tag:theconversation.com,2011:/ca/topics/mobile-banking-4108/articlesMobile banking – The Conversation2022-04-17T06:35:57Ztag:theconversation.com,2011:article/1800922022-04-17T06:35:57Z2022-04-17T06:35:57ZDigital banking is the in-thing – but it excludes many users in Tanzania and Senegal<figure><img src="https://images.theconversation.com/files/455515/original/file-20220331-7236-9063z8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Financial systems have evolved to allow contactless payments but people who cannot use digital services are being left behind.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/close-up-shot-of-a-woman-using-contactless-payment-royalty-free-image/1317311182">Getty Images</a></span></figcaption></figure><p>Across countries in Africa, only 33% of adults have an <a href="https://globalfindex.worldbank.org/">account</a> at a bank or another financial institution. Among the women, this rate is only 27%. </p>
<p>Financial services like accounts, credit cards and retirement plans allow people to protect their savings, earn interest, borrow for big expenses like a house or medical bills, and even start their own businesses. This is why financial inclusion is mentioned in <a href="https://www.uncdf.org/financial-inclusion-and-the-sdgs">eight</a> out of 17 of the Sustainable Development Goals. </p>
<p>But opening and maintaining these kinds of accounts can be difficult when banks are difficult to reach. To solve this, <a href="https://www.worldbank.org/en/topic/financialinclusion/overview">some</a> have proposed using digital technologies to reach the “unbanked”. </p>
<p>Services like mobile money, which allow people to use their mobile phones to make or receive payments, have become quite popular. In recent years, more than 157 mobile money operators like M-Pesa and Orange <a href="https://www.weforum.org/agenda/2021/09/mobile-money-africa-prevalence-economics-technology/">have</a> taken off across the African continent. </p>
<p>These have become even more popular for contactless communication during the COVID-19 pandemic. In response to the pandemic and lockdowns, the use of mobile money <a href="https://cenfri.org/articles/covid-19s-impact-on-mobile-money-in-rwanda/">increased</a> more than three times in Rwanda. Many governments in sub-Saharan Africa <a href="https://www.gsma.com/mobilefordevelopment/programme/mobile-money/gsma-mobile-money-regulatory-response-to-covid-19-tracker-and-analysis/">waived</a> mobile money fees and increased transaction limits to encourage use. </p>
<p>This means people who cannot use these digital services are being left behind as the financial system evolves. My <a href="https://academic.oup.com/ooec/article/doi/10.1093/ooec/odac001/6540090?login=true">research</a> across countries has found evidence for significant barriers which contribute to inequalities in who is able to use digital financial services. These barriers include lack of access to a mobile phone, expensive mobile airtime, lack of financial literacy, and the infrastructure for the reliable service needed to make financial transactions. </p>
<p>Governments and service providers will have to remove these barriers before access to finance can become more equal.</p>
<h2>Location matters</h2>
<p>My research analyses data from the demographic and health surveys in 2016 and covers Senegal and Tanzania, as well as the Philippines and Nepal. The surveys asked women whether they had a financial account and whether they used a mobile phone for financial transactions. They also provided the locations where survey respondents live. </p>
<p>This survey is the first to provide cross-country data on both use of traditional finance and use of digital financial services, along with other characteristics of households like wealth and education. I linked this to other databases containing the locations of infrastructure like mobile phone towers and physical banks to complete my analysis.</p>
<p>Using various statistical and econometric methods, my research found that most banks and their users were clustered in major cities like Dakar and Dar es Salaam. </p>
<p>Inequalities were not only geographic. Use of traditional financial institutions was highest among the wealthy and well-educated. Those in the wealthiest 20% of the population were up to 21 percentage points more likely to use traditional finance than those in the poorest 20%. They may have better knowledge about financial matters or be better targeted for the products offered by commercial banks. </p>
<p>Both dimensions of inequality, by location and by wealth or education, indicate the need for new ways to reach remote areas and people otherwise excluded from the financial system. </p>
<h2>Digital access</h2>
<p>Turning from physical banks to digital banking, I found that mobile phone ownership was much higher than traditional finance use. Mobile phone ownership reached 61% in Senegal and 51% in Tanzania, while traditional finance usage was only 7% and 24%, respectively. Mobile phones were much less unequal than traditional finance. This is why many have <a href="https://documents1.worldbank.org/curated/en/187761468179367706/pdf/WPS7255.pdf">hoped</a> that delivering financial services through mobile phones could be a promising avenue for eliminating inequality in access to finance. </p>
<p>But despite high rates of mobile phone ownership, I found that mobile network quality and mobile phone service were not equally spread. Mobile phone towers were concentrated in the same major cities as banks were. In rural areas, towers were spread thin and were of lower quality, so service might become poor and unreliable. Analysing data on mobile network download speeds showed that connection could be slow outside major cities. </p>
<p>In addition, perhaps because access to these mobile networks can be <a href="https://1e8q3q16vyc81g8l3h3md6q5f5e-wpengine.netdna-ssl.com/wp-content/uploads/2021/04/3522_RegionalReport_Africa.pdf">expensive</a>, the use of digital financial technologies was also concentrated among the wealthy and well-educated, just as was the case for traditional finance. Those in the wealthiest 20% of the population were up to 16 percentage points more likely to use digital finance than those in the poorest 20%.</p>
<p>My findings are consistent with other research, which has highlighted the spatial clustering of financial institutions. A detailed <a href="https://www.elibrary.imf.org/view/books/071/24349-9781484303139-en/ch012.xml?tabs=abstract">study</a> of Senegal’s banking sector published by the International Monetary Fund summed up a similar finding: 63% of automated teller machines and 64% of points of service for traditional financial institutions in Senegal were located in Dakar. </p>
<p>In a 2020 survey covering Tanzania alone, 19% of those who did not use a bank <a href="https://www.fsdzambia.org/publication/finscope-2020-survey-topline-findings/">said</a> that this was because it was too far away. Another 37.5% said they did not have enough money to justify it, indicating that financial services were seen as costly and difficult to access.</p>
<p>Others have confirmed that mobile phones themselves can still be very expensive – and, therefore, unequal. In Tanzania, even a basic phone costs one-twentieth of <a href="https://www.gsma.com/mobilefordevelopment/resources/accelerating-affordable-smartphone-ownership-in-emerging-markets/">annual income</a> for some and a smartphone can be one-sixth of annual income. Then there’s the cost of network access. In Senegal and Tanzania, one gigabyte of mobile broadband <a href="https://1e8q3q16vyc81g8l3h3md6q5f5e-wpengine.netdna-ssl.com/wp-content/uploads/2017/02/A4AI-2017-Affordability-Report.pdf">costs</a> 10.2% and 8.7%, respectively, of average monthly income. </p>
<p>Other researchers have also shown that similar inequalities persist for cash-in or cash-out points, where users can exchange cash for mobile money. Over 47% of mobile money access points in Senegal are in <a href="https://www.centerforfinancialinclusion.org/10000-datapoints-exploring-senegals-financial-access-at-the-commune-level">Dakar</a>. Almost 15% of Tanzanians do not <a href="https://www.fsdt.or.tz/wp-content/uploads/2017/09/Finscope.pdf">live</a> within 5km of a financial access point of any kind. </p>
<h2>Financial inclusion</h2>
<p>To eliminate inequality in access to finance, providers and governments must do more than simply offer digital financial services. They must improve the infrastructure for strong mobile networks even in remote areas. Improving financial literacy and reducing the costs of digital financial services will also help these technologies reach those who have been excluded from the financial system.</p><img src="https://counter.theconversation.com/content/180092/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laura Caron consults for the World Bank. She has recently been awarded the NSF Graduate Research Fellowship unrelated to the study on which this article was based.</span></em></p>Not only are physical banks out of reach, people also face barriers to using digital financial services.Laura Caron, PhD student in Economics, Columbia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1196252019-07-07T18:41:29Z2019-07-07T18:41:29ZHow Ghana is acing its transition to mobile financial services<figure><img src="https://images.theconversation.com/files/281865/original/file-20190629-94716-oac4iu.png?ixlib=rb-1.1.0&rect=0%2C8%2C1200%2C788&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The USAID's Feed the Future program encourages farmers to use mobile money technology to enhance their farming activities.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/usaidafrica/33630316101">USAID/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>This article was co-written by Charlotte Beck of the Agence française de développement (AFD).</em></p>
