Tuesday AfricaDigest (11/30): Mobile Banking in the Emerging World
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Nov 30, 2010, 7:49:34 AM11/30/10
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Mobile Banking in the Emerging World
By KEVIN J. O'BRIEN
New York TImes
BERLIN — In Tanzania, a hospital sends money by text message to women
in remote areas so they can pay for bus fare to travel for critically
needed surgery. In Afghanistan, the government pays its police
officers by text message to skirt corrupt middlemen. In Pakistan, the
biggest financial network is not a bank, but a unit of Telenor, the
Norwegian mobile phone operator.
While storefront bank branches and online banking are ubiquitous in
the United States and most developed countries, in less-developed
countries only a small fraction of the population is served by banking
services.
Mobile banking first appeared in the Philippines in 2001, when two
operators, Globe and Smart, introduced their own domestic payment
plan. In most mobile banking models, the person sending a payment
sends the amount by text to the recipient’s phone number.
The person receiving the payment goes to an authorized local agent,
typically a mom-and-pop retailer that also sells prepaid mobile phone
cards, and withdraws the cash.
In parts of Latin America, Africa, the Middle East and Asia, more than
90 percent of people typically carry at least one mobile phone, a
technological tether that mobile operators are exploiting to become
retail bankers to the emerging world.
“Five years ago, there was hype around mobile banking but no real
numbers in terms of customers,” said Mung Ki Woo, vice president of
electronic payments and transactions at Orange, the wireless unit of
France Télécom. “Now we are starting to see significant numbers. I
think the potential of mobile banking is huge, going forward.”
Since December 2008, Orange has signed up one million people for its
Orange Money mobile banking service in six African countries: Mali,
Senegal, Ivory Coast, Madagascar, Kenya and Niger. In Kenya and
Tanzania, subsidiaries of the British mobile operator Vodafone now
process more international wire transfers than Western Union.
In Kenya, Vodafone has 13 million customers and in Tanzania, six
million customers for its mobile banking service, which generated 670
million transactions last year, primarily for domestic or
international money transfers, said Peter Cornforth, a Vodafone
business development manager for the service, called M-Pesa. Pesa is
the Swahili word for money.
In Kenya, coffee growers routinely pay their field workers by text
message, and in Tanzania, Vodafone customers pay the national electric
utility, Luku, by text. In Dar es Salaam, Tanzania, a rehabilitation
hospital called C.C.B.R.T. sends bus fare via texts to women who
travel to it for surgery to correct fistula incontinence, a common
side effect of childbirth.
“Apart from being a serious new business for operators, these services
for the first time are connecting people to critical banking services,
and making positive changes” in their lives, said Mr. Cornforth, who
is based in London.
Telefónica, the Spanish operator that is a market leader in Latin
America, plans to start mobile banking services in four South American
countries next year. Globally, the number of mobile banking users is
expected to surge more than sixteenfold, to 894 million by 2015 from
55 million in 2009, according to Berg Insight, an industry research
firm based in Stockholm.
Almost all of those mobile banking customers — 78 percent, or 697
million people — are in Asia, Africa, the Middle East and Latin
America, according to Berg Insight. In Europe and North America,
mobile banking remains secondary to personal computer-based Internet
banking. Even so, the on-the-go convenience of mobile banking is
attracting users in the West.
About 10 percent of U.S. bank consumers use mobile banking, usually to
transfer money, make payments or monitor bank accounts, said Teresa A.
Epperson, a partner at Mercatus, a Boston company that advises banks
and financial institutions. As more U.S. consumers buy smartphones,
mobile banking’s market penetration is expected to exceed online
banking’s, which currently is about 50 percent, by 2015, Ms. Epperson
said.
“This is only going to get bigger, in our opinion,” she said.
The potential is great in Latin America, where only 35 percent of the
people have bank accounts, only 19 percent have bank cards but 90
percent have mobile phones, said Pablo Montesano, the head of mobile
financial services at Telefónica.
