Mobile banking is by all measure taking root in Nigeria and other African countries helping to deepen financial inclusion and boosting the continents economy.
The challenges faced by financial institutions in spreading services particularly in rural setting, is not posing so much constraints to rural dwellers itching to transact banking businesses.
According to reports, Africa is at the forefront of mobile banking (M-banking), and is regarded as one of the continents with the lowest levels of financial inclusion.
However with the penetration of the mobile phone in the telecommunications sector, mobile banking has taken off successfully in some parts of Africa, especially in Eastern and Southern African regions. In sub-Saharan Africa (SSA), 36 countries out of 54 have mobile banking services and they include, Nigeria Côte d’Ivoire, Ghana, Kenya, Madagascar, Mali, Niger, South Africa, Senegal, Tanzania, and Uganda.
With roughly 2.5 billion people globally in lower to-middle income countries who have no access to banking services, the potential is clear. According to a 2016 GSMA study, more than half a billion people across Africa are now subscribed to mobile services, adding more than $150 billion in economic value to the African Economy Over the last decade, Africa has witnessed high mobile telephony penetra- tion and high uptake of mobile financial services in a number of countries. Mobile telephony has reduced geographical constraints transaction costs as well as assisting commercial banks to have a cost efficient expansion strategy. A number of factors such as mobile phone penetration, financial and conventional infrastructure development, population density, regula- tion, and the appetite of private players to pursue the opportunity tend to drive varia- tion in mobile financial services.
In most African countries, mobile phone banking is taking services to remote areas where conventional banks have been physically absent or too expensive. Sub- scribers can now open accounts, check their balances, pay their bills, transfer money, and buy basic everyday items, all using their mobile phones. Mobile-banking is 19% and 54% cheaper compared with traditional banks and informal options respectively. It is also technologically the safest, quickest and cheapest method of transferring money, for conducting both personal and business transactions
In most African countries, mobile phone banking is taking services to remote areas where conventional banks have been physically absent or too expensive.
According to data, there are 557 million unique mobile subscribers across Africa at the end of 2015, equivalent to 46 per cent of the continent’s population, making Africa the second-largest – but least pene- trated – mobile market in the world. Afri- ca’s three largest markets – Egypt, Nige- ria and South Africa – together accounted for around a third of the total subscriber base.
This has made financial services accessible to more people than the traditional banking industry ever had. In addition, many other African countries also experi- enced robust mobile penetration and the number of unique mobile subscribers is forecast to reach 725 million by 2020, accounting for 54 per cent of the expected population by this point.
In many African countries, banks and Mobile Network Operators (MNOs) are also competing to tap the market of the unbanked population. This is leading to the expansion of financial services to mobile subscribers by providing mobile financial services to the unbanked. Thus, a necessary condition for M-banking to expand is for regulators, especially cen- tral banks, to put in place supportive regu- latory regimes. With the increased access to M-Banking and financial services comes the ability to do business including spreading into sectors such as the agri- cultural industry which accounts for 25 per cent of GDP. Mobile banking allows countries to immediately bring financial services to the masses in a cheap, accessible way lowering costs for the financial institu- tions as well as for those who use the ser- vices.