When Joyce Rejista ran out of money at a music festival she found herself in a familiar fix for villagers across Malawi, needing cash in places where banks and ATMs are scarce.
The obvious answer was a mobile money service run by telecom companies Airtel or TNM, which have leveraged widespread mobile phone networks to amass more account holders than Africa’s major banks.
But when Rejista, 28, tried a friend in Malawi’s commercial capital of Blantyre for help, he told her to sign up to a new Standard Bank service so he could send her the money.
After long-ignoring mobile money’s target market in favour of higher-income Africans who they can serve their more lucrative traditional products, Africa’s traditional banks are now looking to elbow their way into telco territory.
Since much of Africa’s population has limited access to financial services, the continent is one of the world’s most attractive banking opportunities as incomes rise.
While bank revenues dwarf those from mobile money, in terms of user numbers the latter is a clear winner. As telcos go after a growing number of banks’ revenue streams, they can no longer overlook their success.
Standard Bank, Africa’s largest lender by assets, is rolling out its mobile money-style product, called Unayo, across the continent and aims have it in all its markets by end-2023, Wally Fisher, the head of the service, told Reuters, adding it is also focused on bringing online services like lending.
Unayo aims to win a meaningful share of the mobile money market in the near term and believes it can capture at least 1% of around $90 billion in remittance and donor aid payments made every year in its markets as revenue, Fisher said.
“It can very quickly result in quite a meaningful contribution to the bottom line in the next two to three years.”
Shifting strategies
In Malawi, fewer than 170 of every 1 000 adults has deposits in a bank account, whereas nearly 600 have a mobile money account, according to 2019 IMF statistics.
And across the continent, there were 548 million registered mobile money accounts in 2020, according to the Global System for Mobile Communications Association (GSMA).
While banks have looked to partner with telcos, marrying their licences and lending expertise with massive mobile networks, the operators are increasingly looking to offer lending, insurance, savings and more without their help, and ramped up efforts during the pandemic.
Orange got its own banking licence, while others partnered with smaller banks. MTN and Airtel can now collect deposits in Nigeria, which is Africa’s most populous country.
Banks are following their lead. Fisher said Standard Bank would pursue partnerships where they add value but was focused on building Unayo for now.
Nedbank is discussing partnerships but also looking to offer products itself where it sees opportunities, its head of retail transactional, forex and investments, Vanesha Palani, said.
While it only operates its mobile money-style offering in South Africa, Nedbank is looking to expand it across the continent in the near-term and enable new services like lending and cross-border remittances, Palani said.
But pursuing solo strategies too aggressively risks damaging the potential to forge partnerships critical to growth in many markets, head of card and payments for Absa’s regional operations, Vinolan David, said.
Nevertheless, the bank has now built its own stand-alone product and is planning to launch it in countries including Zambia, Tanzania, Ghana and Uganda in the coming months.-moneyweb