Investors are also beginning to recognize the potential of the
technology. In September, a leading maker of mobile banking technology
for SIM cards, a French company called Gemalto, bought Trivnet, an
Israeli company that makes financial transaction management software
for mobile operators, for $40 million.
Only six months earlier, Trivnet had won the contract to supply mobile
banking technology in Latin America to Telefónica.
Amit Mattatia, the Trivnet chief executive, said that 10 to 15
operators next year are planning to start large mobile banking
operations in big markets in Latin America, the Middle East and India.
Citing confidentiality, he declined to identify the operators.
“Because so much of the world is under-banked, consumers want these
services very much,” Mr. Mattatia said.
As the cost of a simple mobile phone has fallen below $20 in most of
the world, mobile banking is becoming affordable in emerging markets.
“This is now poised to explode in the developing world,” said Philippe
Vrignaud, a senior vice president in Singapore for Gemalto.
In Pakistan, where only 14 percent of the people have bank accounts,
Telenor introduced mobile banking in November 2008.
The service, called Easypaisa (100 paisa equal a Pakistani rupee), now
has 500,000 active users who sent transactions worth a combined 5.5
billion rupees, or $64.1 million, in the first quarter of this year.
Most were domestic money transfers, which are limited to $120 a
transfer. Telenor exacts a fee of as much as 5 percent of the
transaction.
Easypaisa is available at 11,000 independent retail agents that make
up Telnor’s distribution network, which outnumber the 8,300 combined
branches of all Pakistani banks.
Within three years, Telenor plans to expand the number of retailers in
its network to 36,000.
“This service is about addressing the unmet needs of the consumer,”
said Aamir Ibrahim, a vice president and chief strategy officer at
Telenor Pakistan. “I think this is suitable for all of our markets
everywhere.”
--------------
We judge ourselves by what we feel capable of doing, while others
judge us by what we have already done. -Henry Wadsworth Longfellow,
poet (1807-1882)
--------------
This posting is provided without permission of the copyright owner for
purposes of criticism, comment, scholarship, and research under the
"Fair Use" provisions of U.S.Government copyright laws and it may not
be distributed further without permission of the copyright owner. The
sender does not vouch for the accuracy of the content of the message,
which is the sole responsibility of the copyright
By KEVIN J. O'BRIEN
New York TImes
BERLIN — In Tanzania, a hospital sends money by text message to women
in remote areas so they can pay for bus fare to travel for critically
needed surgery. In Afghanistan, the government pays its police
officers by text message to skirt corrupt middlemen. In Pakistan, the
biggest financial network is not a bank, but a unit of Telenor, the
Norwegian mobile phone operator.
While storefront bank branches and online banking are ubiquitous in
the United States and most developed countries, in less-developed
countries only a small fraction of the population is served by banking
services.
Mobile banking first appeared in the Philippines in 2001, when two
operators, Globe and Smart, introduced their own domestic payment
plan. In most mobile banking models, the person sending a payment
sends the amount by text to the recipient’s phone number.
The person receiving the payment goes to an authorized local agent,
typically a mom-and-pop retailer that also sells prepaid mobile phone
cards, and withdraws the cash.
In parts of Latin America, Africa, the Middle East and Asia, more than
90 percent of people typically carry at least one mobile phone, a
technological tether that mobile operators are exploiting to become
retail bankers to the emerging world.
“Five years ago, there was hype around mobile banking but no real
numbers in terms of customers,” said Mung Ki Woo, vice president of
electronic payments and transactions at Orange, the wireless unit of
France Télécom. “Now we are starting to see significant numbers. I
think the potential of mobile banking is huge, going forward.”
Since December 2008, Orange has signed up one million people for its
Orange Money mobile banking service in six African countries: Mali,
Senegal, Ivory Coast, Madagascar, Kenya and Niger. In Kenya and
Tanzania, subsidiaries of the British mobile operator Vodafone now
process more international wire transfers than Western Union.
In Kenya, Vodafone has 13 million customers and in Tanzania, six
million customers for its mobile banking service, which generated 670
million transactions last year, primarily for domestic or
international money transfers, said Peter Cornforth, a Vodafone
business development manager for the service, called M-Pesa. Pesa is
the Swahili word for money.
