Mobile money no threat to banking – Sakyi-Addo

Mobile money operations are no threat to traditional banking, Mr Kwaku Sakyi Addo, Chief Executive Officer of the Ghana Chamber of Telecommunications, has said, adding that mobile money operations rather support banks to expand their operations.

His comments come at a time a recent survey by PricewaterhouseCoopers (PwC) indicated that over 70 percent of CEOs and heads of e-banking services in Ghana view mobile money as both a threat and at the same time an opportunity.

Also, about 56 per cent of banks are of the view that mobile money presents threats to the traditional ways in which the industry operates, even if these threats do not measure up to the opportunity.

The report titled: ‘How to win in an era of mobile money,’ surveyed CEOs, CFOs, and heads of e-banking of 25 out of a total of 30 banks. The threats as viewed by the bankers were the relatively cheaper fees telcos charged on transactions such as payment of bills or services offered in restaurants and items purchased in certain shops. Even though about 29 per cent of the participants viewed mobile money as an opportunity which has generally enhanced the delivery of services such as domestic remittances and bill payments, 71 per cent of the respondents view mobile money as both an opportunity and a threat to their operations.

But responding to this report in an interview with Prince Benjamin, host of the Class Drive on Class 91.3FM on Thursday September 1, Mr Sakyi-Addo said: “Mobile money is not a threat to banks, it is actually an opportunity for banks and for everyone, because when you deposit money on your mobile money wallet, the money is not kept with the mobile company; it goes to the bank.”

He added: “Over the last five, six years, almost GHS700 million have been mobilised by mobile operators and deposited with banks and these are deposits that would not be with the banks if mobile money operators had not mobilsed them. Most of it will not be with them, and of course it’s with the banks and they are working with it. …As of 2010, the banking penetration was about 30 per cent. In the last five years, it has grown to 34 per cent, so there is still 66 per cent as of 2015 of our population that was unbanked and the people that mobile money primarily takes care of are people that are poor, mostly rural. And there are many women as well that have found mobile money useful. So, we are talking about a segment of the population that the banks have not traditionally gone to mobilise resources.”

Mr Sakyi-Addo noted: “…Young men and women selling boiled groundnuts or hawking on the streets, who at the end of the day have to pay back maybe GHS5 daily on the goods they are selling – let’s say they buy a bag of groundnuts from their supplier and have to pay back on a daily basis – can they go to the bank and transfer GHS5? Of course not, but they can use mobile money to transfer GHS5. So, you will hear big numbers thrown around such as GHS35 billion being the value of mobile money transactions in 2015 and it's a lot of money but it is actually the little people’s money that is aggregated that gives you this huge numbers and so there is no competition [with the banks]; we are doing what the traditional banking wouldn’t do.”

The veteran broadcaster added: “…Considering the nature of banking, traditional banking as we know it, with what it costs to set up a bank, a brick and mortar branch, staff and all the manifestations of traditional banking, it is not cheap to set up a bank and open branches and have the appearances and the manifestations that give people the confidence to bring their money to the bank. Therefore, they have got a necessity to look a certain way, [thus the mobile money].”