Telecommunication companies could soon apply for licences to become digital banks – a situation that will significantly disrupt the operations of universal banks operating in the country, the 2019 Oxford Business Group report on Ghana has pointed out
The report, which based its analysis using 2017 data, said over GH¢2.3billion of cash was transacted via mobile money platforms; indicating that consumers are regularly signing up to multiple mobile platforms offered by telcos.
However, presently, telcos are required by the central bank to deposit these monies with banks.
It is this requirement, the report said, that will soon move the telcos to apply for digital banking licences so that they will keep their own deposits in order to be able to offer small loans to their customers – as has already been signalled by the market leader, MTN. It is this situation that will pose a threat to banks’ operations.
“The mobile banking landscape is, however, rapidly evolving. MTN has stated that it would like to scale up its operation to offer small amounts of credit to over 1m customers in the informal sector…The challenge for banks is expected to come later, as the volume of mobile payments grow and the telcos start to leverage the strength that a large asset base confers on them.
“The current legislative framework requires telcos to place their deposits with commercial banks, but the volume of funds attracted by mobile operators has exposed a vulnerability in the banking system. With billions of cedis in deposits, many market observers foresee MTN being the first domestic telco to apply to the regulator for permission to establish itself as a digital bank – a move that could potentially be very disruptive to traditional lenders,” the report said.
The mobile money platform continues to see a lot of success in Ghana, especially after the systems of telcos were harmonised to make transfers across different networks possible – something that did not exist when the mobile money platform was first introduced.
The system, otherwise known as Mobile Money Interoperability, has hit GH¢95.88million in value in the first quarter of 2019 according to data from the Payment Systems Statistics report.
The report shows that of all the services offered by the mobile money interoperability platform – namely wallet to wallet, wallet to account, and wallet to E-Zwich – it was wallet to wallet that recorded the highest transaction of GH¢85.73million, representing 89.4 percent of all transactions.
This was followed by the wallet to Account transactions, which recorded a value of GH¢10.14million representing 10.5 percent of the total transactions on the platform; whereas wallet to E-zwich transactions recorded the least at just GH¢8,343.
This essentially means that many of the subscribers to mobile money find it easier and more convenient transacting money from their mobile money accounts to other mobile money accounts than transacting with bank and E-Zwich accounts.