Bank-telco distrust inhibits SA's financial inclusion
Although partnerships between banks and telcos are essential in enabling financial inclusion to billions of people in Africa, the egos among the institutions are hindering such partnerships, especially in SA.
That was the word from Kim Dancey, regulatory head and specialist advisor for digital and alternative banking at FNB, speaking yesterday during the Amdocs Africa Executive Summit in Johannesburg.
"Financial inclusion is the direct consequence of consumers across the income spectrum accessing and sustainably using financial services that are affordable and appropriate to their needs," she said.
In countries like Kenya mobile financial services have flourished, especially on platforms like M-Pesa and M-Shwari. However, SA has not had the same success with Vodacom's M-Pesa attempt, as an example, failing to scale as expected.
"Banks struggle with partnering in mobile finance because they worry that telcos want to be banks, and telcos worry that banks want to become telcos," she pointed out.
In SA and Nigeria, she added, banks want to be phone companies; however, in Kenya, the phone company is already the bank.
The other stumbling blocks to the take-off of mobile financial services in SA are security and compliance concerns; as well as low consumer activation, Dancey noted.
In SA, she revealed, the majority of people (69%) have a bank account while only 14% have some sort of a mobile account. However, in Kenya over 50% have both bank account and mobile account.
She believes that mobile financial services uptake requires partnerships based on joint incentives to accelerate growth.
To enable the partnerships, Dancey called for proactive regulation, interoperability as well as widespread agent infrastructure which can boost the uptake of mobile money.
According to Dancey, international remittances, merchant payments and diversified financial products are key growth opportunities.
Jonathan Kaftzan, head of product marketing for mobile financial services at Amdocs, who also spoke at the event, concurred, saying partnerships between banks and telcos can help reduce the number of the "unbanked" people in Africa.
According to Kaftzan, the mobile payment market will reach over 450 million users and transaction value of more than $721 billion by 2017.
He pointed out there are about two billion unbanked people in Africa, and there is an opportunity for mobile on the continent to provide affordable financial services and payment options.
For Kaftzan, the opportunity lies in the fact that sub-Saharan Africa is home to 70% of the world's mobile money active users.
SA also presents much opportunity for mobile financial services, he noted, adding 32% of the people in the country are unbanked; although the country has a 120% mobile penetration rate.
Describing the current mobile financial services adoption rate in SA, Kaftzan said according to a recent survey carried out by Amdocs, 60% are non-users, with some unaware or unsure about value.
Some 63% trust banks to deliver mobile payments/banking services. Only 29% said they trust mobile operators. Meanwhile, 24% said they would like to use mobile for loans, savings and insurance; 23% said they would like to pay for education and medical treatment via mobile; while 47% said being offered rewards will encourage them to use mobile payment.