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<p>In recent years, the unprecedented growth of mobile financial services in sub-Saharan Africa has defied expectations. While Kenya is often cited as a leading example of digital transformation, Ghana has recently become the <a href="https://www.worldbank.org/en/country/ghana/publication/ghana-economic-update-enhancing-financial-inclusion">fastest-growing mobile money market in Africa</a>, with registered accounts increasing six-fold between 2012 and 2017. The country’s experience provides a fresh perspective on its digital transformation and demonstrates that technology can help modernise the financial system as well as also support greater financial inclusion.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=480&fit=crop&dpr=1 600w, https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=480&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=480&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/282713/original/file-20190704-51273-1z0sa4w.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="source" href="https://www.cgap.org/sites/default/files/researches/documents/Focus-Note-Building-Inclusive-Payment-Ecosystems-June-2018.pdf">CGAP Focus Note 110 2018</a>, <span class="license">Author provided</span></span>
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<p>In <a href="https://www.afd.fr/en/ghana-what-economic-challenges">Ghana</a>, mobile financial services are mostly used by those poorly served by the traditional financial sector. The <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017Findex%20full%20report_chapter1.pdf">2017 Global Findex database</a> indicates that access to formal financial services rose from <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017Findex%20full%20report_chapter1.pdf">41% of adults in 2014 to 58% in 2017</a>. This is largely attributable to mobile accounts, with 20% of digital-wallet users being previously unbanked. These now represent about <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017Findex%20full%20report_chapter2.pdf">40% of all account holders</a>, compared to 13% in 2014.</p>
<p>Furthermore, by reducing the lengths of transactions as well as the associated risks and costs, mobile-money solutions better meet the needs of vulnerable customers such as smallholder farmers. While rural access to formal financial accounts is still low, figures have almost doubled since 2011, from 26% to 51%. Today, approximately 40% of payments for the sale of agricultural products are made via a formal account, and in most cases into a mobile-money account.</p>
<h2>Mobile money on the rise</h2>
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<span class="attribution"><a class="source" href="https://www.cgap.org/sites/default/files/researches/documents/Focus-Note-Building-Inclusive-Payment-Ecosystems-June-2018.pdf">CGAP Focus Note 110 2018</a></span>
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<p>Many factors explain the rapid progress of mobile money use in Ghana. First, the strong penetration rate of mobile phones (about 128% of the population) make the widespread use of mobile-money services possible, particularly in rural areas. Second, and more importantly, the Ghanaian success is the product of a right mix of consumer-driven practices and a favourable regulatory environment for the industry, built on the back of early infrastructure investments.</p>
<p>If Ghana can boast about championing mobile money today, in the early years digital services struggled to gain traction. The initial 2008 regulation for branchless banking was highly restrictive, imposing rules and requirements that deterred most initiatives. The regulations reflected the perceived “high-risk gamble” of allowing non-bank actors such as mobile network operators to issue e-money and potential negative implications for the <a href="https://www.cgap.org/sites/default/files/researches/documents/Focus-Note-Building-Inclusive-Payment-Ecosystems-June-2018.pdf">stability of Ghana’s banking sector</a>.</p>
<p>When it became apparent that adoption was falling well below expectations, with the support of the <a href="https://www.cgap.org/">Consultative Group to Assist the Poor</a> (CGAP), the Bank of Ghana agreed to engage with all stakeholders and take a second look at the regulations to change the course of mobile money in the country. The revised <a href="https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.bog.gov.gh/privatecontent/Banking/E-MONEY%2520GUIDELINES-29-06-2015-UPDATED5.pdf">2015 e-Money Issuer Guidelines</a> shifted to a more flexible approach, allowing new players in the provision of financial services and more scope for experimentation.</p>
<h2>Key initiatives</h2>
<p>In addition to creating a regulatory framework adapted to the needs of users and operators, Ghanaian authorities took other key initiatives in supporting the development of innovative payment technologies. Underlined in the latest <a href="https://www.worldbank.org/en/country/ghana/publication/ghana-economic-update-enhancing-financial-inclusion">World Bank economic update</a>, the expansion of the agent distribution network – from around <a href="https://www.worldbank.org/en/country/ghana/publication/ghana-economic-update-enhancing-financial-inclusion">6,000 agents in 2012 to more than 150,000 in 2015</a> – was key to allow more cash-in and cash-out opportunities and overall convenience of using mobile money.</p>
<p>In May 2018 Ghana also launched one of the first interoperable systems in Africa, allowing transactions between the different service providers. Interoperability payments reached 308 million GHS (57 million US dollars) by the end of March 2019. Finally, the introduction of the <a href="https://ghipss.net/merchants/e-zwich-agent/18-e-zwich">E-zwich biometric card</a> should ease recognition and use of payments solutions for all cardholders.</p>
<p>User adoption of mobile banking is increasing, but has been limited by restricted merchant acceptance: 2.7 million cards have been issued and 7.7 million transactions handled, representing 2% of Ghana’s GDP. Although most payments are immediately cashed out, <a href="https://www.worldbank.org/en/country/ghana/publication/ghana-economic-update-enhancing-financial-inclusion">53% have residual value</a>.</p>
<p>Ghanaians have so far used mobile wallets principally for transferring money to a person (peer-to-peer, P2P). According to <a href="https://www.bog.gov.gh/privatecontent/Payment%20Systems/Payment%20Systems%20Annual%20Report%202017.pdf">Bank of Ghana data</a>, the total value of all mobile money transactions reached 156 billion GHS (29 billion US dollars) in 2017, compared to 35 billion GHS (6.5 billion US dollars) in 2015. Gradually the range of mobile accessible goods and services has successfully expanded to the purchase of mobile communication credits, payment of public service bills or salaries.</p>
<h2>Next step, government-to-people</h2>
<p>To achieve sustainable change, Ghana’s next challenge revolves around digitizing government collections and utility payments – government-to-people (G2P) and vice versa – the majority of which is still paid in cash. Digitizing these payments will help broaden the tax base, increase the size of the formal economy, as well support financial inclusion efforts.</p>
<p>An interesting example is the digital renewal process of Ghana’s National Health Insurance Authority (NHIA), whose role is to ensure access to basic healthcare services for all residents. </p>
<p>At the end of 2018 the system had approximately 11 million members who were required to renew their membership in person at a district office. The process was time consuming, sometimes taking up to 11 hours, and slowed the growth in coverage, which had levelled off at around 40% of the population. Supported by the <a href="http://www.impactinsurance.org/sites/default/files/CB17.pdf">Impact Insurance Facility</a> of the <a href="https://www.ilo.org/global/lang--en/index.htm">International Labour Organisation</a> and the <a href="https://www.afd.fr/en">Agence française de développement</a> (AFD), a user-friendly platform now allows Ghanaians to renew their membership via a mobile phone. Using design thinking, the aim was to ensure that the technology would actually <a href="https://thebftonline.com/2019/business/insurance/nhia-urges-use-of-mobile-renewal-to-reduce-long-queues/">reach target communities</a> with simple messages and an interface that would be easy to understand. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=197&fit=crop&dpr=1 600w, https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=197&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=197&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=248&fit=crop&dpr=1 754w, https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=248&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/282716/original/file-20190704-51258-ubcezf.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=248&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="http://www.impactinsurance.org/sites/default/files/CB17.pdf">National Health Insurance Authority’s digital renewal process</a></span>
