Whatever the statistic, the rise of mobile money appears to be an unrelenting one.
Through 2018, more than $1.3 billion a day was processed by the industry, while transaction values increased by 17 percent on the previous year.
This equates to some 866 million individual mobile-based accounts, 143 million more than was recorded by the GSMA at the end of 2017, a jump of 20 percent.
Central to this rise has been the development of what the association calls an enhanced customer experience. A massive rise in smartphone adoption in emerging markets has unlocked access to a wider customer base and enabled providers to offer a range of financial products through easy to use apps.
This trend is no more evident than in Sub-Saharan Africa.
Home to more than 45 percent of the world’s mobile money users, the region last year saw a 13.6 percent growth in account holders, now numbering over 395 million. Transaction volumes jumped 11.8 percent to 1.7 billion, while the combined value of these transactions increased by 15.3 percent to $26.8 billion.
“To some extent, we are seeing traditional banking infrastructure being leapfrogged by digital and mobile services,” comments Thabo Makoko, Global Head of Transactional Services at Absa CIB.
“Around 30 percent of people on the continent have access to bank accounts or traditional financial services. About 70 percent of African adults have access to a mobile phone, so a simple answer to extending the reach of banking is to target mobile.
“However, we must do this in a cost-effective manner and the service has to be transparent, like how cash has always been seen as trustworthy.”
Building the ecosystem
A prominent corporate and investment bank, Absa CIB has quickly discovered the benefits to be reaped from cooperating with other organisations in what Makoko describes as a newly emerging ecosystem of financial services.
“Cooperation with fintechs is not a threat by any means,” he continues. “We see it as expanding reach to more people and want to be at the centre of those transactions being processed.”
These thoughts are manifested in GSMA’s findings.
Another crucial observation in its 2018 State of the Industry Report on Mobile Money, it cites the importance of interoperability in not only growing the utility of mobile-based financial services, but also scaling such use cases.
For example, GSMA found a key driver to be bulk disbursements and bill payments, a sign that mobile money providers are becoming strategic partners for enterprises.
“Partnerships with fintechs, as well as telecoms companies, microfinance institutions and other corporates are critical,” adds Makoko. “We are seeing all of these organisations joining up and using the likes of mobile to offer an integrated service which draws on the expertise of each component part.”
Absa CIB’s work with brewing giant AB InBev neatly underlines this point. “Typically, an AB InBev truck leaves the warehouse full of beer and will deliver to lots of different clients like bars, shops and hotels, often small to medium enterprises who then sell onto their own customers,” Makoko continues.
“The truck will stop at your bar and ask how much of what you need, and if it isn’t in stock then you will have to wait until the next delivery round. This results in lost sales and, because payments are often taken in cash, the truck can also become a target for robbery.
“What AB InBev is doing is creating a service where you can sit in your bar and tell them exactly what you need – the delivery will arrive and on receipt a transaction will automatically take place. The company wants to add to this with things like loyalty programmes and credit schemes to help their customers upscale affordably, and we are helping to build this capacity.”
In Ghana, Absa CIB is collaborating with a fintech which has developed a point of sale platform for retailers.
A system which allows customers to pay for goods via mobile money (and other means), it further enables consumers to carry out other banking transactions such as money transfers and cash deposits, effectively turning a network of retail outlets into virtual banks.
Joined up action such as this will only serve to strengthen the decade-strong momentum being gathered by Africa’s mobile money sector.
Indeed, GSMA identifies several sleeping giants that could be woken in the next few years, namely the continent’s three most populous countries – Egypt, Nigeria and Ethiopia – which it believes can add over 110 million mobile money accounts by 2024.
So far, these nations have been limited by varying factors, including restrictive regulations, monopolised telco setups, lack of connectivity, low financial literacy and wavering consumer trust.
However, change appears to be afoot. New reforms in Nigeria and Egypt have been implemented, moves which may harness the potential of mobile money, while Ethiopia has adopted what GSMA calls an ambitious financial inclusion strategy which has attracted the interest of several types of organisations, large and small.
For Makoko, another shift will occur in the nature of transactions being carried out by mobile money users.
“At the moment, 90 percent of transactions are cash in cash out, meaning people are not leaving money in the mobile payment ecosystem,” he explains.
“I think our ability to displace cash and build trust in mobile will see this begin to change – this will encourage a greater uptake of things like savings products and merchant services shown by the example of our project in Ghana.”
This view is backed up by the statistics, GSMA recording that these types of digital payments grew at more than twice the rate of cash in cash out transactions in 2018.
The trends certainly look promising, and while challenges such as taxation pressures remain for mobile money providers in Sub-Saharan Africa, the mood is generally one of optimism thanks to the growth of the financial services ecosystem witnessed.
The State of the Industry report recognises this, calling for wider societal involvement if mobile money is to be fully exploited.
Its conclusion succinctly states: “It is also about deepening engagement with individuals and businesses through a smooth end-to-end experience that ultimately encourages greater uptake and use of mobile financial services, moving us closer toward the end goal of universal financial inclusion.”