Though mobile money is generally known as the play turf of mobile operators but financial institution are also seeking for a piece of the cake that will enable them bank the unbanked and reach millions of Africans that are currently left behind.

As the landscape gets interesting with strong compelling needs for mobile payment technologist, agency developers, third party Banking agents, support services and consultants to support the evolving ecosystem, there is need to develop a skill pool and talent Bank that will position the industry on a proper footing.

Despite the urgent need to bring formal financial services to millions across Africa where millions are still excluded from any form of formal financial inclusion, the main challenge of how Mobile money works and the value creation that it adds to the overall strategy of the provider, Banks and mobile operators. The industry is still faced with critical manpower shortages. The governments are still trying to tackle regulation, Banks battling understanding low value, volume transaction platforms while mobile operators are untying the risk involved in managing deposits which they are not used to.

The presence of the challenges is now creating a new pool of corporate mercenaries which specializes in hijacking new industries with the short term aim of instant benefits against industry experts with the deep knowledge that can sustain long term vision of the organizations. Corporate mercenaries are promoting all sorts of technologies and solutions which cannot be sustained and does not deliver strong value realization even if it meets short term objectives of the banks. Mismatches at the early stages can set the stage for a future failure and Africa cannot afford not to properly position Mobile money as it holds the key to meeting many of the millennium development goals and targets.

Financial institutions are prone to such mis-hires at the early stages. Some Banks are actually deploying technologies which are not compatible with more than 30 percent of their total target mobile subscribers based on some expert mercenary advice which will ultimately ruin the project in the long run.

Industry experts are still few in the industry but their efforts are contributing positively all across Africa and they have deep insights across all the sectors to make change happen. Africa will need to tap into her reservoir of talents all around the world and also groom new hands to sustain this rapid growing industry that holds so many promises for Africa.

Lastly, mobile operators and Banks should collaborate further to develop mobilemoney academies to serve their markets and grow the industry together. Lessons are to be learnt from the Orange Money Academy in Mali. We cannot afford to loose out on this last chance opportunity.

The basic cornerstone of good governance are quality of service, quick response mechanism and above all, accountable and transparent process mechanism but the existing systems does not reflect any of these in any of its activities across all sectors and arm of government in Africa.

Mobile Government is extending the concept of government further with delivery of information and services to the doorsteps of the citizens in a personalized way via what they already have, the mobile phone.

Mobile Government is the next inevitable direction of evolution of e-Government. It is about modernizing the public sector organizations – hence the business processes the work and the workers – using mobile technologies, applications and services. M-government is not only about technology but rather how technology revolutionize the public sector activities and how the society adopts these technologies. Africa is one of the leading continents with growing mobile penetration.

M-government is a two way traffic. While government provisions some services via the mobile phone, the citizens too will be required to make payments to the government for some services using same channel. The challenges of making mobile micro payments in Africa is the core challenge of the adopting of Mobile government in Africa. Being able to make payments conveniently and securely is an essential ingredient in Mobile government.

Mobile government payment circle could take many forms like Government to citizens ( pension, wages, loans), citizens to Government ( taxes, contributions, loan repayments, levies, utilities ) .

Governance in Africa is structured along the colonial master’s master plan without a recourse to the local operating environment which differs significantly. While electronic payments is a way of life in Europe and North America, same cannot be said of in Africa. European economies are better managed with very efficient tax collection systems,African Nations are still grappling with ability to collect citizens taxes. Inability of Governments in this regards in the past were the cost of collecting small payments across disperse populations, far flung geographic locations and reach.

Mobile Money helps to solve all the challenges militating against these untapped government revenue sources. Reach is achievable via mobile payment technologies using third party retail outlets in the local communities without a need for long Bus trips to pay taxes at central locations of State capitals.

The services can be delivered at significant cost reduction for the government and the citizens using low cost mobile payment technologies.Record keeping capabilities are enhanced through receipt issuance capability of mobile payment technologies which reduces the potentials for fund diversion or fraud. The back end server also updates each payee at the back server which may be connected to the central government data systems for real timely updates.