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<a href="https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=254&fit=crop&dpr=1 600w, https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=254&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=254&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=319&fit=crop&dpr=1 754w, https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=319&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/282715/original/file-20190704-51258-tex974.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=319&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="http://www.impactinsurance.org/sites/default/files/CB17.pdf">National Health Insurance Authority’s digital renewal process</a></span>
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<p>As with other such initiatives, the National Health Insurance programme faces a number of challenges. However, the application of technology has helped to <a href="https://www.businessghana.com/site/news/general/190467/Public-advised-to-get-NHIA-handbook-to-clear-misconceptions">address some of the logistical issues around renewal</a>. Today, 54% renewals now take place using mobile phones, reducing the queues at district offices for those who renew in person at district offices.</p>
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<a href="https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=329&fit=crop&dpr=1 600w, https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=329&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=329&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=413&fit=crop&dpr=1 754w, https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=413&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/283673/original/file-20190711-173370-6n3gcq.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=413&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.slideshare.net/IIFacility/population-coverage-from-pilot-to-nationwide-scaleup-of-the-nhis-mobile-renewal-and-digital-authentication-project-148909492">Impact Insurance Facility</a></span>
</figcaption>
</figure>
<p>The other aspects of digitisation include verifying member identity at healthcare providers, claims authorisation, and also notify users when claims are being made in their name, helping flag potential fraud. Increasing digital renewals and authentication is expected to both increase revenue and decrease costs, potentially leading to an estimated 15-25% reduction in NHIA’s annual deficit.</p>
<p>The success and sustainability of the initiative will depend the ability to increase usage in <a href="https://doi.org/10.1186/s12939-019-0946-x">rural areas and among workers in the informal economy</a>. As indicated in the March 2019 study, <a href="https://equityhealthj.biomedcentral.com/articles/10.1186/s12939-019-0946-x">“Determinants of paying national health insurance premium with mobile phone in Ghana”</a>, “making the process as user-friendly and as simple as possible could motivate many who otherwise would not participate to do so”.</p>
<h2>Enabling innovation</h2>
<p>Ghana provides a unique case of governmental commitment to create a suitable working environment for innovation. Digital solutions have enabled wider access to financial services such as health insurance, mobile-based pension schemes (see <a href="https://www.cgap.org/sites/default/files/publications/2019_05_Focus_Note_Fintech_and_Financial_Inclusion_1_0.pdf">People’ Pension Trust</a>) and microcredit loans. More and more previously unbanked users are now using micro-loan services (starting at 2 US dollars). For the first time, users will also earn interest on their digital saving accounts, with total interest paid to holders of electronic money wallets amounting to 24.8 million GHS (4.5 million US dollars) in 2016.</p>
<p>However, in an environment of low financial literacy, many of those using digital credit products don’t fully understanding their rights and obligations as consumers, and sometimes fall victim to predatory practices. Going forward, the Ghanaian consumer-protection regulation will have to tackle client-protection issues raised by digital financial services, in line with <a href="https://sptf.info/responsible-digital-financial-services">Social Performance Task Force recommendations</a>, supported by AFD.</p><img src="https://counter.theconversation.com/content/119625/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Selin Ozyurt ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>In just five years, the number of mobile-money accounts in Ghana have jumped six-fold, providing fresh perspective on the country’s digital transformation.Selin Ozyurt, Economist, Agence française de développement (AFD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1017512018-08-28T17:23:51Z2018-08-28T17:23:51ZExploring Cambodian and French attitudes toward mobile banking adoption and use<p>The demand for mobile banking applications (MBA) is on the rise because of perceived advantages in security, usefulness and speed, but what are the other factors that influence their adoption and use, and what are the profiles of those who adopt them? The <a href="http://www.univ-nantes.fr/projet-formation-erasmus-/the-dockside-project-2136562.kjsp?RH=1508488291953">DOCKSIDE project</a>, coordinated by the University of Nantes, aims to explore such questions.</p>
<p>The study focuses on users from two countries, Cambodia and France, by using a research framework extracted from the well-known <a href="https://nhm.org/site/sites/default/files/pdf/contrib_science/CS521.51-114.pdf">Technology Acceptance Model</a> (TAM) and <a href="http://www.icommercecentral.com/open-access/unified-theory-of-acceptance-and-use-of-technology-utaut-modelmobile-banking.php?aid=86597">Unified theory of acceptance and use of technology</a> (UTAUT).</p>
<h2>Banking on mobile banking</h2>
<p>E-banking is both <a href="https://s3.amazonaws.com/academia.edu.documents/33285898/JECR.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1534666986&Signature=nmjyGq18A1JztZmlP1e%2BQViVGrk%3D&response-content-disposition=inline%3B%20filename%3DMobile_Banking_Adoption_Application_of_D.pdf">growing and become more widespread</a> around the world. This can be explained by three <a href="https://www.sciencedirect.com/science/article/pii/S0747563204000470">interlinked trends</a>:</p>
<ul>
<li>Greater Internet coverage in a growing number of territories.</li>
<li>Higher quality of the operators’ offers.</li>
<li>Higher efficiency of the users’ practices.</li>
</ul>
<p>Nevertheless, the factors that explain their initial adoption and their subsequent use are still interesting to identify and to compare. The object of this article is to compare the <a href="https://www.sciencedirect.com/science/article/pii/S0747563210000154">explanatory factors</a> such as ease of use, utility, security, trust and convenience as perceived by Cambodian (Asia) and French (Europe) users. The full research, with a focus on the economic and entrepreneurship impacts <a href="https://www.researchgate.net/publication/262356195_Entrepreneurship_e-finance_and_mobile_banking">(Ratten, 2012)</a>, will be published in 2019.</p>
<h2>A few words about the Cambodian and French contexts…</h2>
<p>The DOCKSIDE project aims to <a href="http://www.dockside-kh.eu/project-activities/">strengthen multidisciplinary research</a> (economics, management, environment, etc.) as well as cooperation between Cambodians and Europeans, especially in emerging areas. This Erasmus+ project also seeks to confront and adapt research practices, models and methodologies. For example, in the case of this research, the authors began their empirical study in Cambodia (Phnom Penh) in autumn 2017 and then continued in France (Nantes) during spring and summer 2018.</p>
<p><a href="http://num.edu.kh/Research/SERIESVOLUME3_LV05.pdf">Innovative digital payment in Cambodia</a> debuted in 2008 when Wing and <a href="https://www.anzroyal.com/en/about-us/our-company/anz-cambodia/">ANZ Royal Bank</a> launched a money-transfer service for mobile-phone users. As of 2016, 32.4% of Cambodia’s 15.76 million residents used the Internet according to the <a href="https://data.worldbank.org/indicator/IT.NET.USER.ZS?end=2016&locations=KH&start=2016&view=bar">World Bank</a>. Research conducted by the Open Institute in 2016 found that <a href="http://www.open.org.kh/research/phones_2016.pdf">48% of Cambodians</a> use one smartphone or more.</p>
<p>In France, “65% or 34.7 million of the French population has Internet coverage, 61% had declared that they access Internet directly from home using a high-speed connection”, according to <a href="http://www.theibfr2.com/RePEc/ibf/ijmmre/ijmmr-v3n3-2010/IJMMR-V3N3-2010-8.pdf">Sanchez & Gallie, 2010</a>. More recently, in 2017 <a href="http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=isoc_bde15cbc&lang=en">Eurostat</a> reported that 62% of the French population used Internet banking, compared to 50% in 2010. France had a population of <a href="https://data.worldbank.org/indicator/IT.NET.USER.ZS?end=2016&locations=KH&start=2016&view=bar">67.12 million in 2017</a>, indicating that approximately 41.62 million used Internet banking that year. Interestingly, <a href="https://www.journaldunet.com/economie/finance/1175949-banque-le-mobile-en-passe-de-depasser-ordinateur/">47% of bank customers</a> used mobile banking services on mobile phones more frequently than computers in 2016.</p>
