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MNOs give banks a hard run for their mobile money

Publishing Date : 03 December, 2019


The banking sector has been working hard to embrace technology with the rollout of digital products and increased volumes of digital transactions as competition emerges from everywhere. But there is also a need for banks to stand firm on the ground as a digital tug of war is intensifying against Mobile Network Operators (MNOs) for mobile money market.

Many have lauded the revolution of mobile money since about 33 percent of households had no access to any form of financial services ten years ago, while 41 percent accessed the formal banking system. Since its introduction in 2010, mobile money transactions have grown significantly, reaching nearly P1 billion at the end of 2013.

According to Botswana Communications Regulatory Authority’s (BOCRA) latest Telecom Statistics, Mobile Money Subscriptions increased from 412,126 in March 2015 to 1,149,673 this year March. Mobile money subscriptions for MNOs kept increasing for the past four years, a trend which shows continued growth in banking services by MNOs every year. In March 2016, subscribers of mobile money grew to 558 703 from 412 126 in 2015. In March of 2017, mobile banking services increased with 673,741 of subscription from the previous year. March 2018 saw subscriptions increase by 178 000 to 851,719, before going up to 1,149,673 in March this year.

Orange with its Orange Money mobile money platform is the pioneer in the local market for such services and continues to dominate the market since 2015. It is followed by Mascom with its My Zaka services, while BSE listed BTC continues to trail with less subscriptions. BTC’s Be-Mobile has moved from having 2499 subscriptions for three years, since 2016, to dropping drastically to 240 subscriptions this year.

Last year at Orange Botswana’s 20th anniversary celebrations, President Mokgweetsi Masisi saw the advert of mobile money services as having the agility of providing an alternative to the traditional brick and mortar of financial institutions. According to Banking Sector Report for November 2019 from Stockbrokers Botswana, the traditional banking sector continues to face increasing competition from the MNOs mobile money services.

“The sector continues to increasingly embrace technology with the rollout of digital products and increased volumes of digital transactions as competition intensifies. Notwithstanding this, banks have been investing in the refurbishment and relocation of their branch networks amidst this “bricks to clicks” phenomenon,” said Stockbrokers Botswana in a recent analysis on the banking sector.

Stockbrokers Botswana in its banking report said, going forth it appears banks will be looking to consolidate their networks with agency banking outlets to be in lieu of branches, particularly in areas of low footfall. MNOs trump banks geographically with their far wider access points, while banks are more competitive with regards to their pricing, said the stockbroker’s banking sector analysis. “Some banks have managed to increase their financial inclusion reach with mobile wallet disbursement platforms, while the increased adoption of agency banking will increase their access points,” said Stockbrokers Botswana.

The banking sector is not only troubled by competition for digital banking services from MNOs, it has also faced challenging environment of accommodative monetary policy characterized by all-time low rates, a slow-down in credit growth and heightened competition.
Despite registering improved profitability according to Stockbrokers Botswana, the latest figures show that commercial banks credit for the year to September 2019, slowed to 6.1 percent(Sept 2018: 8.1 percent).

The stockbroker research further stated that commercial bank credit growth for the twelve months to June 2019 eased to 6.5 percent (June 2018: 7.6 percent). The slow-down was a result of sharply lower credit growth to the business sector, while household credit growth increased, according to Stockbrokers Botswana Banking Sector Report.



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