Hello Readers, have you observed the latest catchy adverts on radio in respect of the new marriages between telephone companies (Telcos) and financial institutions? I find them very fascinating because barely two years ago, there was a turf war between the telco giants and banks, with so much suspicion among the banks that the telcos were taking over their jobs with minimum governmental intervention. The customers, or for that matter, the general public was left in the middle, not knowing what was in for them.

Creativity in the adverts:

To take it to the lighter side, let me give you some imaginary adverts about these marriages:

Bank A: “Come to us, and enjoy the benefits of linking your mobile money to your bank account, and all your payment headaches will be gone, with a click of a button”

Bank B: “Click, click! No more queues. Open an account today and get your mobile money alive twenty four hours a day. Your mobile money account is your bank! Hurry Hurry. Dont be left out”

Bank C: “Is your internet banking slowing down your transactions? You dont need data, to be able to effect transactions. Hurry, your mobile money account is your reliable partner”.

Bank D: Cashless! Cashless! Cashless! . No more looking over your shoulder, afraid of pick pockets. Walk confidently. Your mobile phone is your bank.”

I can go on and on about how the collaboration among banks with the telcos. The adverts declare the perfect marriages made in heaven. Customers are now being spoilt for choice.

The Collaboration has come to stay

Today, there’s no limit to what you can do with your mobile money wallet – bill payment, moving funds from your wallet to your account and vice-versa, money transfer, shopping, purchasing of insurance or Treasury Bills amongst others. Yet this is just the tip of the iceberg – like what is happening with Uber now, in the next few years, tro-tro drivers will be reluctant to take cash, they will prefer mobile money. So would the traders in Makola and the “Waakye” seller around the corner. Adoption rates are projected to double, even triple in the next 5 years. The innovative nature of the platform is attractive to different demographics and this is one of the key drivers of adoption. These innovations however cannot happen in isolation. That is why Mobile Money operators needed the partnership of banks and financial institutions to better serve the needs of customers.

In the PwC 2016 Banking Survey on the theme: “How to win in an era of mobile money,” which indicated that banks consider mobile money operators as partners due their ability to mobilize deposit through the use of technology, but at the same time banks are increasingly worried that mobile money operators will metamorphose into banks or develop to the point where they can operate independently of banks. The beauty of the mobile money platform is that it cannot effectively operate without the partnership of banks. The whole idea behind mobile money is to promote a cash lite economy. Achieving that objective requires a solid partnership between banks and mobile money operators. So whether you are a bank or a telecom company, we all have our roles to play to drive sustained value for the customer.

The previous turf war between mobile telecos and banks has gradually metamorphosed into a world of collaboration of systems.

The Advantages

In the case of Kenya, the decade-old technology’s impact on poverty — specifically how it encourages saving, reduces transaction costs and offers an option to find funds in the case of an emergency. In the unbanked markets of Africa, it is encouraging saving, reducing transaction costs and offering an option to find funds in the case of an emergency. Other advantages are:

  • In emerging markets, forms of mobile money are quickly growing and helping financial inclusion to the unbanked population.
  • It is creating opportunities for poor people to more actively participate in the economy.
  • Customers can also benefit from speed and convenience of a financial transaction.
  • Pay bills without waiting long hours in line at cash centers.
  • Security is another benefit. Carrying cash can be dangerous in many countries. The threat of robbery limits individuals’ capacity and use of purchasing power.
  • The threat of robbery is reduced, and a mobile wallet allows for the safe storage of money.

The Growing Disappointments

The euphoria and excitement is now turning into something else. The service, which has been touted as the innovation to bring banking to the doorsteps of the unbanked, is turning out to be a monster depriving mostly poor people of their little money. What is even worrying is that, it is very difficult for security agencies to track down the perpetrators due to the use of fake identities. It is estimated that, at least five out of 10 mobile money subscribers have either experienced one form of fraud or have been a target for mobile money fraudsters/scammers. The increase in reported fraud cases involving some unscrupulous persons and confidence tricksters of mobile money services, is eroding confidence in the system.

Let us look at the new developments:

  • “Madam, I have mistakenly sent GH80 into your mobile money account. Kindly resend it to me.” You just do the transfer without checking the authenticity. How naïve!
  • “Madam, you have won a lottery. Please go to the nearest mobile money joint and let me speak to the operator” ….He speaks to the operator and instructs that GHC200 be sent to him since you have no idea how the mobile money works! After the transaction you are notified that money has been sent and you are asked to pay!
  • “Let me assist you to effect your transaction. Please input the pin number and lets finish the transaction.” Sometime later, you find all your funds siphoned off!
  • As the newest fraud technique emerging, some subscribers, without having performed any transaction, receive text messages of withdrawal of money from their accounts.

On the global front, managing risk in mobile money is a challenging task, especially when it comes to the risk of fraud. Fraud not only results in financial loss to customers or a mobile money provider, but it also damages the reputation of the service to the customer and risks the reputation of the industry as a whole. As such, mitigating the risk of fraud is a primary objective. The introduction of these products to the marketplace, given they are not fully understood or fully regulated has made it quite difficult to track transactions, lending itself to the illegal use of these technologies. As a result they can become attractive for criminal behavior such as money laundering and terrorist financing. There are risks that exist in every mobile money service around the world, such as the potential theft of customer information or manipulation in e-money reconciliation.

According to Authors: Ana L. Pereira and Ana Maria H. de Alba of LexisNexis Risk Solutions, in the white paper  “Understanding the new payment methods, their risks, and opportunities” M-payments have the following risk factors:

  • They have the potential of being used for money laundering or terrorist financing because they can allow for non-face-to-face business.
  • Certain local practices could provide cover for the true initiator and recipient of a transaction (elusiveness or traceability of the transactions)
  • Also, depending on the type of product, funds can quickly move around the world (velocity), and with the absence of face-to-face contact (anonymity) stronger mitigating controls need to be in place to ensure that the customer identification program addresses risks such as identity theft.
  • How the product is funded could pose a risk. For example, does it allow cash funding? Or anonymous funding? How the product is funded could pose a risk. For example, does it allow cash funding? Or anonymous funding?
  • Is it reloadable? Other risks include incomplete or fictitious information, structured or recurring, non-reportable transactions, and high velocity or frequency of transactions.

These problems are not necessarily new; they might be the same inherent problem that might occur quicker or in a larger scale.

Risk Management should go with the euphoria.

For now, I will pause here. I am only a layman when it comes to these things, but I recommend that banks’ risk management experts should go into full scale knowledge acquisition to assist the marketing and IT departments of the banks as they go into full-scale use of these technological breakthrough. It is always good to look at the more serious aspect of these processes and build in risk management frameworks to minimize its misuse. Customers are usually the first persons to bear the brunt.

Next week, we shall delve into typical frauds that have occurred in the implementation of these schemes, which Ghana can learn and avoid.





Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud. 


Website  or [email protected]

Tel: +233-0244333051/+233-0244611343


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