<h2>… and about e-banking services</h2>
<p>The technological offer of French and Cambodian banks is comparable, but the distribution and the background of the countries’ populations are not.</p>
<p><a href="https://pdfs.semanticscholar.org/2a3e/4a3024bfc4df27db07a1d48f77a6f371b0c3.pdf">Traditional banks</a> have the potential to provide mobile banking access to people in rural area where a few people could have computer without an Internet. They also have the possibility of bringing mobile banking to areas where people do not have Internet due to an extensive cell phone use and the limited capacity of Internet banking. <a href="http://www.sciencedirect.com/science/article/pii/S0268401206001101">The Internet</a> should be added the range of banks’ services while others branch and phone services are kept traditionally to strategise from branch to mobile banking and to capture an adequate market share during this transition period.</p>
<p>The <a href="http://www.sciencedirect.com/science/article/pii/S0957417409002735">trend toward mobile banking</a> has potential for the banking sector. By providing such services, banks can retain their existing client base and transform mobile phones users to mobile banking customers. But it seems increasingly difficult to attract and retain users. With a wide range of service providers, it is difficult for financial institutions to <a href="http://www.iosrjournals.org/iosr-jbm/papers/Vol17-issue11/Version-1/H0171114854.pdf">retain customers’ loyalty</a>. Plus, users have gained rights <a href="http://www.sciencedirect.com/science/article/pii/S0268401206001101">due to recent evolution of legislation and regulation</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&rect=0%2C0%2C1200%2C732&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=368&fit=crop&dpr=1 600w, https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=368&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=368&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=462&fit=crop&dpr=1 754w, https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=462&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/233128/original/file-20180822-149490-9lpvgx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=462&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Mobile banking in Cambodia.</span>
<span class="attribution"><a class="source" href="https://tradepractices.wordpress.com/2012/07/03/beyond-smartphones-mobile-banking-in-developing-countries/">Trade Practices</a></span>
</figcaption>
</figure>
<h2>About data collection and analysis</h2>
<p>Our study aims to compare factors that really affect the intention to adopt and use mobile banking applications in Cambodia and France. In all, our field survey collected the opinions and perceptions of <a href="https://measuringu.com/sample-size-designs/">252 representative e-banking users</a> (126 from each country, urban and connected), with parity between men and women and between younger and older users. </p>
<p>Both paper-based and online surveys were used to get a large enough sample for treatment and analysis using the <a href="https://www.ibm.com/analytics/spss-statistics-software">Statistical Package for the Social Sciences</a> (SPSS). Data were collected from October 2017 to July 2018. The questionnaire follows previous research studies including some <a href="http://www3.cis.gsu.edu/dtruex/courses/IB8710/Articles/EJIS-FrenchSMEs-201212.pdf">empirical research</a> by both universities. A seven-point Likert scale, ranging from “Strongly Disagree” to “Strongly Agree” was used to measure and treat all items. Our main results are summarized below.</p>
<h2>About main results…</h2>
<p>The research is divided into two sections. The first compares the conventional factors that affect intention to adopt and to use mobile banking app between the two population. The second compares how gender and age influence (or not) the adopting behaviour.</p>
<p>The research found that both countries share a similarity (mean values > 5 “agree”) of perceptions toward the usefulness, easiness and intention to use mobile banking applications. Concerning self-efficacy, French users have more experience with and knowledge of mobile banking than Cambodians. This result might be link with the <a href="https://www.atkearney.com/financial-services/article?/a/going-digital-the-banking-transformation-roadmap">different periods of Internet network introduction</a> (France around 2000, and Cambodia around 2008) and of smartphone availability (2010 and 2013, respectively).</p>
<h2>… focusing on trust and usefulness</h2>
<p>However, both nations gave a low scores (mean values < 5 “agree”) to their level of trust in mobile banking. Strengthening perceived trust remains a major issue, especially safety, confidentiality of personal information – including the <a href="https://gdpr-info.eu/">GDPR</a>, which is affecting data-privacy laws across Europe – as well as transaction safety, encryption technology and legal protections.</p>
<p>In terms of demographics, men and women in the two countries have similar attitudes about the use, benefits and conveniences of mobile-banking applications. However, both still rate their level of trust lower. In Cambodia, the 26-35 age group has more knowledge and experience with mobile activities than those 16-25 and 36 and up. In France, those 26-35 are more likely to have better knowledge and experience of mobile banking than those 16-25 and 36 and up. The youngest age group, 16-25, does not surpass those 26-36 in self-efficacy due to their income, knowledge, and working experiences.</p>
<p>Finally, we can highlight some interesting differences concerning the influence of <a href="https://data.worldbank.org/indicator/SP.POP.GROW">gender and age</a>. For example, the perceived usefulness is higher in France for women, whereas in Cambodia it’s higher for men. Similarly, perceived trust is higher in Cambodia for women, whereas it’s similar for men and women in France. Lastly, in both France and Cambodia, users 26 and older are more are confident and capable using mobile banking than those under 26.</p>
<h2>A few words about IT globalisation process</h2>
<p>Even if the two countries are different in socio-economic terms, the practices and attitudes of their (young) population are quite similar concerning e-banking. This exploratory study highlights the true similarity among young users (male and female) of the factors influencing the adoption of e-banking technologies, but also – in the course of their learning and appropriation of mobile technology – behaviours and uses that are fairly similar. Research continues by focusing on the economic and entrepreneurial impacts (or lack thereof) of the growing use of e-banking in terms of value, therefore value creation, wealth and <a href="https://www.tandfonline.com/doi/full/10.1080/14479338.2016.1268924">social innovation</a>.</p><img src="https://counter.theconversation.com/content/101751/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samedy Mey is participating DOCKSIDE Erasmus+ program at both University of Nantes (UN) and National University of Management (NUM) between France and Cambodia. </span></em></p><p class="fine-print"><em><span>Marc Bidan is afiliated with DOCKSIDE Erasmus+ program, in the field of higher education, coordinated by University of Nantes.and directed by Pr. Thomas Vallée</span></em></p>A new study explores factors that motivate users of mobile banking applications in Cambodia and France.Samedy Mey, PhD student in management, National University of Management - CambodiaMarc Bidan, Professeur des Universités - Management des systèmes d’information - Polytech Nantes, Université de NantesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/787252017-06-30T19:09:32Z2017-06-30T19:09:32ZOn the savanna, mobile phones haven’t transformed Maasai lives – yet<figure><img src="https://images.theconversation.com/files/172559/original/file-20170606-3668-1lns0i0.jpg?ixlib=rb-1.1.0&rect=450%2C505%2C1927%2C1722&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A group of Maasai men look at the mobile phone belonging to one of them.</span> <span class="attribution"><span class="source">Timothy Baird</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Mobile phones are everywhere. In fact, they may be nearly as common on the <a href="http://www.pewglobal.org/2015/04/15/cell-phones-in-africa-communication-lifeline/">African savanna</a> as they are on American subways. </p>
<p>With the explosion of mobile technology in developing countries, a common narrative is that <a href="http://www.economist.com/news/middle-east-and-africa/21711511-mobile-phones-are-transforming-africa-where-they-can-get-signal-mobile-phones">phones are transforming</a> poor people’s lives. Phones, the story goes, reduce the effort required to search for information and make commerce more efficient.</p>
