Mobile Banking in Africa

Experts in international development like to talk about technological leapfrogging, the phenomenon of developing countries to skip over certain technologies (like land-line phones) and go straight to mobile.  Last week talked about the fact that Africa is the fastest growing mobile market in the world, and whether it was investible.  Well, Africa may be on the verge of leapfrogging another outmoded technology--physical currency.  The Christian Science Monitor reports that Africa's cellphone boom is creating a base for e-banking.  Awesome:

JOHANNESBURG, SOUTH AFRICA – With the new technology, a grandmother in rural area can receive money from her son, working hundreds of miles away, with the beep of her cellphone. A teenager can buy groceries with a few punches of keys. Not a coin need change hands.

Cellphones are already used for music downloads, text messaging, and video games. But here in South Africa, they are beginning to perform another function: personal piggy bank.

 

It's a high-tech solution designed to help poor people here who never have had access to banks, cash machines, or credit cards. And it's another example of using digital technology to fast forward development in remote areas.

Earlier this month, one of South Africa's main cellphone networks and one if its largest banks launched a new cellphone banking system that they hope will bring millions of poor South Africans into the official economy for the first time. The venture hopes to build on the rapid spread of pre-paid cellphones to create a whole new banking system, one designed for low-income users that have long been under-served or ignored by traditional banks.

"There's a large number of individuals who are unable to access banking services because conventional banking is expensive, relative to their income. And physically we don't have banking facilities in remote areas," says Herman Singh, director of technology engineering at Standard Bank, which has partnered with cellphone company MTN Group on the project. The goal, he says, was to create a form of banking "that would be very easy to register for, and that we could run at a low cost."

Asking a question like "Now when will we be able to do that here?" seems almost silly.