by Karin Flinspach, Managing Director, Head – Global Cash Products, Standard Chartered Bank
‘Mobile money’ i.e., payments and collections through wallets held on mobile devices, has grown exponentially in recent years, but there continues to be an unspoken assumption that mobile payments are somehow an alternative channel for payments than more ‘traditional’ electronic transfers or card payments. With mobile money now the dominant form of payment in countries such as Kenya, with rapid growth in countries across both Africa and Asia, treasurers should no longer consider mobile money to be a niche or optional payment solution, but a core element of their cash management infrastructure.
Catalysts for mobile money
Africa has been the crucible for the birth and subsequent growth of mobile money. The combination of a large unbanked population, and a rapid increase in smartphone and feature phone usage (i.e., cheaper handsets with more limited functionality than smartphones) provide the ideal conditions in which mobile money can flourish, such as
M-PESA in Kenya. In addition, as banks may be less accessible, more expensive and have less ‘privileged’ a relationship with customers than telecom providers, particularly in rural areas, consumers and small businesses often find it more convenient to work with telecom providers, an issue that has been exacerbated further following the recent collapse of some local banks.
Together, these factors have led to M-PESA, and other mobile money schemes, revolutionising the way that consumers and businesses pay and receive funds. In March 2016 alone, 36.7 million customers and 151,000 agents used M-PESA to process 121.7 million transactions, an increase of a third since March 2015 (source: Central Bank of Kenya). Indeed, there is now around seven times the value of transactions exchanged through M-PESA as via the national ACH. Similarly, mobile money has expanded rapidly in other countries in Africa, including Tanzania, Uganda, Ghana, Zambia, Democratic Republic of Congo, Mozambique, Lesotho, Nigeria, Rwanda and Zimbabwe.
No longer an alternative payment method
Consequently, treasurers should consider mobile money as a mainstream form of payment and collection, and given its inherent advantages of being real-time and addressing last-mile delivery, be proactive in supporting, and leveraging established and emerging mobile money schemes. The opportunities for corporations across a wide range of industries are considerable. Those that have a supply chain that comprises small suppliers or distributors (such as farmers), or that need to make payments to individuals, such as bills, loan or microfinance payments/installments, insurance premia, or even wages, can benefit significantly by replacing insecure, and in most cases physical cash payments with payments direct to mobile wallets. Similarly, those that collect from individuals or small businesses can virtually eliminate the need to process and transport cash, whilst making it easier to reconcile collections.
Key to the value proposition for these corporations is not simply the more secure, timely, convenient and cost-effective transfer of funds, but the data that accompanies each payment. By capturing information on customer behaviour, supplier spend, regional nuances, and the impact of sales and distributor incentives, companies can refine and control their supply chains, communicate more directly with customers, and be more precise in their sales approaches.
As a result, mobile money has real potential to help treasurers to achieve key quantitative and qualitative performance indicators, whilst also managing counterparty and supply chain more effectively.[[[PAGE]]]
Figure 1 – Mobile Wallet Payment / Collection solution overview
Integrating mobile money in practice
An important consideration for treasurers is how to integrate mobile money into their core processes. To help overcome this, and offer an integrated electronic banking solution across payment channels, we have partnered with leading telecoms providers, including multiple telecoms providers in some countries, to provide a ‘one-stop’ mobile money solution,
‘Straight2Bank Wallet’, which allows our clients to enable transactions with mobile wallets using mobile numbers instead of bank account numbers, thereby allowing cashless transactions between our clients and their customers and partners that they would traditionally paid or received funds in cash.
Our clients can initiate transactions directly from our Straight2Bank electronic channels (both web-based and host-to-host) or via SWIFT, see figure 1, and the funds are credited directly into mobile wallets of individual beneficiaries. Similarly, clients are able to receive payments from individuals’ mobile wallets. Clients receive consistent reporting of mobile wallet payments and collections in the same way as other cash flows, enabling integration of information with internal systems, automated reconciliation and account posting.
