as well – these are all challenges as to why there’s such a vast unbanked population here. It’s the kind of issues that we’re coming across but where there’s challenges there’s also that opportunity,” Crawshaw noted.
M-PESA, Kenya’s first mobile money platform, is a transfer solution that enables mobile customers who do not have a bank account, to transfer money.
The GSM Association reported that Kenya had 23,018,500 mobile money users in July 2013, and that 31 per cent of the country’s GDP was transacted through mobile money.
“I think that’s why we’ve seen solutions such as M-PESA in Kenya just absolutely explode. It’s a perfect storm whereby that solution came around at the right time and there’s a huge opportunity for that in Africa. I think that’s really why Africa can really be seen to be leading this in mobile – that’s why I think it’s such an exciting space to be in at the moment in this region,” Crawshaw stated.
MEF, a global trade association for companies wishing to monetise their products and services via mobile, launched its Africa branch in November 2012 in Johannesburg, South Africa.
Crawshaw believes that MEF, as a mediator of sorts, is well-positioned to work with mobile operators, banks and regulators alike, to grow and mature a capable mobile money industry on the continent.
“So how do you breed an environment of co-operative competition that is actually best for the industry as a whole and the consumer? We’re trying to ensure that the right people are coming around the table to discuss this.”