[ 2016-09-01 ]

Banks threatened by mobile money service – PwC survey
At a time that calls for collaboration between
banks and telcos in the provision of mobile money
services intensify, it appears banks are rather
concerned about the threat posed by mobile money
services.

For instance the August 2015 Telecom Subscriptions
Report by the National Communications Authority
(NCA), posits that mobile money made significant
strides between 2012 and 2015.

According to the report, registered subscribers
increased from 3.8 million to 13.1 million while
registered agents also increased over tenfold from
8,660 to 79,747 within the three year period.

A recent survey by Pricewaterhouse Coopers [PwC]
indicated that over 70 percent of CEOs and Heads
of e-banking services in Ghana view mobile money
as both a threat and at the same time an
opportunity.

Also, about 56 percent of banks are of the view
that mobile money presents threats to the
traditional ways in which the industry operates,
even if these threats do not measure up to the
opportunity.

The report captioned, “How to win in an era of
mobile money,” surveyed CEOs, CFOs, and Heads of
E-banking of 25 out of a total of 30 banks.

The threats as viewed by the bankers were the
relatively cheaper or no costs telcos charged on
services such as of bills or services offered in
restaurants and items purchased in certain shops.

Even though about 29 percent of the participants
viewed mobile money as an opportunity which has
generally enhanced the delivery of services such
as domestic remittances and bill payments, 71
percent of the respondents view mobile money as
both an opportunity and a threat to their
operations.

The bankers also argued that the E-Money Issuer
(EMI) Guidelines of the BoG have set the stage for
a possible entry into the banking arena by
telcos.

As a result, the bankers believe that the telcos
will at that point become direct competitors to
banks instead of partners and service providers to
the industry.

Regulatory regime necessary

Commenting on the development, the Senior Vice
President, Strategic Planning at Royal bank, Dr.
Kwame Baah Nuako, told Citi Business News
regulation is key to foster the collaboration
between telcos and banks.

“My argument is that you cannot have one part of
the banking space that is the universal bankers
being regulated while another part that is the
telcos also engaging in banking, not being
regulated,” he opined.

For Buddy Broukou of the financial inclusion think
tank, the Consultative Group to Assist the Poor
[CGAP], Ghana is less likely to see the mobile
money take over traditional banking.

“I would say no because the two services are
operating independently…if you take the case of
Ghana where there is high banking penetration and
relatively low mobile money penetration, that has
been more a function of regulatory environment,”
she remarked.

Meanwhile the banks believe three key things,
regulation, technology and partnerships together
with other conditions will propel them to win in
the era of mobile money.

Mobile money quick facts

Between 2012 and 2015, the number of transactions
increased substantially from 18 million to 266
million while the value of transactions equally
went up from GH¢594 million to GH¢35 billion.

Also, by the end of 2015, the mobile money balance
on float stood at GH¢548 million.

The Bank of Ghana’s Payment and Settlement
Department however reports that the figure
increased by about 24 percent as at the end of
June this year.

According to the central bank, the mobile money
balance on float increased from the GH¢548
million to GH¢679 million.

Source - citibsinessnews.com

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