Mobile Money: Time for banks to up their game.

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ACCORDING to a February 15 2013 economic assessment carried out by Zimbabwean economic expert Lance Mambondiani

ACCORDING to a February 15 2013 economic assessment carried out by Zimbabwean economic expert Lance Mambondiani, Ecocash has dispensed the need for a physical interaction with brick and mortar banks for basic services, threatening the future of the entire sector.

In less than three years, the Ecocash subscriber base has increased to more than two million users, moving up by approximately $150 million per month.

Econet has achieved this feat through its network of accredited agents through whom the communications giant has created what is arguably the largest payment platform in the country.

This simply means that all other things being constant, Econet through Ecocash could easily become the country’s biggest bank in the next few years.

How can that be? Econet Wireless Services chief executive officer Darlington Mandivenga was quoted as saying: “We have agreements with most banks and we are currently carrying out physical connections with most of them. We at Econet, initiated the process and we are very keen to get it completed . . .”

Ecocash has improved livelihoods via the direct effects of its commercial transactions and the downstream effects of the payments solution on the wider economy.

Besides creating employment for thousands previously unemployed people, Ecocash has opened business opportunities for many small and average retailers.

The payments solution has also breathed an extra dose of life to Zimpost whose business of moving physical letters — also called snail mail — has been declining for several years due to the advent of the Internet and other related modern communications technologies.

A survey conducted in Gwanda town revealed that the Ecocash uptake rate was more than 50% among interviewed rural dwellers. The product was also revealed to be popular with small-to-medium enterprises such as rural farmers from irrigation schemes, cross-border traders and vendors.

It is important to underscore that Ecocash is not the only mobile money product around. There is Kingdom Cellcard, Telecel’s Skwama and NetOne’s One Wallet to name a few.

Nevertheless, these other products are yet to pose a serious threat to the dominance of Econet’s Ecocash on the market. The existence of alternatives to Ecocash provides the discerning customer a range of products to cater for his taste as situations in life present themselves.

Whoever said small is beautiful most probably had a point. If the small did not exist, the big would lose significance or meaning. Moreover, in a fast-paced world of breakneck technological changes, today’s heroes usually become tomorrow’s zeroes, especially if they do not embrace the persistent winds of innovation and globalisation.

Despite the significant gains that have been made by mobile money services in terms of improved payments, more employment and increased financial inclusion, it has to be noted that improvements in incomes for individual agents or dealers have been small. A former student told me that for one to make more money one has to drive volumes of sales, otherwise an agent makes a small income from all the toil and effort.

The case of contributions of mobile money to Zimbabwe’s economic development is an ongoing discussion since the industry is a young one which has barely reached its teen years, if ever it will reach its adolescence in the modern fast-paced world in which competition, innovation and creative destruction are at best cut-throat.

The modern digital world is an economic jungle in which the fastest and the most innovative businesses will survive the relentless winds of change. Those who sit by the wayside and rue lost opportunities instead of picking themselves up and running the race of life are relegated by economic changes to the dust bins and ash heaps of society.

While still on the so-called mobile money revolution, I remember a discussion which I had with one layman (they are usually said to be in the street, but we were not in any street, just around town).

The man asked me where all this technological rush was leading the world to. I answered honestly that I did not know. Then he proffered his explanation that he thought all this globalisation of payment technologies may eventually lead to the “mark of the beast” predicted in the last book of the Bible.

Well, as a business analyst, I chose not to rebut his line of thinking.

What I know is that modern payment technologies like Ecocash, Skwama and Kingdom Cellcard, to mention a few, have made life more convenient for the majority of the previously financially-excluded segments of our country’s population.

Moreover, mobile money has injected an elixir of competition to the banking sector which for a number of years had almost become synonymous with banking scandals, failures and other unfortunate activities. In the banking world there is no child race, the race is for the strong.

Institutions that are feeble will continue to fall by the wayside.

As to whether the current mobile money revolution is not just another asset bubble which will burst in the future to give way for more creative effort, only time will tell.

What we know is that companies like Econet, NetOne and Telecel are now national landmarks which are here to stay.

How they will stay is anyone’s guess. Their stay may be facilitated by clawing away some of the market share of the traditional brick and mortar banks in an attempt to improve convenience and lives for their customers or by innovating and introducing completely new products.

Ian Ndlovu is a lecturer of economics and national income accounting courses at the National University of Science and Technology, in Bulawayo. He is a researcher on issues of electronic commerce and development economics issues. He writes in his personal capacity.