Forward thinking, a city like Lagos (Nigeria) with 20 million inhabitants, more than 700 standard eateries and 600 gas stations can quickly convert these outlets to citizens engagement outlets to serve a significant proportion of the populations. With estimated 3 dollars per month tax payment rate for the millions of non government workers, artisan and non formal workers, government will rake in 6million dollar monthly if only 10 percent of the population pays up and 72 million dollars annually. That will go a long way in providing basis amenities that are currently lacking.

More than ever before, African Nations can engage the citizens in a more effective and efficient method of collecting government revenues across all strata of the economy for meaningful and purposeful development without dependence on extractive industries which fuels corruption and environmental degradation and leads to unrest like in the case of Niger Delta of Nigeria.

Banks lean towards confining themselves within clear industry boundaries, they tend to compete on matching and beating rivals and the result are strategies that converge along same basic dimension of competition but telcos compete across industries, communications, media and now finance. Telcos are breaking the acceptable boundaries of competition by tapping into mobile money landscape. For the Banks in the Mobile Money Landscape, the strategy is, ‘it is our beer, we deserve a sip but for the telcos, the beer barrel is ours’.

The entrenched ‘How we compete’ syndrome is taking the African Banks eye off the target, the Unbanked populations. Since telcos don’t seems to be very rigid on same principle, they are ready to explore what should ordinarily be the sweet pot for the Banks.

The MNO’s (Telcos) seem to understand clearly and at an early stage the Four Horsemen – Reach, cost, regulation and technology, that are critical to the success of deploying Mobile Money platforms in Africa to meet the needs of the Unbanked millions while the Banks were still groping in the dark. Why is this so? Both are customer-facing enterprises but with different value systems that pushed one ahead of the other, but for how long?

Banks are driven by specific customer and segment profitability measures within defined geographical boundaries with aversion to low margins ventures like mobile money, which are treated more as supporting key segments rather than as a way of reaching new ones. Telcos are low margin, high volume engines with extensive infrastructure in a more competitive industry than Banks in Africa. For a Bank, a few deep pocket customers can determine profitability but for a telcos, customer niches don’t work for them.

Horseman number one – Reach

Telcos usually operate extensive networks within National boundaries and external Boundaries. Few Banks in Africa are widely spread out like the MTN or Zain in Africa apart from few Banks like Standard Bank, Ecobank, UBA and a few others.
Telcos while not shouting about it operate some of the most elaborate retail systems and touch points in most countries.

In a country like Nigeria, the dominant Mobile Operator, MTN, retails the pre paid card through more than 500,000 airtime dealers, agents and stores that are not owned by them. Over the years, they had mastered the art of low value, high volume business environments and working through independent agents as potential Mobile Money agents will be a walk in the park.
The Banks on the other hand has little or no experiences in working through agents, though the newly released Mobile Money guidelines in Nigeria, now supports it.

In event of Banks trying to manage agent networks the way telcos do, is to attract failures. Telcos are masters at managing large retail networks of pre- paid airtime agents with strong internal control mechanism.

Elsewhere, Banks had successfully worked through agents. Lemon Bank in Brazil has more than 5,000 agents without a single Bank Branch; Banco Bradesco uses the post offices, Equity Bank in Kenya works with Nakumatt retail stores. In Peru, Banks operate more than 3,000 networks of banking agents.

Cross Border, Mobile Operators tend to ‘stick’ with a technology and modify it to existing regulations and run with it, across Geo Boundaries, MTN and Zain are doing this, all over Africa. Banks tend to look for, what is working in those countries and adopt it, accordingly.

Despite the successes recorded in the financial sector in recent years
and spread of 24 mega Banks with over 9,500 Bank Branches and 11,000ATM points, Financial Inclusion is still limited and not widely
available for Millions that are still left behind. As Potential Mobile
Money providers across the Globe eye the Largest Mobile market in
Africa for mobile payments technologies, there is a strong compelling
need to provide credible and evidence based information and Data for
Technology providers, Financial Institutions, Regulators, Researchers,
scholars and Investors in the evolving ecosystem.

MobileMoneyAfrica, in coming weeks will conduct Perception surveys in
selected states across the Federal Republic of Nigeria with a view to
understand the potential drivers of Mobile Money, transactional
services that will drive uptake, potential users demographics across
different social and occupational groups, access, End user costing
metrix and other relevant information that are needed for decision
support in the industry. This is the first in the series that will take
us to other parts of West Africa in the short term.