This is a rapid, streamlined process that contrasts with the use of cash or manual payments where it can take days or weeks to credit the value of funds. In addition to providing cohesive, integrated solutions for processing mobile money transactions, a growing number of customers are relying on Standard Chartered for our advice and expertise on the opportunities that mobile money present to create operational, financial and competitive advantage.
Credibility and compliance
Inevitably, despite the opportunities that mobile wallets present for both payments and collections, treasurers need to consider the risk and compliance issues in the same way as any other payment method. Central banks are increasingly recognising the pivotal role that mobile money services can play in fostering financial inclusion, and are establishing a more conducive regulatory environment for the provision of mobile money services. This is creating greater certainty for financial participants and improves the integrity and legitimacy of mobile wallets as a mainstream payment method. In addition, Standard Chartered has invested heavily in solutions to conduct due diligence and fulfil relevant governance requirements on behalf of customers, therefore providing treasurers with the same degree of confidence in mobile money than any other form of electronic payment.
|
Namita Lal, Managing Director, Head of Mobile Money, Standard Chartered Bank Namita Lal is Head of Mobile Money for Standard Chartered Bank based in Singapore. She is responsible for creating and executing innovative wallet and e-commerce propositions that are high priority green-field for the bank. In her 26 years with the bank, she has worked for both Consumer and Wholesale businesses across India, UK, Africa, Middle East, and South East Asia. Her recent roles include Group Head of International Banking in Singapore, Country Consumer Banking Head in Vietnam and General Manager SME in Thailand. She has enjoyed starting up many businesses for the bank across its network. Namita has studied in a premier university and management institute in India. |
“There is a wide range of industries that can benefit from mobile money opportunities, from development organisations, fast-moving consumer goods, insurance, healthcare and education through to logistics, energy, pharmaceuticals, agrichemicals and seeds, and commodity buyers. Many are already doing so.”
Beyond Africa
Increasing financial inclusion is a primary objective for Standard Chartered as a socially and financially responsible bank. We recognise that mobile money presents a huge opportunity to increase financial inclusion in parts of the world with large unbanked populations but high smartphone penetration, of which Africa is a key example, hence our investment in this important area. Furthermore, the success of these programmes in Africa has also been a catalyst for the introduction and growth of mobile money in other regions where mobile wallets are growing quickly, particularly as the use of cards is relatively limited.
Increasingly, companies are working with Standard Chartered to access advice and local expertise in order to optimise the value of mobile wallets in their business, both in countries in Africa where mobile money is relatively mature, and in countries with emerging schemes. In addition, they are leveraging our innovative, cohesive payment, collection and analytic solutions that are integrated with core treasury and finance processes to maximise operational and working capital efficiency and drive competitive advantage. As companies become more familiar and confident with the use of mobile wallets for payments and collections, they are seeking our advice on how to further utilise ubiquitous smartphone technology to derive further customer and competitor intelligence.
Standard Chartered is playing a leading role in facilitating mobile wallets, helping clients to leverage these fast-changing opportunities, and managing risk and compliance. While mobile wallets are already revolutionising payments and collections in Africa, with similar potential in other parts of the world, we are just at the start of a journey in increasing financial inclusion and giving all citizens and businesses the opportunity to access efficient, secure digital services. Join us on the journey!
|
Karin is the Head of Cash Products for Standard Chartered Bank based in Singapore where she is responsible for the development of cash capabilities for a large corporate and investor and intermediaries base globally. The cash product suite includes payments and receivables as well as liquidity management tools. With capabilities in over 45 countries, she and her team are designing efficient and automated solutions that will allow corporations to optimise their working capital across multiple countries, thus creating operational efficiencies. Prior to joining Standard Chartered Bank, Karin worked with Citi for 20 years and has held a variety of cash management product roles in developed and developing markets. Most recently, she had responsibility for leading the payments and receivables business for Citi in Europe, Middle East and Africa. During her long tenure in Europe, she positioned herself as a key authority on SEPA (Single European Payments Area), publishing a large number of articles on the bank process infrastructure in Europe. Karin graduated in Business Administration and holds a bachelors degree from Ecole Superieure de Commerce in Reims, France as well as Fachhochschule fuer Wirtschaft und Technik in Reutlingen, Germany. |
Karin Flinspach 