In Kenya, coffee growers routinely pay their field workers by text
message, and in Tanzania, Vodafone customers pay the national electric
utility, Luku, by text. In Dar es Salaam, Tanzania, a rehabilitation
hospital called C.C.B.R.T. sends bus fare via texts to women who
travel to it for surgery to correct fistula incontinence, a common
side effect of childbirth.
“Apart from being a serious new business for operators, these services
for the first time are connecting people to critical banking services,
and making positive changes” in their lives, said Mr. Cornforth, who
is based in London.
Telefónica, the Spanish operator that is a market leader in Latin
America, plans to start mobile banking services in four South American
countries next year. Globally, the number of mobile banking users is
expected to surge more than sixteenfold, to 894 million by 2015 from
55 million in 2009, according to Berg Insight, an industry research
firm based in Stockholm.
Almost all of those mobile banking customers — 78 percent, or 697
million people — are in Asia, Africa, the Middle East and Latin
America, according to Berg Insight. In Europe and North America,
mobile banking remains secondary to personal computer-based Internet
banking. Even so, the on-the-go convenience of mobile banking is
attracting users in the West.
About 10 percent of U.S. bank consumers use mobile banking, usually to
transfer money, make payments or monitor bank accounts, said Teresa A.
Epperson, a partner at Mercatus, a Boston company that advises banks
and financial institutions. As more U.S. consumers buy smartphones,
mobile banking’s market penetration is expected to exceed online
banking’s, which currently is about 50 percent, by 2015, Ms. Epperson
said.
“This is only going to get bigger, in our opinion,” she said.
The potential is great in Latin America, where only 35 percent of the
people have bank accounts, only 19 percent have bank cards but 90
percent have mobile phones, said Pablo Montesano, the head of mobile
financial services at Telefónica.
Investors are also beginning to recognize the potential of the
technology. In September, a leading maker of mobile banking technology
for SIM cards, a French company called Gemalto, bought Trivnet, an
Israeli company that makes financial transaction management software
for mobile operators, for $40 million.
Only six months earlier, Trivnet had won the contract to supply mobile
banking technology in Latin America to Telefónica.
Amit Mattatia, the Trivnet chief executive, said that 10 to 15
operators next year are planning to start large mobile banking
operations in big markets in Latin America, the Middle East and India.
Citing confidentiality, he declined to identify the operators.
“Because so much of the world is under-banked, consumers want these
services very much,” Mr. Mattatia said.
As the cost of a simple mobile phone has fallen below $20 in most of
the world, mobile banking is becoming affordable in emerging markets.
“This is now poised to explode in the developing world,” said Philippe
Vrignaud, a senior vice president in Singapore for Gemalto.
In Pakistan, where only 14 percent of the people have bank accounts,
Telenor introduced mobile banking in November 2008.
The service, called Easypaisa (100 paisa equal a Pakistani rupee), now
has 500,000 active users who sent transactions worth a combined 5.5
billion rupees, or $64.1 million, in the first quarter of this year.
Most were domestic money transfers, which are limited to $120 a
transfer. Telenor exacts a fee of as much as 5 percent of the
transaction.
Easypaisa is available at 11,000 independent retail agents that make
up Telnor’s distribution network, which outnumber the 8,300 combined
branches of all Pakistani banks.
Within three years, Telenor plans to expand the number of retailers in
its network to 36,000.
“This service is about addressing the unmet needs of the consumer,”
said Aamir Ibrahim, a vice president and chief strategy officer at
Telenor Pakistan. “I think this is suitable for all of our markets
everywhere.”
--------------
We judge ourselves by what we feel capable of doing, while others
judge us by what we have already done. -Henry Wadsworth Longfellow,
poet (1807-1882)
--------------
This posting is provided without permission of the copyright owner for
purposes of criticism, comment, scholarship, and research under the
"Fair Use" provisions of U.S.Government copyright laws and it may not
be distributed further without permission of the copyright owner. The
sender does not vouch for the accuracy of the content of the message,
which is the sole responsibility of the copyright
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