In our previous post in this series, we took a look the role of innovation in the success of mobile based financial services, such as M-Pesa, in African countries. By contrast, the Western world has been marked by a safer, slower approach in recent years.
It could appear as if the West has not seen the development of such tools because they are not required. However, as a recent report points out, this is not entirely true. Take the US for example, where the poorest 30 percent of the country has been found to be underbanked. This section of the population could certainly benefit from the access and convenience offered by mobile money.
Western businesses are beginning to recognise the potential mobile money has even in developed nations. East Africa, a hub of local innovation, is becoming known as the ‘Silicon Savannah’ in these circles and is increasingly finding its way to itineraries of technology investors and experts. Facebook’s recent acquisition of WhatsApp – a service used by millions of Africans – is another indicator of the continent’s growing significance in the mobile landscape.
Apart from M-Pesa, newer, more cutting-edge services are coming into play as well. In Zinbabwe, Econet Wireless has launched a service enabling customers to move their mobile money into savings accounts that earn interest. In Mali, Orange has partnered with MFS Africa to launch insurance for pregnant women. Such tools could greatly benefit the undocumented/underbanked population even in developed countries.
Introducing similar facilities in the West would, however, come with a set of new challenges that are not seen in Africa. For instance, one the biggest reasons that M-Pesa enjoyed such massive growth in Kenya was the almost-complete lack of mobile banking-related regulation in the early years. This regulatory ambiguity still characterises Africa, with laws lagging behind the technological development. In the US and most European countries, on the other hand, banking regulations are much tighter. Consumer protection is high on the priority list and telecoms must bear the responsibility of compliance or, possibly, canvassing and pushing for new legislation. Dues to these circumstances, it is likely that mobile money would evolve differently in developed nations.
Nevertheless, it is certain that this is an effort worth making if the West wants to catch up with the technological developments currently taking place in Africa. Mobile money has the potential to be a game-changer in the developed world as well.
Watch this space for updates.