Mobile revolution

2011-04-30 14:04

As a trendspotter, I can’t help but beam with pride when I see new South African innovations make headlines, not once, but twice – in the space of one week – on one of my regular international trend feeds.

What makes it even more satisfying is that the innovations centre on mobile banking, or mobile payment systems, to empower the poor: a large part of the population previously ignored by banks, because it has always been assumed that the poor don’t have money.

But as developmental economist CK Prahalad pointed out in his seminal book, The Fortune at the Bottom of the Pyramid, the poor may only have a little money, but there just happen to be billions of them.

Professor Muhammad ­Yunus proved this point to the world when he founded the Grameen Bank, which provides micro-loans to the poorest of the poor in Bangladesh – and received a Nobel Peace Prize for his efforts.

In South Africa, an estimated 13 million people, 27% of the population, do not have bank accounts.

However, 94% of that same population possess a cellphone.

If cellphone technology has leapfrogged old landline infrastructure on the continent, then it takes no stretch of the imagination to see that innovations in mobile banking, or M-commerce, can quickly fill the void that traditional banking systems have not bothered to service.

Necessity is the mother of invention, and in a technologically driven world, innovation comes so much faster – and in the most surprising ways.

The M-Pesa system in Kenya, developed by Safaricom (part-owned by Vodafone), was initially proposed as just a mobile banking experiment, but has since become the template for mobile money transfers across the globe – even in Afghanistan.

In Africa, where illiteracy is high and transactions small but frequent, a traditional banking system has more than enough red tape to dissuade the unbanked masses from even trying to engage with a bank.

With the runaway success of easy-to-use mobile money transfers, Kenyans using M-Pesa started leaving money in their accounts as an alternative form of a secure savings deposit.

This prompted Safaricom to collaborate with a Nairobi-based equity bank to have their ­M-Pesa customer’s cellphone accounts linked to a bank account.

In an ironic twist of fate, the previously developed world template of using your bank account as a credit record to obtain a cellphone contract has now been reversed.

In Africa, it is fast becoming your prepaid cellphone contract that is your credit rating, and your passport to banking services.In 1998 there were less than two million cellphone users on the continent.

By the end of last year the figure was estimated to have jumped to 506 million.

Add to this the predictions that almost all cellphone users will have migrated from “feature phones” to the ubiquitous “smartphone” by the end of the decade, and a very different mobile future begins to unfold.

It’s a future where the relevance, and role, of a bank is being questioned, and one where retailers and mobile companies will blur the boundaries in the consumer’s minds and provide fast, efficient, financial services in one seamless user experience.

Just think about that the next time you’re in a queue at the bank.

» Chang is the founder of Flux Trends:

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