The outcomes of the survey will help Financial Institutions and Mobile
payment providers to competitively position their products and
services in the evolving ecosystem.

Read more on MobileMoneyAfrica

That is the typical scenario across Africa’s rural population. She might end up adding to the statistics of the previously banked by the year end.

In Africa, in bid to turn in massive profits and assume a continental Player status, Banks are focused on the Big picture: Africa, while neglecting their backyards where credible statistics has shown that 70% percent of the citizens live in the rural and semi Urban areas. The Banks are engaged in Grand prix like race to breast the tape into many African countries.

With the ear bursting sermons of Banking the unbanked in Nigeria and yet the attitude of the Banks are a direct opposite, it seems to be fashionable to sing the song but never dancing to it. While some Large Rural local governments in some parts of Nigeria are without a Bank branch, a high street in Lagos of 1.8-kilometer stretch has 8 branches of a particular Bank, which translates into a bank branch for every 180 meters. These are same Banks with aggressive African rollouts, exporting same disconnections.

Governments in it’s wisdom, thought Micro Finance Institutions will bridge the gap but they too fell into the large commercial Banks trap by modeling their services to be exact or look alike. They issue same standard KYC forms and conditions like the large commercial Bank (LCB) to a different type customer. Some even went further to style their offices to look imposing and as intimidating and located in the major cities like the LCB, far away from their potential and targeted market. Rather than close the gap, the MFI’s by design are widening it.

For the unbanked African, with few options for formal financial inclusion, out of sight is out of mind. They continue to patronize the informal channel, which is unreliable and unsafe. While promoting this imbalances, the LCB are slow to take on innovations that can significantly change this pattern and are quick to muscle in any perceived incursions into what they think will be their bread and butter forever, the unbanked populations.

The games changers are here. Regulations across the world is changing and favoring the entities that can make it happen. In Kenya, while the Banks are still importing security doors and window blinds to set up ‘profit centres’ Bank Branches, Safaricom through Mpesa was signing up agents.

While the telcos are promoting a Bank-in- your -pocket strategy, The Banks are busy pushing the crowds through their doors. Last update on banking statistics in Nigeria, there are 22,000 people to a Bank Branch.

With the new thinking amongst African Financial and telecommunications regulators, the bridge is closing on the Financial institutions that are not ready to use what the Left Behinds already have, the Mobile Phone. Little snippets from the Bank / Telcos, war front capital – Kenya, The Crying Babies are the Banks and the winner is Mpesa with 6.5 million subscribers and 10 million monthly usage. Will the likes of MTN Mobile Money, Wizzit in South Africa, Txtpay in Ghana, Mi-pay in Sierra Leone and Tagattitude in Nigeria, be able to replicate the Mpesa challenge? Only time will tell but for sure, the game changers are here.

With four world class Mobile operators, 25 large commercial Banks and 840 micro Finance Banks and an addressable market of 140 million people and newly released guidelines for Mobile money by the National finance regulator, The Central Bank of Nigeria, the stage is set for Africa’s most populous Nation to commence Mobile money roll outs.

The mobile operators are positioning themselves for a significant share of the market. MTN Mobile money platform will go live in coming weeks while the likes of Zain are working towards a launch too. It is not too clear yet the plans of operators like Glo and Etisalat in the evolving mobile money ecosystem in Nigeria. From the Banking sector, UBA Group and Zenith are looking like top contenders. Zenith Bank recently conducted public demonstrations of Mobile money transfers with technology provider, Tagattitude Nigeria at the Card expo event in Lagos.

 Despite all the technology and marketing budget that will be thrown into these ventures by the Banks and mobile operators, agent networks will play a significant role in the success of these enterprises. While the operators which are known for low value and high volume transactions with very useful experiences in managing transactions through agent networks for pre paid cards distributions, same cannot be said of Banks with little or no experiences in Banking through agents. Banking through agents is a novel in Nigeria.

