IBS Journal Supplement 2015
retailers, including Walmart, removes the hated interchanges fee of credit card companies and now also from the likes of Apple (Walmart is currently suing Visa, the latest in a number of lawsuits from retailers challenging what they believe are excessive transaction fees). As point- ed out by some analysts, Apple is seeking to win over the hearts and minds of con- sumers, but MCX appeals to the hearts
and minds of retailers. Each side has weap- ons in its armoury: Apple won’t allow oth- er payment systems to have access on its NFC-enabled phones, but the merchants don’t have to accept Apple Pay and, indeed, a couple of the MCX members have shut off support for Apple Pay. A final interesting aspect of MyBank and the fusing of telco and banking solu- tions relates to cross-border money trans-
fers. ‘Everyone understands this market is ready for disruption,’ says Kaftzan. Linking Utiba’s customer bases in emerging mar- kets with Amdocs’ customers in developed markets can help to build solutions for the main money transfer corridors, he feels. ‘We are trying to connect the dots, you will hear quite a lot in the next couple of months.’ The same could be envisaged for the different MyBank participants.
The battle for mobile financial services hots up in Kenya
M-Pesa has clearly been a huge suc- cess in Kenya but one bank in particu- lar, Equity Bank, is fighting back. This most innovative of the Kenyan banks had previously ridden the coat-tails of M-Pesa. In May 2010, Equity Bank and Safaricom, the mobile operator behind M-Pesa, launched M-Kesho, a savings account linked to the M-Pe- sa service. Customers could depos- it and withdraw cash to and from the account using M-Pesa, with Equity Bank charging for withdrawals, albeit at around half the fee of withdraw- als from its regular savings accounts. Around 600,000 new M-Kesho bank accounts were opened in its first five months; by early 2012, it had some 720,000 customers. Equity Bank then launched sim-
ilar accounts with two of the other mobile operators in the country (yU and Orange), while Safaricom sub- sequently tied up in November 2012 with Commercial Bank of Africa to replace M-Kesho with a similar sav- ings and loan account, M-Shwari. Ken- ya Commercial Bank also now has an M-Pesa-enabled account, albeit only for depositing and withdrawing cash, with no lending or savings capabili- ties, called M-Benki. Equity Bank responded by apply-
ing for a Mobile Virtual Network Oper- ator (MVNO) licence, with this grant- ed in April 2014. MVNOs use existing mobile networks to provide servic-
©Raidarmax, Commons Wikimedia
es to end-users and the bank will use SIM overlay technology to operate independently of the SIM. By con- trolling the SIM, Equity Bank takes control of the security, rather than relying on that of a mobile operator, and its service menu can reside on the phone. It also takes a would-be com- petitor (the mobile operator) out of the equation and removes the ability of that operator to set the charges for the bank to access its channel. A report by Washington-based financial inclusion association, CGAP, summed up the situation: ‘Banks shouldn’t have to become telcos in order to deepen their mobile bank- ing offer. But if banking, telecoms and competition authorities do not
address the fact that increasingly tel- cos are an essential component sup- plier as well as a competitor to banks – a clear conflict – the choice for banks will be stark: sit out the mobile money revolution until such time that everyone has smartphones, or else join the telco club and get on with the job of financially including people.’ Clearly, Equity Bank decid-
ed to join the telco club. Safari- com responded to the challenge by announcing in August 2014 that it was cutting M-Pesa transaction fees by up to 67 per cent for money trans- fers in low and medium tiers. So what- ever the outcome of Equity Bank’s move, it seems consumers have already benefitted.
© IBS Intelligence 2015
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analysis: mobile banking
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