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According to a report released by The Boston Consulting Group (BCG), the use of mobile financial services in sub-Saharan Africa to perform tasks like pay utility bills and send money to relatives could produce an estimated US$1.5-billion in fees for mobile-money providers by 2019.
With mobile based financial services, be it remittance, paying utility bills or purchase, offering convenience and spreading like a disease in Africa as a whole, it is no secret that traditional banks are shaking on their feet. The banks that have seen the trend and are moving in the same direction are poised to be not only trendsetters but in the long run will reap the benefits.
The report states that sub-Saharan Africans are looking for more-secure ways to borrow and save money and are open to other financial products delivered using mobile phones, including loans and insurance.
The report says that sub-Saharan Africa is adopting mobile financial services more than other parts of Africa, slowly nudging traditional banks out of the way. The report further notes that in the top ten countries that make the most use of mobile financial services in the World, eight of them are in Africa, and sub-Saharan Africa has the highest proportion of active accounts for 43 %.
A number of factors, it says, are driving this growth. One major factor is the large unbanked population that exist in countries in sub-Saharan Africa, another is the region’s high mobile phone penetration.
According to BCG estimates, there will also be some 400-million unique mobile-phone subscribers in 2019 and almost 150-million traditionally banked sub-Saharan Africans. That will leave some 250 million people aged 15 or older who have an income of US$500 or more and a mobile phone but no traditional bank account. This gives a sense of the potential market for mobile financial services.
Far more troubling for traditional banks is that even the traditionally banked Africans are increasingly preferring the convenience of mobile financial services. Not only is it about convenience but also about the low charges. Services like Snapscan which was championed by Standard Bank, a traditional bank, is an example of how banks need to respond to the growth of mobile services. Instead of being stubborn, they must adapt and invent new ways of doing business.
Research by BCG also shows that more than half of all people in sub-Saharan Africa aged 15 or older have a mobile-phone subscription—more than twice the number of people who have an account at a formal financial institution.
At the rate that mobile money services are growing in Africa, it will not be a surprise in the near future when kids growing up now never know which way the entrance and exit door swings in traditional banks.