Agent Banking is popular in Peru, Brazil, Kenya and Phillipines. In Agent Banking, it is basically a technology play for Banks. They provide the technology that enable Banks and their customers to interact remotely in a trusted way through existing local retail outlets. Without the likes of large retails store chains like shoprite, Dunns or UK’s telcos,the players will have to make do with what is available, the eateries and gas stations. Mr Biggs is a very prominent eatery with over 907 outlets in major urban and semi urban towns across the length and breath of Nigeria while the gas stations are present in cities, towns and rural areas.

These outlets will perform cash in / cash out points for Mobile money, serve the customers, may enroll customers and implement simple KYC while the Banks manage the technology platforms. The advantage of using these channels are,cash are available in the merchants kitty from shop sales,the cost of setting up brick and mortar Branches are significantly reduced, agent provides the space, energy and trained manpower to provide services to customers.

 Set up time is also significantly reduced. An agent can be set up and running in 5 hours while it will take average of five to six months to commission a Bank Branch.

Experiences has shown that agent Banking can help Banks decongest Brick and mortar Branches, expand into new commercially unviable territories, create a virtual Bank and tapping into new customer segments that were previously left behind.

Though it is not all sweet honey pot banking through agents. Risk such as security, ID manipulations and Point of transactions frauds are issues that the Banks will have to tackle through such third party relationships. With adequate risk management, robust technology platform and proper training and monitoring systems, Nigerian Banks may be on their way to joining the likes of Lemon Bank in Brazil without a single Bank Branch while working through over 5,000 bank agents. Welcome to the future!

Most of the Unbanked are either semi Urban, rural dwellers and Short stay Migratory workers with needs to be met for formal financial inclusion and the Banks are still promoting walking the ‘three Hundred year old’  proven strategies of walking through the door.

 The two models that can take Banking away from the existing systems are the Bank model or the mobile operator model for millions of Africans that own a Mobile but without a Bank account. The statistics is widening by the day. In Nigeria, there are 20 million account holders, 8,800 ATM, 7,000 Bank Branches while Mobile subscription is over 62 million as at April,2009 under an addressable market of 140 million people and landmass of land mass of 923768 sq.km! The only way to go is Branchless Banking.

 Banking regulation in Africa, though re-active but it is still potent enough to drive Branchless Banking for the Banks that can see the need. Bank promoted version of Branches Banking packages financial services through a retail agent while in some cases where regulation permits, KYC enrollment is conducted at the Bank Branch or agent location. The Agent outlet interacts with the customers for cash in and cash out while the Bank updates customers information and transactions, periodically. This model immediately takes the Banks into territories that were unserved in the past with less cost.

 It costs the Banks in Nigeria, average 11 months to set up a brick and mortar Branch, costing average of 200,000 US Dollars to get it up and running with property acquisition, rentals and ICT facilities but setting up an agency will require less than 6 hours, depending on technology and  350 dollars to get it up and open to customers.

 Where the agent is a store outlet with cash kitty, then cash management issues are significantly reduced since the cash needs are met from the merchant’s kitty while Balancing of account can be managed either remotely or periodically. In some other bolder models, the merchants pre –pays the deposit and earn commission based on the volumes of transactions conducted via the outlet.

 Major drawback for this model is that, Banks tend to over supervise the retail networks like existing Bank Branches; drawing up KYC requirements for virtual customers like full fledge Bank Branch customers. The peculiar situation of the targeted groups negates this approach.

 The Mobile operator led scenario is such that financial products are designed and packaged by the MNO while agent’s networks manage the customer interface and interactions. Safaricom’s M-Pesa is an example. The agent networks perform all the Bank office functions that a Bank would normally carry out. This could be very useful in countries with very robust and well implemented ID systems where a common form of ID is used within the National boundaries. Though it may exclude migratory workers without the necessary documentations but they can still perform simple transactions like money transfer to third parties if it does not exceed the required set amounts under the AML.

 The major risk in this model is that where supervision is not closely monitored at the point of KYC enrollment, the platform could be used to circumvent AML regulations since the agent will probably reside in such communities where they operate and might be friendly with some locals with not to good intentions. Cash management could also poise a risk since the core platform provider is not a financial institution.

 For both Banks and Mobile operator led models, it is same objective but different approaches.