KALONDE NYATI, Lusaka
TAKING a walk or drive along the streets of any town, be it rural or urban, one will notice booths with people receiving or sending money -something that is contributing to narrowing the financial inclusion gap.
A few years ago, money transaction was mainly a preserve for people that held bank accounts while those that did not rely on those with bank accounts to receive money on their behalf.
But the introduction of mobile money platforms by mobile network operators (MNOs) has resulted in more people opening accounts with the service providers and accessing financial services with ease because the only requirement for opening an account with Airtel Mobile Money or MTN Money is just a National Registration Card (NRC) as opposed to the numerous requirements by commercial banks.
Like conventional banking, MNOs are providing domestic person-to-person transactions, cash-in and cash-out transactions, airtime top-ups, bill payments, bulk payments, international remittances and digital loans, thus making them popular.
According to the 2017 report on the state of the digital financial services market published by the United Nations Capital Development Fund (UNCDF), of the total active accounts last year, MNOs accounted 62 percent from 60 percent recorded the previous year while commercial banks accounted for only 34 percent, which was a decrease from the 39 percent recorded the previous year.
In terms of transaction volumes, commercial banks accounted 44 percent of the total 41.5 million transactions compared to 32 percent share by MNOs.
Are MNOs taking over conventional banks?
Despite commercial banks recording the larger chunk, it is clear that MNOs are up to the challenge and are projected to grow as evidenced by the increasing numbers of people accessing the platform.
According to Airtel Money director James Chona, the mobile money platforms have continued to record steady growth with transactions growing on a monthly basis.
“In terms of transactions, Airtel is on average posting over 20 percent growth monthly. For instance, we [Airtel] have in the last seven months exceeded the 20 percent month-on-month growth, indicating that the product is growing and being accepted on the market,” Mr Chona said.
The company, which has rolled out 10,000 booths, creating about 10,000 jobs is upbeat of the future of mobile money platforms.
“We want 90 percent of our total base to be on the platform. About 40 percent of the total 5.5 million subscribers are on the Airtel Money platform with plans to grow the base further,” he said.
With the envisioned increase in the participation of MNOs in the financial space, one would ask what the future of conventional banking is. Will it continue to be relevant in the provision of financial services and closing the financial access gap?
Informal financial inclusion currently stands at 59 percent while formal financial inclusion is at 38 percent and the central bank wants commercial banks to be innovative in the provision of services to remain relevant.
“The future of conventional banking has been a discussion point in many fora. It means banks have to shape up because if they do not, the others will take over,” Bank of Zambia Governor Denny Kalyalya says.
Dr Kalyalya, however, notes the banks are not sitting idle and have been putting various innovative products and services to enhance their relevancy in the financial market space and contribution to financial inclusion.
Supporting his statements, Bankers Association of Zambia chief executive officer Leonard Mwanza, says the banking sector has already stepped into the digital payment space.
“The needs of future generations are anchored on smart technology,” Mr Mwanza said.
Clearly, the payment ecosystem whether driven by mobile operators, Fintecs [a new industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the public] and commercial banks, is becoming more digital.
“Commercial banks in the country are in close collaboration with MNOs and Fintecs and creating platforms, which enable the interoperability and movement of funds from each other’s platforms – this is all working towards expanding financial inclusion levels in the country,” he said.
He also notes that tapping into the huge customer base currently using mobile payment transactions will facilitate and revolutionise the uptake of digital financial services in the country.
With most banks partnering with MNOs and deploying mobile payment solutions on their platforms and enabling customers to pay bills, service and transfer funds using their mobile phones, it is envisioned that both players will continue being partners in development as opposed to being competitors.
KALONDE NYATI, Lusaka