Here's an article from the net : Big Banks crush Mobile Innovation in Bangladesh ?: "Banks, the traditional leader in payment systems, see mobile banking as a new threat if private telecom operators are allowed to use their outlets for money transfer without law," writes journalist Sajjadur Rahman. I don't know what he means by "without law", but I do know what's behind this quote by a government official: "We won't let anything, which hurts the banking industry, happen." It is a classic example of powerful lobbyists delaying a new technology to protect their industry interests. Mobile banking allows any mobile phone customer to deposit money into his or her phone account at any mobile phone outlet (which are everywhere in countries like Bangladesh) and transfer that money to any other mobile phone user. M-PESA in Kenya has shown<http://startupkenya.blogspot.com/2008/08/cheers-and-jeers-for-m-pesa.html>how this can bring basic banking services to millions of rural residents who would otherwise never open a traditional bank account. Mahmud Sattar, president of the Association of Banks of Bangladesh, offered this line to the *Daily Star*: "We have given our opinions at the meeting and told the central bank that banks have no objection to using modern technology as a tool of expanding delivery channels." The problem is that banks aren't in the position to introduce mobile banking whereas phone companies are. If mobile banking services are not introduced, it is the rural poor who are denied the services. Just ten days ago Mark Pickens wrote an article at CGAP<http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-with-the-poor/>, which says that traditional banks in Kenya are irked<http://www.eastandard.net/InsidePage.php?id=1143992228&cid=457>that Safaricom is able to operate its M-PESA mobile banking service with so few regulations in place. With 2.7 million clients, it may be that M-PESA became too successful too fast and, having learned their lessons, banks in other developing countries won't allow mobile phone companies to dig into such a large market share. http://www.thedailystar.net/story.php?nid=52017 http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-w... On Sat, Oct 18, 2008 at 1:21 PM, alice <alice@apc.org> wrote:
(From Balancing Act)
Kenya's Banks ask for regulation on Mobile Money Transfers
The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime.
"Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed."
The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability.
Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take.
To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million).
This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya.
To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation.
Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system."
Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act.
It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services.
Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African)
For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments through mobile phones"
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