<p>As technology has spread, so has research on its effects. With support from the National Geographic Committee for Research and Exploration, I study how Maasai pastoralists in Tanzania respond to various issues, including biodiversity conservation, globalization and technology. I and others are learning that mobile phones are changing lives, but perhaps not as much as some may think.</p>
<h2>Phones as new tools</h2>
<p>Studies have found that phones are critical new technologies to combat pastoralists’ greatest challenge: uncertainty. For generations, herders have moved across the landscape in search of forage and water for their livestock. Social networks are paramount for sharing information, but communication has long been challenging. Now, with phones, herders can share information easily, quickly and over great distances. </p>
<p>In Benin and Ethiopia, researchers have found that phones help facilitate social connections for <a href="http://www.ingentaconnect.com/content/whp/nomp/2017/00000021/00000001/art00006">Fulani</a> and <a href="https://doi.org/10.3197/np.2016.200104">Borana</a> herders, respectively. But efforts to leverage phones for broader economic gains are hampered by illiteracy and limited cellular coverage.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/173580/original/file-20170613-25879-1qww75t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Cell towers, few and far between, provide patchy coverage in rural Tanzania.</span>
<span class="attribution"><span class="source">Timothy Baird</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Among Maasai herders in Kenya, one study found that phone use is widespread but people largely communicate <a href="https://dx.doi.org/10.1007/s10745-014-9710-4">within their existing social networks</a>. Establishing new connections is much less common.</p>
<p>Another study from Kenya found that Samburu herders <a href="https://doi.org/10.1016/j.jaridenv.2015.12.001">don’t rely on phones during drought periods</a>. It’s risky to move herds in search of water, and herders fear being misled by informants about where valuable resources are. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/173579/original/file-20170613-25868-1mkw5lr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Tarangire River is a critical source of water during the dry season.</span>
<span class="attribution"><span class="source">Timothy Baird</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>In the hands of the Maasai</h2>
<p>My collaborators and I interviewed hundreds of Maasai in northern Tanzania to learn how they use mobile phones. In 2010, half of the households in our study area used phones. Now virtually all households do.</p>
<p>As one of our respondents commented, “The phone is one of the best tools we have ever seen.” </p>
<p>In our 2017 paper, <a href="http://www.colorado.edu/ses/joel-hartter">Joel Hartter</a> and I <a href="http://www.sciencedirect.com/science/article/pii/S0264837716307323">describe how Maasai are integrating phones</a> into most aspects of their lives.</p>
<p>Like earlier studies, we found that Maasai use phones to support traditional herding activities. Herders call each other to locate resources or notify others when health emergencies arise. We also learned that they use phones for many other activities, including getting information that helps them farm.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/173581/original/file-20170613-25827-19l6abv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A Maasai man accessorizes with a beaded phone holder.</span>
<span class="attribution"><span class="source">Timothy Baird</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Rain-fed agriculture poses a different challenge in this semi-arid region where rainfall is highly variable. Unable to move fields to water, Maasai try to coordinate their planting with the onset of the rainy season. </p>
<p>This is a precarious proposition each year. But with basic phones, Maasai call experienced smartphone users who can download weather forecasts. Demand for these few individuals is so high they’ve become like medicine men.</p>
<p>In addition, phones help communities manage persistent conflicts with wildlife. Elephants, zebra and bush pigs can devastate agricultural fields. And lions and other predators can threaten livestock and people alike. Maasai now use phones to <a href="https://dx.doi.org/10.1007/s00267-016-0694-2">communicate about about wildlife</a> and avoid conflicts or reduce their consequences.</p>
<p>And phones support commerce. Maasai can make calls to check prices for livestock and other commodities at different markets. Pictures of animals can be texted around to prospect for buyers. Mobile banking applications help users conduct transactions and monitor their accounts. </p>
<p>Phones are also drawing Maasai into less traditional activities. Young people use phones to play video games, store music and flirt on WhatsApp and Facebook. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/173585/original/file-20170613-25839-de96s9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Young warriors use phones to take pics at a political meeting.</span>
<span class="attribution"><span class="source">Timothy Baird</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>‘Phones also lie’</h2>
<p>Our respondents also told us that some people are using them to lie and cheat and steal. </p>
<p>As the Samburu herders of Kenya found, Maasai people also lie to callers about the locations of valuable forage or water. Young brides use phones to arrange extramarital rendezvous. And criminals can use phones to lure victims to “meetings” to ambush them en route.</p>
<p>Maasai have strong traditions surrounding <a href="https://doi.org/10.1016/j.worlddev.2014.02.002">lending and gift giving</a>; requests for a loan or a gift are typically made in person. People seeking assistance can use a phone to call ahead before paying a visit. Someone who doesn’t want to help can lie and say they’re not around.</p>
<p>As traditionally spiritual people, Maasai can be superstitious about phones. Respondents described instances of witchcraft where people received calls from mysterious numbers and instantly died. They also expressed grave concern about the fact that they, just like other phone users around the world, feel <a href="https://theconversation.com/whats-behind-phantom-cellphone-buzzes-73829">phantom phone vibrations</a>.</p>
<p>Taken together, these issues seem to have weakened community ties. Respondents told us that while phones make group meetings easier to arrange than in the past, it’s harder to get people to attend. In many ways, phones help people to be more independent – and individualistic.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=896&fit=crop&dpr=1 600w, https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=896&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=896&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1126&fit=crop&dpr=1 754w, https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1126&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/173587/original/file-20170613-25868-1772rdq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1126&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Solar panels on hut roofs are used to charge phones and power lights and radios.</span>
<span class="attribution"><span class="source">Timothy Baird</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>Face-to-face communication is more common, more diverse</h2>
<p>In addition to simply describing how Maasai use phones, we also wanted to see if people use phones to communicate with more types of people or about more types of information than they do face to face.</p>
<p>In one of the most cited papers in social science, Mark Granovetter found that “<a href="https://doi.org/10.1086/225469">weak ties</a>” with acquaintances were more useful for finding and securing job opportunities than “strong ties” with close friends and family. The value of weak ties is that they provide new, diverse types of information.</p>
<p>We thought that phones may be helping people to expand their weak ties and broaden their horizons. What we found instead was that face-to-face communication was more diverse among the Maasai than phone-based communication, even when controlling for factors like age, wealth and education.</p>
<p>These findings are well aligned with those from other studies of phone use in developing communities. Generally, phones support longstanding, culturally ingrained activities – they don’t transform them. One change, though, is that phone use amplifies issues of trust and distrust.</p>
<p>These are some early findings, and many questions remain. This year, with funding from the National Science Foundation, we will begin examining <a href="https://www.nsf.gov/awardsearch/showAward?AWD_ID=1660428&HistoricalAwards=false">how phone use affects the social networks of Maasai men and women differently</a>.</p><img src="https://counter.theconversation.com/content/78725/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Timothy D. Baird receives funding from the National Geographic Society Committee for Research and Exploration. </span></em></p>What do traditional Maasai people use mobile phones for?Timothy D. Baird, Assistant Professor of Geography, Virginia TechLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/363372015-02-06T06:15:45Z2015-02-06T06:15:45ZC2C: the next frontier in mobile payments is all about trust<figure><img src="https://images.theconversation.com/files/70978/original/image-20150203-25557-1jn47nr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A tap dance.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Mobile payments will be one of the hottest businesses in 2015 as consumers increasingly swap cash and credit cards for their smartphones. How fast the mobile payment market segment grows, however, will depend on consumer trust, security and ease of use.</p>
