The story goes that the banks showed little interest some years back when the whole mobile money idea was bounced off them, but a new survey by PricewaterhouseCoopers (PwC) indicates that the phenomenon has sent banks into a cold sweat, and they are beginning to adopt an ‘if you can’t beat them, join them,’ approach.
The PwC 2016 Banking Survey on the theme: “How to win in an era of mobile money,” released on Thursday, said much as banks consider the Mobile Network Operators (MNOs) as partners due to their ease of deposit mobilisation through use of technology, banks are increasingly worried the mobile money operators will metamorphose into banks.
The concerns come at a time funds deposited with the banks by mobile money operators, which is referred to as the balance on the float, has increased from GH¢19.6 million in 2012 to GH¢581.3 million in the first quarter of this year.
According to respondents of the survey, which included CEOs, Chief Financial Officers and Heads of E-banking of commercial banks, mobile money is evolving into “banking on your phone,” which provides customers with alternatives to traditional banking.
The bank executives feared that the E-Money Issuer (EMI) Guidelines — issued by the Bank of Ghana last year to regulate the mobile money service — have set the stage for a possible entry into the banking arena by telecom companies.
Judging by the framework for mobile money operations as established by the central bank, respondents said it is possible for telecom companies to develop to the point where they can operate mobile money services independently of banks.
“Telcos will at that point become direct competitors to banks instead of partners and service providers to the industry.
To curtail this threat, most banks are quickly building the relevant infrastructure that allows them to partner with telcos to jointly deliver mobile money services. Respondents believe there is enough opportunity in mobile money for both banks and telcos,” the PwC survey said.
In an interview in Accra, Vish Ashiagbor, Country Senior Partner at PwC said, “with mobile money making such drastic inroads into the banking space, we set out to understand what bank executives are making of the development and how they are planning to win in this era.
For us, winning in this era does not mean eliminating mobile money but rather being competitive both in spite of any threats, and due to any opportunities, that mobile money presents,” he said.
Last year, mobile money operators recorded a value of transaction of about GH¢35.4billion, an increase of more than 216 percent over the 2014 data.
Last year’s transactional value was recorded on the back of more than 260 million transactions in a market that has since seen a new entrant in the form of Vodafone Cash, powered by the namesake mobile operator.
The value of mobile money transactions when put into perspective is just GH¢5.85billion shy of the total deposit liabilities of the 29 banks as at the end of last year, a figure that is likely to be surpassed by the mobile operators this year.
Since the introduction of mobile money to the Ghanaian market in 2009, it has played a key role in the push for financial inclusion.
According to data from the World Bank, in 2010 a relatively large segment of the Ghanaian population – 44 percent, was excluded from the financial services sector altogether.
During this period, access to formal banking services hovered around 34 percent, with banks creating innovative channels to penetrate the market further.
By 2015 however, the segment of the population excluded from the financial services system had dropped to 25 percent, according to the World Bank.
The drop in the population excluded from financial services was driven primarily by the widespread adoption of mobile money for financial services activities.
According to the latest Bank of Ghana report on the mobile money sector, between 2012 and first quarter 2016, registered mobile money subscribers increased from 3.8 million to 14.6 million, while active subscribers shot up from 345,434 to 5.3 million within the period.
B&FT