Africa is a continent with staggering statistics when it comes to bank use versus mobile banking. With only 34% of Africans using a brick-and-mortar bank and 85% of Africans using cell phones, it’s clear banks that don’t offer mobile banking are missing the mark.
In a recent article by Chris Tredger from IT Web Africa, banks and telcos are vying for the business of those who use mobile banking and the telcos are winning. Tredger explains,
“traditional banks are reinventing their business models and launching new digital-banking-as-a-platform initiatives in order to reclaim the mobile banking initiative.”
But in the process of doing so, they are facing several “digital dilemmas”, as Tredger calls them. The first is that those who would come up with these innovations have conflicting interests. Creating consistent systems would require multiple owners with varying agendas to work together. No one person or entity is the owner of the digital part of the business. So no one wants to take the risk of potential failure when it comes to expanding into digital markets.
Another digital dilemma facing banks in Africa is expanding services to the unbanked instead of just issuing loans it perceives as safer. Tredger challenges that African banks might be happy to issue a $2 million loan to a company. But what they need to be willing to do to remain viable in the changing banking world is issue one million $2 loans to the unbanked. Will the ROI be the same? Only time will tell but while banks are deliberating they are passing up on hundreds of millions of customers.
The good news is the race for market share between banks and telcos means inclusive banking is on the rise, as well as FinTech innovation. Tredger suggests the future of mobile banking will require collaboration between banks, internet companies, mobile providers, and FinTech innovators.
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