Banks set to wrestle market from African mobile financial Ops

By Prince Osuagwu
As more banks are now suddenly taking a renewed interest in the African Mobile market, Senior Vice President, Fundamo Africa and Middle East, Reg Swart has said that the major problem for mobile operators who have been driving the market, would be how to defend their successful business model, and ultimately their revenues, against the encroachment of banks.

Swart also noted, however, that according to the 2009 World bank report, there were still millions of unbanked people with more than 70% of the African population either unbanked or under_banked.He argued that the development was a compelling opportunity for banks to encroach into the market.

Meanwhile, Swart said his availability at the ongoing AfricaCom Conference in Cape Town South Africa, would help answer questions on how operator_led versus bank_led models are set to evolve across the region.

Mobile financial services in Africa has continued to grow at an unprecedented rate and in many instances have far surpassed traditional banking services in terms of customers.

For instance, there are now more mobile money wallets than bank accounts in Uganda and Kenya and these growth, have been undoubtedly driven by mobile operators, as banks lag behind with very minimal role at he moment.

At best, banks mostly act as  suppliers to mobile operators rather than partners and ultimately, mobile operators engage with banks for the relevant banking credentials. In Ghana for example, MTN is working with several different banks to provide various credentials which highlights the supplier rather than partner relationship now commonplace.

However, as the key issues around the economic downturn and the technical doubts surrounding mobile financial services begin to dissipate, more African banks are looking to setup bank_led services. As a result, banks are now looking for a larger share in a market which they previously dominated.

But according to Swart, there are four key factors that are leading banks to make a serious play in the mobile financial services market. He enumerated them as:

*Market opportunity _ While African mobile financial services have certainly taken off in recent years, it is by no means a saturated market. There are still millions of unbanked people with more than 70% of the African population either unbanked or under_banked representing a compelling opportunity for banks.

* Investment _ Banks also now have the CAPEX to invest in setting up services that they didn’t have a few years ago.
* Banking expertise _ Operators rely on banks to ensure their services adhere to the right regulations. This expertise can still give banks the edge in developing their own services.

*Proven services _ The business models and technology involved are proven, and are currently delivering increased revenues and customer loyalty. However, Swart believes there must be an acceptable model to balance activities of operator-led and bank-led mobile financial services platforms.