Mobile Money Panel at East Africa Com – May 2017
A number of issues were raised on the East AfricaCom Mobile Money panel in May regarding the future of the USSD mobile money channel, the breadth of services offered through the channel and the potential threats to and opportunities for this business model. The panel was hosted in Nairobi, Kenya, the birthplace of mobile money.
Ed Higenbottam, Managing Director of Verdant Capital identified two competing themes: (i) the ever-broadening product offering through the USSD channel: payments, micro-loans, micro-insurance, remittances, micro-investments (for example the recent M-Akiba bond); and (ii) the long-term potential threat to the USSD-business model as a result of increasing prevalence of smart phones in Africa, and the potential threat of app-based banking. It is estimated that 50% of Africans will have smart phones by 2020. Banks offering app-based services have advantages by the nature of their regulated status, for example they can use customer deposits in mobile money wallets as deposits in their own businesses rather than placing on deposit with another institution.
Segeni Ng’ethe, a Director of BRCK, identified WhatsApp’s trial of a new peer-to-peer payment system using its messaging platform as a key threat, both to payments channels within countries, but also to traditional cross-border remittance businesses. The threat is analogous to how WhatsApp has disrupted the international calling and roaming revenue of mobile phone operators. Segeni, also discussed his experience as founder of AirPesa, a remittance channel providing gifting services from diaspora to friends and relatives in Kenya. The majority of the gifts were in the form of mobile airtime!
Joel Macharia, Founder & CEO of Abacus, also on the panel, discussed Abacus’ business model offering investors globally the opportunity to invest in African markets using web and mobile systems.
The audio of the panel will be added to our website in the coming days.