So I read that Michael Joseph said "Unless banks change and adopt this technology, there will not be anything like retail banking in 10 years" - you have to love Safaricom for being so aggressive AND successful in their approach - I think that similarly to Vodacom M-Pesa SA, that Safaricom has managed to turn the banks into super M-Pesa agents (read "dumb pipes") what a turn of events eh?
Side note:
I can understand how this can happen in Kenya where M-Pesa has majority of "accounts" but in SA where M-Pesa essentially is a new, albeit respected, brand with no traction is a total cluster.... for me.
So whats next for M-Pesa and where to from here?
Well there is a battle happening on multiple fronts I guess:
1. retail banking going forward
2. global telecom outlook
3. Association (ex.) relevance
I agree with Joseph - new times are abound in emerging markets, not sure this scenario applies in the US or EU, and banks have to think outside the box to be relevant. Its hard to be a bank who relies on terminal access to service their customers (ATM, mobile, online), when the #1 terminal and the connecting tissue is owned by the operator, who is also the only entity in these markets that have an "on the street" network (airtime vendors). If the banks can get access to the operator channels, then they still have to build agent networks and have relevant services for the end customers - yes being a regulated bank is not easy at the moment.
Wireless operators around the world are looking with keen eyes on what is happening in Kenya, because regardless of the market and cultural situation, operators are seeing that it can be done. To give you an idea, AT&T has a market cap of more than $165bn while Bank of America's Market cap is $133bn and the worlds largest retail bank Citibank is in at around $122bn!.
Giving these very cash flow wealthy wireless operators a taste for a "new" multi billion dollar opportunity ripe for refactoring may prove dangerous in the long term (see the joint Verizon, AT&T and T-Mobile payments release). So the more successful Joseph and his teams are at disinter-mediating the established FI ecosystem the more excited wireless operators get across the globe.
I actually think that the second place contenders here could be VISA/MasterCard because the issues that Joseph is trying to solve is that his M-Pesa system is closed loop (well not so much anymore nationally in Kenya) and closed loop systems (1-1 scenarios) are not sustainable long term in payments. Unfortunately for VISA/MasterCard is that they have shown in the past how poorly they capitalize on huge opportunities - I recall the VISA - GMSA announcement 2 years ago and I am still eager to see the output, in fact recently it seems like VISA has decided to fight some wireless operator initiatives jointly with the banks.
So I guess that I think in emerging markets retail banks are in danger of loosing out, globally wireless operators are excited about this Safaricom success and the associations have a shot at helping the mobile money services gain a global footprint - and thereby getting a new life, but will most likely fail. Comments Bill?
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