Mobile money in the Digital Economy: The East African perspective

Bill Gates, in the ‘2015 Gates Letter’, foresees a revolution in how banking is conducted in Africa and how it will improve the lives of the poor. Gates, referencing the Kenya Financial Diaries, which documents the financial lives of hundreds of people living in Kenya over the course of a year, and references stories of people who had to forego medical care due to lack of funds. This is but one indication of the seismic change required in banking and financial services across the continent.

SAP East Africa’s Regional Managing Director, Andrew Waititu says offering financial services to the poor has, in the past, been largely unattainable. “Due to the high cost of physical bank branches which need to be built, staffed and maintained, the man on the street was left with increased bank charges which are beyond what most people in poorer areas can afford. However, we have entered the age of the Digital Economy, where financial services are now available at reasonable cost to consumers while still offering high levels of security, making banking and all forms of financial services simpler and safer.”

According to Gates, two billion people without bank accounts today will be storing money and making payments with their mobile phones by the year 2030. “This statistic is phenomenal, as it will allow people who previously had to take a day off work to deliver money to a service provider or relative, the freedom to transact across the Digital Economy. Mobile banking bolstered by the recently launched SAP S4/HANA in-memory technology platform, which has been hailed as the biggest technology advancement in decades, has allowed banks to service customers that were previously unreachable by removing the need for brick and mortar structures.”

The positive effects of the Digital Economy are visible throughout the world. However according to a study conducted by McKinsey in February 2015, the rapid change in technology will require some careful planning by banks offering services to both the poor and the well-heeled:

Discovery

Banks must apply advanced analytics technology to the large amount of structured and unstructured data at their disposal in order to gain a 360-degree view of their customers. Their engagement strategies should be based on an empirical analysis of customers’ recent behaviours and past experiences with the bank, as well as the signals embedded in customers’ mobile or social media data.

Design

Constant product pushes wear thin upon repeated messaging, and consumers now have much more control over where they focus their attention. Banks need to craft a compelling customer experience where all the interactions are expressly tailored to a customer’s stage in the decision journey. The bank should always be able to recommend the correct next action for the customer.

Delivery

Periodic marketing campaigns will always be core to banks’ customer outreach programs, but more and more institutions are shifting their dollars to “always-on” marketing programs, in which banks engage with customers in exactly the right way at any contact point along the journey. This approach requires agile teams of experts in analytics and information technologies, marketing and experience design. These cross-functional teams need strong collaborative and communications skills and a relentless commitment to iterative testing, learning, and scaling—at a pace that many banks may find challenging.

“The advantages of technology in the challenging context of the Digital Economy are endless. Countries’ borders become picket fences and the high cost of banking is eradicated, allowing people who previously were storing money under their mattresses complete financial freedom. SAP Africa is focused on developing East Africa into a sustainable and thriving hub of business. Through burgeoning homegrown innovations and ongoing local initiatives, we believe that Africa is in fact the First Frontier. The digital journey for the financial services industry is a major focus for SAP, not only because of the economic impact simpler banking processes will have on the economy, but the social impact too. Through creating safe, user-friendly and interactive banking interfaces, all citizens will be able to transact on a much larger scale, with much more ease than before. From a business perspective, the Digital Economy opens countless new markets to companies who would otherwise have had to plough enormous amounts of capital into infrastructure development,” concluded Waititu.