Where will the next M-Pesa come from?
The promise of mobile money has changed many lives all over the world, but despite the wide recognition of the success of M-Pesa in Kenya, it is yet to be replicated and the rest of the industry remains fragmented. While fintech hubs exist all over the world, more needs to be done to make a real impact on the business model of traditional services so that financial inclusion and poverty reduction is a priority.
Only 2% of adults worldwide report having a mobile money account, however, this reached 12% in Sub-Saharan Africa in 2014. This shows that mobile phones are most prevalent in the poorest part of the world, according to Jay Rosengard from Harvard University, and this ensures that the developing country can skip a couple steps ahead in the evolution of finance in that particular country.
Rosengard explained that substantial latent demand for mobile money will increase if there is no real comparable alternative and this is how M-Pesa was successful, as well as the service it provided being a third cheaper that what people used before for money transfer. Alongside this, although the Central Bank of Kenya is very cautious, they have created an enabling environment that doesn’t kill innovation.
Kapronasia’s Zennon Kapron explored how in China, the government has tried to push for financial inclusion and are advocating services like Alipay and Tencent so we should see a M-Pesa 2.0 emerge for smartphones in other countries. Sopendu Mohanty from the Monetary Authority of Singapore followed on from this to say that “a lot of people don’t understand that the genesis of fintech comes from financial inclusion and financial exclusion.”
Mohanty went on to say that the best technology comes from where you come from and made reference to the aadhar technology that India has adopted. As well as this, the best technology comes from the financial services and the best entrepreneurial talent comes from a place of constraint, according to Mohanty. “The first stage of fintech development was for the B2C but now we must concentrate on risk modelling so we don’t create another financial crisis through lending.”
May Abulnaga gave her views from an Egyptian perspective and said that all emerging markets are hot pot for cybercrime, but there is potential for mobile money in Egypt because 25% of the population are youths. “The biggest challenge is getting stakeholders committed in Egypt and letting them take the lead. The role of regulation has to change,” she said.