I’m blogging from Dakar, Senegal where I had a stark reminder of why innovation in financial services is so necessary. A colleague of mine had a check to cash, so after one of our meetings we made our way to a “to-remain-unnamed” bank in the city center. Good thing I decided not to wait in the car because this relatively simple transaction took well over an hour to complete. First we had to wait about 30 minutes for our number to be called behind all the people waiting ahead of us. But once he was at the teller, it still took my colleague about 45 minutes to finally walk away with his cash.
My intention is by no means to bash banks…the computer system seemed to be running slowly and the check was for a couple thousand dollars, so he was sent to another desk for some sort of extra authorization. But it was a good, and admittedly frustrating, reminder of the potential of branchless banking, technology and innovative business models to transform the way people, especially the unbanked, access financial services…outside of bank branches.
This experience aside, the Senegalese market is full of exciting initiatives and inspiring energy from banks, MFIs, mobile network operators, technology companies, various government institutions and the central bank. In perusing my Google feed of news on branchless and mobile banking, there are plenty of things around the world to get excited about. Here are just a few that caught my eye:
One of the banks that has a regional presence in the West African Economic and Monetary Union (WAEMU – of which Senegal is a part) is Morroccan-based Attijariwafa Bank. Wafacash, a specialized subsidiary of Attijariwafa and leader in international money transfers, announced the launch of a new mobile money transfer corridor in partnership with Belgacom subsidiary BICS between Belgium and Morocco.
A new study reports on the first randomized evaluation of a cash transfer program delivered via the mobile phone – Zain’s Zap service in Niger (now Airtel’s Airtel Money). The report highlights several benefits of this new delivery mechanism and we’ll be profiling this experience in more depth on our blog in the coming weeks.
Also related to cash transfers, a new report by UNCDF examines Fiji’s experience in leveraging government-to-person (G2P) payments as a mechanism to enhance financial inclusion and provide savings to government and social welfare recipients via a savings-linked electronic payment system.
In Bangladesh, the Bangladesh Bank has just published new guidelines on mobile financial services and the Financial Express reports that nearly a dozen banks are preparing to introduce such services, in addition to those services that are already in the market.
In Pakistan, the largest mobile network operator Mobilink, a subsidiary of Orascom Telecom, was recently granted a license by the State Bank of Pakistan to initiate microfinance activities, seen as their foray into branchless banking.
But I admit that what excited me the most when I looked through my Google feed was the fact that I read more than 20 headlines before finding a story that mentioned M-PESA. The rest of the world is catching up!
The success of Banking services depends on Trust; a bank depends on people’s deposits to make money through on-lending which is called “credit”, Latin for trust. Trust building in money matters is a fragile and always on-going process, where an error can easily break the trust which then is difficult to repair. The entire world seems to need rebuilding trust with banks nowadays isn’t it?
The trust between clients (as said they are the main funding source for the bank’s loan capital) and banks should be based on physical trust building. Again to illustrate with a negative example, when rumors go round about a failing bank, depositors run in masses to the bank to personally withdraw their money.
All agent banking in Micro-Finance can also be illustrated by (sometimes important numbers) of theft and fraud (directly by clients or by and with staff), but the providers and their promoters prefer to hold it secret, something that in banking is difficult to do because of its stringent regulation and its strong sanctions. In one debate I already heard about fraud cases in Kenya’s M-Pesa. If we read and hear around then we know that even the most secured places can be “hacked into” and many telecom companies involved in “branchless banking” (mobile banking is legally the wrong term as it immediately pretends that a bank is responsible) refuse to be responsible for money or data lost or misused. Indeed some regulators have written excellent regulatory frameworks (obliging telcom firms to get a specific license), but I still firmly believe that trust in the banking system is the result of an on-going direct relationship between government, banks and clients.
Kind regards, Peter (BSD City, Indonesia)