MOBILE BANKING
by consumeword Posted on 24/06/2015
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Should Financial Institutions opt for their own SIM card or Tie-ups with Telcos?

Equity through Finserve Africa Ltd has gone ahead of other financial institution by owning their own simcard trading as ``Equitel’’ which is a mobile virtual network operator in Kenya .It is a wholly owned subsidiary of Equity Group Holdings Limited and is using the Airtel Kenya network as its carrier. What does this mean to other Financial Institutions and Telecommunication Companies?

Financial Institutions have opted for tie-ups with telecommunications companies to link customers’ bank accounts with mobile wallets; Equity Bank, on the other hand, plans to unveil its SIM card-based mobile based service.

Being one of the Financial Institutions with a large pool of customers in Kenya Equity Bank would easily cross-sell to its existing customers .After it has acquired a considerate number of clients under the Equitel platform and also enticed them to using their platform this is when I believe other banks would now think this is the time to go which would be too late and quite expensive. Banks in East Africa are already growing jittery over uptake of mobile money services, which truly threatens to eclipse their traditional banking models.

Banks opted for agency banking in a bid to counter telcos which has actually worked but agents have been reluctant into uptake of this owing to minimal revenue growth despite the increasing volumes of transactions handled by them and they have been targeted by thugs’ especially rural folks.

Having your own SIM card enables you to manipulate it contrary to tie-ups and I believe this is what led to a misunderstanding between some banks and telcos. Owning it enables you to cross-sell your products leading to increased average revenue per user where East African banks have been performing dismally i.e. 90 % of clients have access to one product resulting to increased dormant accounts whereby one in four bank accounts is inactive.

This would enable easy customer segmentation and clearly knowing your customer (KYC) through their bank transaction, airtime and data bundles consumption. Tie-ups limits this due to client confidentiality by either telcos or banks as credit reference bureau wouldn’t enable client segmentation necessary for cross-selling in the increasing competitive market.

Financial institutions ought to move fast and grasp this idea rather than wait or else Equity Group Holdings would misuse this monopoly whereas other banks would find it hard just as some telcos have found it hard to break even.

If one would buy airtime at no cost using Equitel SIM card from their Equity Bank account then why would a financial prudent person expense himself when such a cheap option exist…furthermore the cost of calling across other networks is also cheap in comparison to some telcos. By doing this we would be conserving our environment as we wouldn’t actually be in need of scratch cards that are hazardous to our environment further reducing the cost of doing business. We need more financial institutions adopting this strategy as this would have a positive by-product to the common mwananchi.

Airtel was the preferred carrier for Equitel due to its presence in seventeen countries in Africa and this for sure would enable Equity Holdings replicate the same to its subsidiaries in East and Central Africa with a lot of ease. Financial institution needs to borrow a leaf on this strategy as the eye external markets with low financial inclusion and a large population such as Ethiopia exceeding 90 million by owning their own SIM card as this would enable them mute exorbitant charges incurred by their clients on using mobile banking services at their comfort.




   

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About the Writer consumeword
OCCUPATION investment banker and team leader

 Agency Team Leader

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prof
Very informative keep writing
Comment By:    KatanaSokratis On  10/07/2015
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