The African banking evolution: High-Street banking on your doorstep
Simon Pont, chief executive of ECR Retail Systems.
Mobile phones may have revolutionised the way of life of the African population, but when it comes to mobile banking there are a variety of technologies circulating which each provide precise services and levels of connectivity and functionality, writes Simon Pont, chief executive of ECR Retail Systems.
In order for the banking evolution to move up to the next level, the focus needs to shift from technological innovation to the delivery of solutions that place a greater emphasis on customer service and on helping businesses fulfil their potential by providing them with optimum transparency and traceability,
Significant investment in infrastructure and technology has accelerated growth in Africa over the past decade establishing it as the second-fastest growing economic region in the world, with an annual growth rate of 5.1%.
That growth has largely been triggered by a boom in mobile technology. In 1998, there were less than four million mobile phones on the continent. By the end of last year that figure had swelled to 735 million, establishing Africa as the second-largest mobile market by connections after Asia, and the fastest-growing mobile market in the world.
Mobile banking has been a key driver of this growth. Improved capabilities of smartphones – specifically advances in their functionality and connectivity – have created a wealth of opportunities for the African population. While consumers in the western world may take the benefits of smartphones for granted, for Africans they represent a whole way of life. They’re a device which enables people to carry out all the essential tasks we have been accustomed to performing for decades. Banking plays a vital role in that mix.
Africa’s banking evolution began six years ago with the launch of Safaricom’s M-Pesa, a service that allows users to store money on their mobiles and then use it to pay their utility bill or send money to their friends via text. At the time it was revolutionary. It was a cheap, easy-to-use service that granted millions of Africans the ability to access their bank account via a mobile, removing both the hefty charges of doing so, and the need to go into the bank itself. Since then, the continent has seen rapid technological changes, with record take-up rates.
But there are multiple interpretations of mobile. Mobile phones may allow for one-off electronic payments to be made, but what about deposits and business banking? What are the alternatives? How do you evaluate the different options? Is there enough spectrum to accommodate the increasing demand? These questions are all vital, but it’s not all about technological innovation. Investment in technology is important, but it’s great service which helps secure a high customer retention percentage.
First National Bank, Ghana’s premier savings and loans bank – the only private bank with active working branches in each of the 12 regions of Ghana – recognised the need for a handheld mobile point of sale solution that would improve the customer experience; while at the same streamline the operational process for its branch managers across the region.
The FNSL solution equips agents on the ground with an ECR XPDA – a handheld terminal with on-board banking software, built-in printer, barcode scanner and GPRS connectivity. This computerised revenue banking management system bypasses issues with connectivity and speeds up the process of collecting payments. Customers making a deposit can be issued with a receipt instantly, legitimising the transaction at the point of contact. Customers can therefore rely on the convenience and trustworthiness of handing over money at their home or small business with the certainty that the transaction has been made securely and reliably. Since the introduction of the new solution, FNSL has seen transactions increase by 10%.
Previously, unless Africans deposited their money in person, there was no way of legitimising the transaction process; you had to rely on the collectors to deposit the cash on your behalf. Mobile technology has not only improved security but increased confidence in the technology of the doorstep banking concept.
Amma Korang, a vegetables trader in Ghana’s Makola No.1 Market, hails the technology as a major breakthrough: “The new machines give traders confidence that the money collected is actually going into our accounts, as we can see for ourselves our account details being brought up on the computer.”
Additionally, branch managers can access real-time updates of all the revenues being collected on the ground, enabling them to concentrate on managing their employees’ performance more closely, removing the need to spend time reconciling discrepancies with client accounts.
“The ECR revenue management system has enabled the bank to get full visibility of our operations and customers,” says Hilda Nkansah, relationship manager, First National Bank. “Now our mobilisers all insist on using the terminal because of the speed and ease of use.”
So what does the future hold for banking in Africa? According to California-based mobile-banking innovator Carol Realini, executive chairman, Obopay: “Africa is the Silicon Valley of banking: the future of banking is being defined here … it’s going to change the world”. That may sound like a bold statement, but when you look at the past six years it is hard to dispute. And with global mobile transactions estimated to exceed $1 trillion dollars by 2015, Africa’s growing dominance on the banking stage is hard to ignore.
That said, growth beyond initial penetration will all depend on how the major banks and their customers respond and embrace these new technologies. Perhaps the biggest consideration is how all parties manage the ongoing impact of mass mobile penetration.
