Mobile Banking in Africa

Africa leads the mobile banking sector worldwide, representing over half of all the mobile money services on the planet. The sector is fast-moving and grows at a rapid pace. Even though traditional banks are lagging behind, there’s plenty of mobile money apps and services that continue to explode around the continent. Some are even linked to banks as an extension of their service.

M-Pesa’s success story

The case of M-Pesa best illustrates what African mobile banking was and can be. It has changed banking in Africa, with a grand total of 26 million users in Kenya. MTN Mobile Money is another contender, with 41 million customers. However, only a little less than half of their users are active. M-Pesa was launched in 2007 by a mobile network operator called Safaricom. The idea was for users to text small payments between themselves. Today, loans and international transfers are also a part of its service. The money service operates in 10 countries and is in talks to open in Ethiopia.

Banks and their role in mobile banking

There are a few models that banks have adopted when faced with the rise of mobile banking in Africa. First is to see this as competition and offer their own services. Other banks partner with the telecom operators who own the mobile banking companies and offer them deposit services. An example of the partnership model is Equitel. This service is formed of an alliance between Airtel and a Kenyan bank. It offers a transfer service, with the money coming from the customer’s account and being sent to a bank account with any bank.

Loans and deposits facilities are also available. To add on to the service, Equitel also allows the customer to access information on topics they are interested in. They can even purchase airline tickets using Equitel.

On the other hand, competitive services like the FNB banking app stand as examples of the second approach. It seems, however, that the mobile network providers continue to have an edge in the sector. Banks tried to enter the game too late.

The take up of mobile phone use has brought a digital-first attitude that helps mobile penetrate African markets. It’s a simple and low-cost option that can be used by virtually every consumer. A cheap phone and a SIM card are all a person needs to get started. Mobile banking services do not only provide a needed outlet for the African consumer. They also support small businesses and can help reduce poverty. They include the “unbanked” in the possibility of financial prosperity.

It was even shown in a study that those who used mobile banking, in this case, M-Pesa, were able to weather disasters like a bad crop or a slow business period better. This was because friends and family had an easy way that they were able to send them money to support their recovery. With the continued growth of the sector, it’s clear that the future of mobile money in Africa is bright.

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