<p>While consumer-to-business (C2B) payments have taken off with companies like Apple Pay and PayPal, consumer-to-consumer (C2C) payments are the next frontier. </p>
<p>Reliable statistics on C2C mobile transaction growth are hard to come by. But <a href="http://www.gartner.com/document/2484915?ref=grrec&refval=2484915%22%22">according to Gartner Research</a>, by 2017 the total worldwide mobile payments market is expected to reach 450 million users (18% growth a year) and be worth $721 billion (35% a year). </p>
<p>Meanwhile, <a href="http://blogs.forrester.com/denee_carrington/13-01-16-us_mobile_payments_forecast_2013_2017_mobile_payments_to_reach_90b_by_2017">Forrester Research predicts</a> “mobile payments adoption will be fueled by unprecedented growth in proximity payments.” Forrester adds that mobile proximity, or in-store, payments, are expected to be the fastest-growing category of mobile payments through this period.</p>
<p>Predictably, this growth is being fueled largely by younger consumers. Ernst & Young <a href="http://www.ey.com/Publication/vwLUAssets/EY_-_Mobile_money_-_the_next_wave_of_growth_in_telecoms/$FILE/EY-mobile-money-the-next-wave.pdf">reports</a> that millennials are more receptive to mobile money than their older counterparts. Its recent survey of 6,000 consumers in 12 countries showed that 11% of those aged 25–30 regularly use device-based money transfer, compared with only 4% in the 46–65 age group.</p>
<p>Mobile payments aren’t likely to entirely replace cash in these person-to-person transactions, but they do have the potential to make some major headway, especially among millennials.</p>
<p>Why is this important? Such a sea change in how transactions are done at both the macro level (how consumers buy from established businesses) and the micro level (how money changes hands between individuals) will open up exciting new technological opportunities.</p>
<p>Software (particularly open source) will be at the center of these developments. More on that shortly – but first, let’s look at the generational shifts that are prompting these changes.</p>
<h2>Millennials will lead the way</h2>
<p>Why millennials? Because that is the generation most likely to congregate socially in groups, split checks or to rent apartments together. They’re also the generation that’s already <a href="http://www.adweek.com/news/technology/millennials-abandon-cash-mobile-payment-apps-159569">leaving wallets behind</a> in favor of carrying smartphones. When millennials owe one another money – whether it’s $20 from a group dinner or $100 towards a utility bill – it’s not uncommon for them to use a platform like Venmo to settle up.</p>
<p>Making C2C mobile payments more enticing to this generation is its social aspect. Not only do they want to leverage social networks for payment (think Facebook), platforms like Venmo publish announcements when transactions occur, like a financial selfie or a personal declaration of solvency. Millennials use technology differently than previous generations – to this group public recognition carries great import. Witness how millennials covet “likes” on Facebook.</p>
<p>As a result, traditional players in financial services are hurrying to catch up in the C2C space and build solutions tailored to millennials. This segment stampede will put major pressure on companies like Venmo to innovate and stay ahead of the pack.</p>
<p>This area is <a href="http://www.mobilepaymentstoday.com/news/study-examines-efforts-to-regulate-mobile-payments-standardize-technology/">fertile ground for regulation</a> – still in its infancy – as governments around the world start to pay attention. Mobile payments should increase the velocity of transactions, given the attachment of many users to their phones.</p>
<h2>Beyond social</h2>
<p>To really expand C2C solutions, companies will have to look beyond user social networks for payments. Successful C2C solutions will also need to support moving funds from mobile payment accounts to other types like savings and/or competing mobile wallets. This kind of flexibility requires new levels of trust on the payment journey. Companies need to convincingly prove that they provide secure paths for these transactions.</p>
<p>An important key to building trust is open source software (OSS). Why? Quality and transparency.</p>
<p>Major companies already know that OSS confers applications and networks with better security than legacy/proprietary software. A recent survey shows 75% of enterprises rate Linux as more secure than other platforms (<a href="http://www.linuxfoundation.org/news-media/announcements/2014/12/linux-foundation-releases-report-detailing-linux-user-trends-among">The Linux Foundation 2014 End User Survey</a>), and a study of more than 1,200 open source and proprietary software projects (Coverity) found that OSS code exhibited 18% fewer defects (the cause of many vulnerabilities). And when security vulnerabilities are detected in OSS code, they are addressed 1.3 times faster than vulnerabilities in internal enterprise projects and 2.3 times faster than with commercial or proprietary software.</p>
<p>On the side of transparency, savvy individual and corporate end-users as well as developers know that they, their friends and colleagues always have the option of vetting OSS for themselves.</p>
<h2>Ease of use matters</h2>
<p>While consumers aren’t likely going to use Venmo and other emerging C2C platforms for major financial transactions, they are forcing other payment segments to improve their ease of use. </p>
<p>In the same way that Amazon ushered in the “consumerization of IT,” forcing existing IT vendors to improve the ease of use of their products, simple C2C payment systems like Venmo teach the rest of the market that ease of use and ease of access matter.</p>
<p>Venmo is simple to use - in fact Venmo’s transaction rates already match payments going through the Starbucks app, even though the Seattle-based coffee chain has spent a lot more promoting its software</p>
<p>Ultimately, C2C market growth is limited only by consumer trust – trust of the platforms, the services and of the code that implements them.</p><img src="https://counter.theconversation.com/content/36337/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lou Shipley is CEO of Black Duck Software.</span></em></p>Mobile payments will be one of the hottest businesses in 2015 as consumers increasingly swap cash and credit cards for their smartphones. How fast the mobile payment market segment grows, however, will…Lou Shipley, Lecturer, MIT Sloan School of ManagementLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/218662014-01-09T06:22:26Z2014-01-09T06:22:26ZAncient IT makes a banking meltdown inevitable<figure><img src="https://images.theconversation.com/files/38694/original/s9zgdpcz-1389197684.jpg?ixlib=rb-1.1.0&rect=10%2C6%2C1007%2C649&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The shoulder pads are gone but the IT infrastructure remains.</span> <span class="attribution"><span class="source">Phagan photos</span></span></figcaption></figure><p>A <a href="http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Market%20Sector/Financial%20Services/uk-banks-half-year-results2013.pdf">KPMG</a> report warned last year that the next systemic shock to UK banking could come from an as yet unforeseen event, such as a massive payment outage or a cyber attack. Since the IT systems in most banks are complex and some essential parts of these systems are very old, a system outage is almost inevitable. The IT systems that hold up our every financial move are a disaster waiting to happen. </p>
<h2>A few days to disaster</h2>
<p>In the summer of 2012, a routine <a href="http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/9358252/RBS-computer-failure-caused-by-inexperienced-operative-in-India.html">software update in India</a> caused an IT meltdown at the Royal Bank of Scotland. As a result, 17 million customers were locked out of their accounts for days. This was followed by a <a href="http://www.bbc.co.uk/news/business-21694704">hardware failure</a> in March 2013 that prevented millions of customers from accessing online services and ATMs for hours. While the bank is still under investigation by the Financial Conduct Authority over these incidents, it suffered a third embarrassing system outage on the busiest online shopping day before Christmas last year, followed by yet another IT failure a few days later.</p>
<p>Catastrophic IT failures such as these can lead to financial chaos, create financial hardship for both businesses and families and, if not quickly addressed, may even lead to social breakdowns. If employers are unable to pay employees and people are unable to pay their rents, buy their groceries and medicine or pay for their transport, utilities and credit card bills, social unrest may ensue.</p>
