Standard Chartered backs mobile wallets

Standard Chartered has launched a mobile wallet service targeted at corporate clients in Kenya. The service has been developed in partnership with Safaricom, which operates the mobile money transfer service M-Pesa. The bank hopes the deal will herald the start of a major drive to open up financial inclusion in emerging markets.

The bank’s Straight2Bank Mobile Wallet service is designed to help development agencies, insurance companies and consumer goods firms to make payments to unbanked or banked individuals such as aid workers, policy holders and farmers. Payments can be made to these individuals via their M-Pesa mobile wallets. The aim is to lower corporates’ risks and costs in handling cash, while simplifying and accelerating their payment processes of administration and reconciliation.

“We believe the mobile wallet is going to be one of the essential components of banking,” Gautam Jain, global head of client access, transaction banking at Standard Chartered, told Daily News at Sibos. “Wallets are very quick, easy and cost effective for consumers. Looking within Africa, organisations such as the UN and Save the Children disburse aid in remote areas where the population is unbanked. Taking cash out and moving to an electronic model helps the end beneficiary and it helps the corporate, because it gets rid of paper-based reconciliation.”

M-Pesa is a widely known mobile money transfer system launched by Safaricom in March 2007. Since then, it has gained 17 million users, which accounts for more than two-thirds of the adult population in Kenya. Some 43 per cent of the country’s GDP now flows through the mobile network. Standard Chartered said the Straight2Bank Mobile Wallet will help corporates save time and cost, by enabling them to conveniently make and track payments.

Straight2Bank already existed as an internet-based service for corporates, but did not have a mobile dimension until now. The main focus of Straight2Bank is automating the transaction process from one end to the other, which Standard Chartered says helps to reduce the error rate and increase overall efficiency. Building the mobile service took two months, said Jain.

The launch in Kenya is not the end of the story. M-Pesa itself launched in India in November last year and Standard Chartered has similar plans to extend its mobile wallet service into new regions. Other countries across Asia, Africa and the Middle East have an estimated one billion people who own a mobile phone but do not have a bank account. While Jain acknowledged the mobile wallet is not a new concept, he said the reason previous initiatives such as Google Wallet had not gained traction was that an attractive proposition that included enough players had not been produced.

“Today’s announcement fits in so well with our prime purpose, helping emerging economies and development organisations come together for financial inclusion,” said Jain. “We are integrating our banking infrastructure with as many telcos as possible. We have to be inclusive, so we can encourage the clients of corporates to start using the mobile wallet. By the end of this year we are looking to integrate with eight telcos.”