by Mike Brains
Mobile Banking………with Africa leading the way!!
Most of America and Europe’s business world is caught up in cutting edge practices, but when thinking of a truly global economy, it is worth taking into consideration how some less developed countries too have adapted to what little technology they have!.
And while Africa may not be the obvious place to look for economic breakthroughs, its lack of an established credit card industry has left it with more of a blank slate for the development of new digital money-transferral techniques.
If you were to travel to Kenya for example; carrying around large sums ofcash would be understandably dangerous, so there has always been a need for a way of dealing with money remotely.
You could take your home countries Credit Cards for sure, but what if you were to stay there for a long period of time? Paying the charges for using a foreign card would be ridiculous. But you wouldn’t have that much of a choice… Cheap Credit Cards are not nearly as common in Africa as they are in America or the UK, however they are still in use.
Sixteen banks offer credit card services and there are around 200,000 cards in use. However, the low credit scores of many Kenyans makes it hard for them to get a card – and the many opportunities for online shopping are stifled by the cost and rarity of internet connections, with only 0.5% of the population having home broadband.
In the past, the solution to this dilemma was to rely on money-transfer and micro-banking. But there is a new, more forward-thinking, technique that may make Kenya one of the most pioneering financially forward-thinking countries in the world……”Mobile Banking”.
Electronic commerce has been a multi-billion shilling industry in Kenya for a while, but consumer reliance on mobile payments is a much more recent development. Mobile money platforms popular in the country include as Zain’s Zap and Safaricom’s M-pesa, the latter having over five million registered users – more than twenty times the number of credit card users in the country!
The mobile penetration of the country is estimated at around 38%, versus the 20% who have ready access to banks, so this is a natural progression. But does this suggest there will be a trend towards mobile banking in other countries?
One of the reasons mobile payments have been so viable in Kenya is that consumers are reluctant to rely on credit. While many services offer some form of access to additional funds, the overall financial situation is unstable enough to put people off relying on anything more than their readily available balance.
Before the technology hits America and beyond, a greater stream of credit will need to be available to make it truly worthwhile for expensive purchases.
While developments like Jack Dorsey’s Square have shown that there is a great interest in increasing mobile banking, even this revolutionary technology is still dependent on the traditional credit card. With the major banks such as Lloyds and MBNA still having the resources to offer incredibly temping rewards credit cards and other deals, it seems unlikely we will be completely free of our flexible friends!.
But credit cards will definitely need to reform and revitalise to match our increasingly mobile world.