<p>Due to the enormous number of transactions that take place every day in the financial sector, a major bank only has a matter of days to recover after suffering a catastrophic IT failure. If it fails, the backlog of financial transactions would simply become unmanageable, and the bank would be overwhelmed. This is of course an Armageddon scenario, but it is highly probable given that some of the core IT systems used by all UK banks were developed in the 1960s and 70s. We should be prepared for more problems like this to strike in the coming years.</p>
<h2>IT legacy systems in UK banking</h2>
<p>The term “legacy” in IT describes software applications, operating systems and occasionally hardware and network infrastructure developed and implemented before the early 1990s. Legacy IT systems form the core of a daily processing cycle in UK banking, much of which is still overnight batch-based processing rather than in real time, despite significant technological advances in recent years.</p>
<p>These systems have been at the very core of payments transmission, bank transaction processing and account maintenance and management for more than 40 years. They were initially designed in the 1960s to automate branch accounting, and by the 1970s and 1980s the range of software applications expanded to help banks improve services, reduce costs and speed up transaction and payment processing. Many of these systems remain in operational use today.</p>
<h2>New wine in old wineskin</h2>
<p>Despite significant annual IT investment by most banks (from hundreds of millions of pounds to multi-billion-pound investments), almost <a href="https://www.techuk.org/component/techuksecurity/security/download/240?file=Financial_infrastructure_-_can_banks_afford_no_to_change_WEBSITE.pdf&Itemid=181&return=aHR0cHM6Ly93d3cudGVjaHVrLm9yZy9pbnNpZ2h0cy9yZXBvcnRzL2l0ZW0vMjQwLWZpbmFuY2lhbC1pbmZyYXN0cnVjdHVyZS1jYW4tYmFua3MtYWZmb3JkLW5vdC10by1jaGFuZ2U=">80% of that investment</a> goes towards maintaining and improving the existing core applications base – including legacy systems. The remaining 20% has historically been devoted to a range of short-term and medium-term IT developments.</p>
<p>Typically, more than half of that 20% is spent on projects that either meet a immediate product or service demand or are needed to respond to new regulatory reporting requirements.</p>
<p>That leaves just 8-9% for medium-term – and occasionally long-term – strategic programmes. To match the astonishing speed of IT development, this level of investment is pitifully inadequate. The impact is most noticeable where game-changing technologies are applied, and is particularly pronounced in retail banking where consumer expectations are changing rapidly. For example, people increasingly expect to have access to a range of banking services not only via their PCs but also via their mobile devices. </p>
<p>For many UK banks the only practical response is to use the legacy systems as a launch pad for new applications. The front-end applications are newly developed but all the back-end processing remains within the legacy system.</p>
<h2>Unwilling to change</h2>
<p>For most senior banking executives, IT is viewed as a cost. The pressure to reduce cost has led to an increasing dependence on IT outsourcing and offshoring over the past 20 years. Often this process means that systems fail to meet client expectations and many of these projects are questionable in terms of return on investment.</p>
<p>Still worse, IT is often viewed by senior executives as a “basket case”, plagued with missed project deadlines, budget busting overspends and an astonishing track record of project failure. This has often led to an unforgiving bias towards IT which militates against long term investment.</p>
<p>One result is a pronounced lack of economic will by senior executives to sponsor – or even be seen sponsoring – strategic IT initiatives. This is further exacerbated by the short tenure for key executives and CIOs in major banks and frequent structural and personnel upheaval. The outcome is a lack of credible medium to long-term strategic planning for IT in most banks.</p>
<h2>The solution</h2>
<p>The likelihood for any UK banks to overcome the legacy IT degenerative problem at an individual level is very slim. Even some of the new entrants to the market have decided to use licensed IT systems which are essentially legacy applications.</p>
<p>Senior leaders from UK banks need to get together urgently to systematically explore the challenges and opportunities associated with upgrading the IT infrastructure for UK banking. This is not an issue for the IT professionals alone. It is a strategic issue that calls for the full involvement of senior business executives. The alternative is to continue to bury our heads in the sand, waiting for the next inevitable disaster to strike. </p>
<p><em>Ian Marshall, senior advisor to Sopra Group Financial Services, also contributed to this article.</em></p><img src="https://counter.theconversation.com/content/21866/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The views expressed in this article are those of the author and not of Cass Business School.</span></em></p>A KPMG report warned last year that the next systemic shock to UK banking could come from an as yet unforeseen event, such as a massive payment outage or a cyber attack. Since the IT systems in most banks…Feng Li, Associate Dean for Research and Enterprise, Cass Business School, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/204402013-11-21T03:28:53Z2013-11-21T03:28:53ZBarclays is closing branches, but Aussie banks slow to follow<figure><img src="https://images.theconversation.com/files/35537/original/m3cfd22c-1384822002.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Bank of Melbourne relaunched its new look branch network in 2011 as part of a broader push to build customer relationships.</span> <span class="attribution"><span class="source">Joe Castro/AAP</span></span></figcaption></figure><p>UK banking giant Barclays has revealed <a href="http://www.ft.com/intl/cms/s/0/e90e3854-4fa6-11e3-b06e-00144feabdc0.html#axzz2l2nS3EXo">plans</a> to lay off 1700 branch staff and shrink its branch network as customers embrace online and mobile banking.</p>
<p>The street faces of banks are changing quickly. Where once banks had big buildings, strong walls and lots of marble facings, all designed to impress users with strength, solidity and safety, new branches can look more like pop-up shops. Certainly outside Australia, pop-up banks located in shopping malls are becoming common. Even here, bank sales sites are cropping up in shopping malls without any cash handling facilities at all.</p>
<p>The drivers are the standard ones. Branches are costly to run. Even the smallest branch will have four staff, with two or three of them not busy most of the time. A new branch also takes about three years to become profitable so branch expansion can put a drag on the business.</p>
<p>Patronage is also changing. As facilities to do banking by desktop or mobile device and online payments become easier to use, the need to visit the bank declines. Exponential <a href="http://www.smh.com.au/business/mobile-banking-rings-up-net-victory-20130203-2dslw.html">growth</a> in mobile banking has exceeded that of early internet banking, surpassing the expectations of the major banks. </p>
<p>But despite the growth, bank points of presence have only been declining slowly in Australia. The latest APRA data suggests that they have fallen from 7975 in 2004 to 7725 this year. The drop for credit unions has been from 1485 to 783 over the same period, and from 550 to 286 for building societies. But the big drops for credit unions and building societies are misleading since a number of them have converted to banks, nine in the last two years. If we take the total points of presence for all financial institutions, the number of branches has fallen from 13059 to 12036 between 2004 and this year (about 8%).</p>
<h2>Branch politics</h2>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=916&fit=crop&dpr=1 600w, https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=916&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=916&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1151&fit=crop&dpr=1 754w, https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1151&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/35543/original/tw5fjkwk-1384822735.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1151&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In 2002 NAB announced the planned closure of 56 rural branches in a bid to save $370 million.</span>
<span class="attribution"><span class="source">Joe Castro/AAP</span></span>
</figcaption>
</figure>
<p>Since there is usually a public outcry when communities lose a bank, politicians and banks treat the risk of complaint seriously. Potential closures are usually subject to substantial community consultation, and closures where banks are scarce are scrutinised particularly carefully. This might be one reason why the decline in branches in remote and very remote regions has only declined from 209 to 204 over the last decade.</p>
<p>Bank attitudes to branches have <a href="http://www.couriermail.com.au/business/bank-of-queensland-eyes-trimmer-branch-network-says-majors-get-more-market-share-for-presence/story-fnihsps3-1226760204537">changed</a> over time. Branches were cut back sharply in the 1990s, as EFTPOS, credit cards and ATMs were seen as the wave of the future. This caused a consumer backlash which damaged bank reputations. </p>
