Money on the Go: Mobile Money out of Africa

Money on the Go: The rise of mobile money

Mobile telecommunications grew at an astronomical rate in sub-Saharan African and most of the third world in the late 1990's and early-mid 2000's. Tens of millions of rural and urban poor (along with the urban middle class) were empowered with the ability to reach each other faster than ever in human history. It was quiet literally a revolution.

Like any truly disruptive technology Mobile telecoms brought on a wave of innovation with it. Researchers examining the usage patterns of prepaid subscribers (~90% of mobile users) in Southern Africa noticed that they would often send money to each other - 'Airtime' (prepaid mobile talk time) - as payments for goods or services or to be traded for goods and services. This data passed on to the obvious players - the Mobile Telco's, led to the creation of a few mobile based cash transfer services. But the first true mobile banking service was launched by Kenya's Mobile telecoms giant Safaricom in 2007. There are now nearly 300 million Mobile Money users world wide - over half of whom are in sub-Saharan Africa.

So what is Mobile Money?
Simply put it is access to bank account [wallet] identified by your phone number and accessed primarily from your mobile phone. The tight coupling with your mobile phone meant Mobile telecoms companies were the first develop this service. They were already dynamic, innovative and vibrant (you had to be to work in late 1990's sub-Saharan Africa) and easily shook off Euro-centric rigidity, embraced a more Afro-centric unconventional approach and dived into a completely new of industry.
The basic services offered included withdraw/deposits, cash transfer, bill payments and goods and services payment. Now mobile lending, mobile micro-finance, bulk payments (pay roll) and international money transfer are becoming increasingly common. Mobile Money has truly reshaped the social and economic landscape of the countries it thrives in.

With such rapid growth (0 to 300 million users in ten years) the obvious question is 'where does Mobile Money go from here?'.
I think the only way is up-more users, more services in the ecosystem and a larger global footprint. The industry has to continue to be agile and dynamic - here's a few ways it needs to change;

• Interoperability: while Mobile Money has done well to integrate with traditional retail banking for cash transfers, the big telco's still run their Mobile Money services as silos. This needs to change, I should be able to move my Money from Mpesa to Airtel Money to MTN Mobile Money with ease and minimal fees. This will further drive financial inclusion.
• Regulation: its been a game of catch up for the industry regulators but they will now have to design regulation that encourages (if not compels) the providers to move towards greater financial inclusion, improves the ease of international transactions while increasing accountability and preventing criminal finance. They must also implement safe guards for Mobile Money users that protect their money.
• Decoupling from Mobile Telco's: the Mobile telecoms industry gave birth to Mobile Money but its time Mobile Money sought his fortune in the wider world. Mobile devices are changing rapidly, cell phones will not be in the game much longer. Transitioning to Fintech on wearable devices (smart watches, VR and AR headsets etc) and the Internet of Things will be cardinal.
• Conquering the first world: success in developing markets has been good for Mobile Money but the 'promise land' of developed markets is the key to global reach. Providers will have to return to their roots of unconventional innovation to permeate this market.

Mobile Money has had an exciting history and the future is definitely bright, but I'd like to here what your experiencing and views on it are. Drop a comment - lets start a conversation.