The Fight for Mobile Money 2.0

Wiza Jalakasi
Oct 1, 2019 · 17 min read

Understanding the complex continental war to be the digital bank for the African consumer

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Image credit: Alexander Andrews via Unsplash
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MTN Group HQ — 14th Avenue, Fairlands, Roodepoort, Gauteng Province, South Africa (Image credit: Wiza Jalakasi)

There is nowhere else in the developing world that moves more money purely on mobile phones than Sub-Saharan Africa

The region is currently responsible for an astonishing 45.6% of mobile money activity in the world — an estimate of at least $26.8 billion in transaction value in 2018 alone. Mobile money in this context is defined to include only telco-based money solutions, thus this figure excludes WeChat Pay, AliPay and all card/bank operated solutions.

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Victoria Island, Lagos, Lagos State, Nigeria (Image credit: Wiza Jalakasi)
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View from the top floor of iHub, Kilimani, Nairobi, Kenya (Image credit: Wiza Jalakasi)

This is the state of mobile financial services in Africa

… where the value of transactions has grown over 890% since 2011 and shows no signs of slowing down.

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GSMA Mobile Money Metrics 2011–2018 (Image credit: GSMA)

But how did we get here?

There is no simple answer, but in many ways the mobile phone democratised the financial services opportunity. Being a relatively recent invention, different market actors have leveraged it’s growing ubiquity to be able to play in a previously walled garden.

What is mobile money 1.0?

By running the mobile money software on the core mobile network, you ensure that the service is compatible with all phones on your network without the need for the user to install anything else or connect to the Internet to use the service. This works well for targeting the widest possible range of users, and allows organic discovery and activation of the service backed by local marketing campaigns. This has been the formula that has led to the success of M-PESA and every other telco led mobile financial service over the past decade.

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A few types of mobile financial service providers (Image credit: Wiza Jalakasi)

Why is this important?

The cost of these devices tends to be under $25 — making them affordable for first time Internet users who are migrating to consume online services like WhatsApp to stay connected in a globalised world and bypass telco messaging costs.

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MTN Smart T — KaiOS device sold for NGN 8,000 (Image credit: Wiza Jalakasi)

“But there’s a flip side to that coin”

It’s not all sunshine and daisies for digibanks in Africa. Despite the increased investment and and growing market to engage, the biggest challenge for them still lies ahead.

Why would I use another app to send money and receive money in Kenya when M-PESA works and I’d have to use M-PESA to cash into your app’s wallet anyway?

Digibanks have responded to this challenge with some clever value propositions, including discounted airtime top-ups, special deals on goods and services and my personal favourite, international remittances — a good example of such is Chipper Cash — and it seems to be working well so far.

Naturally, the incumbent banking industry refuses to be left behind

The first wave of digibank offerings from incumbent banks is already well under way. Standard Bank has taken an interesting approach by investing into a 9-year old fintech, Nomanini, for instance.

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CBA Loop offering — NFC enabled international debit Mastercard and iOS app (Image credit: Wiza Jalakasi)
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Flutterwave Barter app offering (Image credit: Wiza Jalakasi)
  • Mechanisms to liquidate value stored or transfer to other forms of digital value
  • Utility beyond peer-to-peer and merchant transactions
  • Extensibility for services to easily integrate with it
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NALA Money app offering (Image credit: Wiza Jalakasi)
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OPay (Left) and SafeBoda (Right) app offerings (Image credit: Wiza Jalakasi)


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