Doorstep Banking

Over the last decade, Africa has become the second-fastest growing economic region in the world, with an average growth rate of 5.1 per cent per annum, and a rapidly growing IT infrastructure.

Mobile technology has been at the heart of this growth. In 1998, there were less than 4m mobile phones in Africa. By 2011, that number had swelled to 500m – half the population. By the end of last year, the figure  had risen to 735m, making Africa the second-largest mobile market by connections after Asia, and the fastest-growing mobile market in the world.

This rapid annual growth, triggered by increasing consumer demand, is largely down to the improved capabilities of handsets. While consumers in the western world may take advantage of the benefits of smartphones – largely because of their similarities to computers – for Africans mobiles represent a whole way of life. Many don’t have access to a computer; their mobile phone, therefore, is the device which equips them with the ability to carry out all the essential tasks we have been accustomed to performing for decades. Furthermore, as the continent’s infrastructure continues to develop, mobile internet usage is accelerating fast.

Mobile banking is perhaps the best example of this. According to California-based mobile-banking innovator Carol Realini, executive chairman of Obopay: "Africa is the Silicon Valley of banking. The future of banking is being defined here… It's going to change the world."

When you consider that by 2015 it’s estimated that global mobile transactions will exceed $1 trillion, it’s hard to ignore the impact that mobile banking has had on Africa’s rapidly accelerating annual mobile growth rate.

Banking evolution
The banking evolution in Africa kicked into life five years ago, with the launch of Safaricom’s M-Pesa service in Kenya, which allows users to store money on their mobiles and then use it to pay their utility bill or to send money to their friends via text. At the time, this marked a revolutionary breakthrough. It was a cheap, easy-to-use service which granted millions of Africans the ability to access a bank account and avoid the hefty charges of doing so.

Since then, the rapid technological changes taking place across Africa have continued to evolve approaches to banking. With countries across the continent introducing mobile financial service solutions to the market, marginalised communities are gaining access to services which were previously merely a pipe dream.

But there are multiple interpretations of mobile. In March 2009 for instance, MTN Uganda launched its own banking solution, MobileMoney. A year on, 600,000 Ugandans had signed up. Today the service has attracted 1.6m users, reaching 85 per cent of the population. MobileMoney units are located across the country and housed within distinctive canary-yellow buildings and kiosks.

Mobile phones may allow for one-off electronic payments to be made, but what about deposits and business banking? Are static mobile units, which take advantage of mobile technology, too restrictive? What are the alternatives? How do you distinguish between them all?

Customer service
What is clear is that in order for the banking evolution to move up to the next level, there needs to be a focus on delivering solutions which put greater emphasis on customer service, while at the same time helping businesses to fulfil their potential through the provision of optimum transparency and traceability. Without this approach, even the best technologies won’t last beyond their initial penetration, and retain the same dominance.

First National Bank (FNSL), Ghana’s premier savings and loans bank– the only private bank with active working branches in each of the 12 regions of Ghana – recognised this need and has been operating our handheld mobile point of sale (MPoS) solution across the region since 2011.

The MPoS solution equips agents on the ground with an ECR XPDA – a handheld terminal with on-board banking software, built-in printer, barcode scanner and GPRS connectivity. This not only speeds up the collection of payments, but also reduces the admin costs and time required to audit and track payments. This tailored, computerised, mobile, revenue banking management system bypasses issues with connectivity on mobile phones, while legitimising the banking processes for small business and individuals looking to deposit monies.

In the past, unless Africans deposited the money at a bank in person, there was no way of legitimising the transaction process; you had to rely on the collectors to deposit the cash on your behalf. Now, thanks to the introduction of mobile technology, customers making a deposit can rely on the convenience and trustworthiness of handing over money at their home or small business, with the certainty that the transaction has been made securely and reliably.

By issuing the depositor with a receipt instantly, the transaction is legitimised at the point of contact. This not only improves security, but also reduces the cost of monetary collections across Ghana, and has increased confidence in the technology of the doorstep banking concept. This confidence is vital for customer retention - since its launch, FNSL has seen a 10 per cent increase in transactions, but it’s also important to banking staff.

Branch managers can access real-time updates of all the revenues being collected on the ground, too. This allows them to concentrate on managing their employees’ performance more closely, as the need to spend hours reconciling client accounts and reviewing inconsistences surrounding collected accounts has been removed.

African countries have currently allocated considerably less spectrum to mobile services than Europe, the Americas and Asia. As a result, connectivity in rural areas of Africa is largely restricted. Additional spectrum is therefore needed to help create a catalyst for future growth and to advance the banking evolution across the continent. Mobile technology is key to this growth, but the banking evolution in Africa is multi-faceted.

Mobile phones may have revolutionised the way of life of the African population, but when it comes to mobile banking, there are a variety of technologies circulating, each of which provide precise services and levels of connectivity and functionality. The future of banking in Africa will depend on how the major banks and their customers respond to and embrace these new technologies. Perhaps the biggest consideration is how both parties manage the impact of mass mobile penetration.

Simon Pont is CEO of ECR Retail Systems