<p>Through the 2000s, banks took a different approach, realising that having good relations with customers was important both to help raise deposits and to sell additional products. But now the underlying economics of branches is changing: demand for standard services in branches is falling off as a result of customer choice rather than bank initiative.</p>
<p>So how do banks adapt? Essentially the bank branch is being reinvented. Branches are being made cheaper to operate with videoconference access to specialists, coin sorting machines, and internet facilities, and much reduced floor space. </p>
<h2>Keep the branch, move the cash</h2>
<p>Branches are also being made safer by under-floor cash repositories which means tellers do not have drawers bulging with cash. These strategies can reduce the cost of a branch while maintaining its operations so that it is not necessary to close them or to upset the local community.</p>
<p>The Australian banks are also changing the function of their branches to incorporate wealth management, insurance or share trading facilities. The modern branch is being refocussed to offer the full suite of financial services and self-service, allowing the considerable overheads to be spread across a wider range of services. So far none as gone as far as some of the Spanish bank branches where you can buy a ham or a bicycle as well as making a deposit.</p>
<h2>The regulator in the room</h2>
<p>Regulation can reinforce this transition. Under the Basel III reforms, the regulators are encouraging banks to have more stable funding. Term and other stable deposits will probably bear a higher interest rate as a result. And banks will respond by chasing harder for stable retail deposits, with branches playing an important part in their retail strategy.</p>
<p>Where the history of bank runs has images of people queued up in the street to withdraw deposits, this is actually much less of a problem than funds that can be withdrawn at the press of a button.</p>
<p>Regulation will make standard retail deposits more valuable to banks than say online deposits – because they are stickier. Banks will find retail and transactional customers more valuable, and so will do everything they can to keep customers returning to their branches, meaning the range of services bundled into your local branch is only likely to expand further.</p><img src="https://counter.theconversation.com/content/20440/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rodney Maddock does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>UK banking giant Barclays has revealed plans to lay off 1700 branch staff and shrink its branch network as customers embrace online and mobile banking. The street faces of banks are changing quickly. Where…Rodney Maddock, Vice Chancellor's Fellow at Victoria University and Adjunct Professor of Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/102882012-10-23T19:33:38Z2012-10-23T19:33:38ZThe fate of retail banks: embrace technology or lose market share<figure><img src="https://images.theconversation.com/files/16807/original/yq27f4mv-1350964448.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will retail banks go the same way as Borders or Blockbuster Video?</span> <span class="attribution"><span class="source">Image from www.shutterstock.com</span></span></figcaption></figure><p>How are retail banks — the incumbents of banking — likely to fare in the era of mobile banking?</p>
<p>This is an increasingly crucial issue for banks. Mobile banking is a major technological development, and history suggests that incumbents can be reduced to obscurity as new players, or “market disruptors”, use improved technology to <a href="http://www-935.ibm.com/services/au/gbs/bus/pdf/GL_13332_Brett_King_Final_PDF_01.pdf">upset the old order</a>. </p>
<p>For example, companies such as <a href="https://signup.netflix.com/global">Netflix</a>, which uses postal and later online distribution of rented films, are revolutionising the way consumers access movies. A consequence has been that Blockbuster, a traditional bricks-and-mortar DVD rental company, has lost enormous market share. Similarly, as at January 2011, Amazon was selling 105 digital books for every 100 analogue books and contributing to sending Borders, a regular bookstore, <a href="http://www.thinque.com.au/blog/future-banking-top-3-disruptive-trends-banking.php">into obsolescence</a>.</p>
<p>In the era of mobile banking, banks may be next in line to see their relevance diminished. Internet, telecommunications and technological companies — the market disruptors in relation to mobile banking — are probably <a href="http://www.mckinsey.com/clientservice/Financial_Services/Knowledge_Highlights/Recent_Reports/%7E/media/Reports/Financial_Services/McKMobileBanking2011.ashx">better placed to develop key components of mobile banking than banks</a>. Traditionally, banks “owned” the retail banking relationship with customers. They designed, manufactured and distributed banking products. However, mobile banking emphasises disintermediation and these processes may reduce that advantage for banks because market disruptors can provide some (if not all) of these steps.</p>
<p>Market disruptors are becoming increasingly adept at distributing banking products through payment systems. For example, mobile payments constitute one of Google’s three main strategic goals, and it already has a <a href="http://www.thinque.com.au/blog/future-banking-top-3-disruptive-trends-banking.php">digital banking licence in Holland</a>. PayPal is reportedly scouting for a major retailer to embrace its mobile phone payment services. <a href="https://squareup.com/">Square</a>, which provides small devices that attach to smartphones and allow small businesses or tradesmen to accept credit card payments, has signed up more than <a href="http://www.economist.com/node/21554744">1 million customers since its launch in 2010</a>, including the Salvation Army. Around three million customers now use mobile prepaid to pay for their coffee at Starbucks.</p>
<p>New technology is making these processes ever easier. For example, Australian-based mHits has developed a <a href="http://www.smh.com.au/it-pro/business-it/from-go-to--ordering-and-paying-for-goods-by-app-20120312-1utoh.html#ixzz29cAZDeWU%3E.%20%3Chttp://www.smh.com.au/it-pro/business-it/phones-ring-in-banks-future-20120813-244qz.html#ixzz29cADio9f">SMS-based technology</a> where natural language messages are used to transfer money to another mobile phone number. (For example “pay 0412345678 $3 soy latte”.)</p>
<p>Many of these developments come under the label of “near field communication (NFC)”, which involves establishing radio communication between smartphones and similar devices by touching them together or bringing them into close proximity, usually no more than a few centimetres. In late 2010, Google introduced the first NFC-enabled smartphone, the Nexus S, made by Samsung. A simple app turns the Nexus S into a portable payment processor. In 2011 market researcher Pyramid Research forecast that 28% of all smartphones (around 250 million) sold by 2015 <a href="http://www.cbsnews.com/8301-505144_162-57238761/future-of-mobile-banking-paying-with-your-cell-phone/">will be NFC enabled</a>.</p>
<p>Clearly, banks need to reform to ride the wave of mobile payments. To compete with these market disruptors, banks need to remain relevant, attractive and create value for customers. Doing so in relation to mobile banking will require a fundamental reappraisal of a bank’s relationship with customers, and it is unclear the extent to which the major clearing banks have come to terms with this need. In a <a href="http://www.mckinsey.com/clientservice/Financial_Services/Knowledge_Highlights/Recent_Reports/%7E/media/Reports/Financial_Services/McKMobileBanking2011.ashx">2011 survey</a> of over 150 European banks, McKinsey reported that almost 55% assigned 10 or less employees to mobile banking, suggesting a lack of investment in this field. For those who do want to compete with the market disruptors, how should they do so? Four strategies may be helpful.</p>
<p><strong>Collaborate and listen</strong></p>
<p>The first, and perhaps most obvious and fundamental step, involves banks accepting that they will no longer own the customer relationship — and that they should collaborate with the market disruptors. This will involve, for example, supporting contactless point of sales, and generally either determining mobile payment solutions themselves or <a href="http://www-935.ibm.com/services/au/gbs/bus/pdf/GL_13332_Brett_King_Final_PDF_01.pdf">partnering with potential market disruptors</a> such as Telstra, EFTPOS, BPAY, and PayPal.</p>
<p>Some banks have started. For example, Barclays has adopted a <a href="http://www.kpmg.com/uk/en/issuesandinsights/articlespublications/pages/mobile-banking-golden-future.aspx">contactless mobile payments partnership with Orange</a> in the UK.</p>
<p><strong>Size matters</strong></p>
<p>The second strategy involves banks becoming bigger so that they can afford the technological innovation required to build mobile banking into their operations. The Economist has argued that the high cost of technology and the gains it promises may mean that in the era of mobile banking, <a href="http://www.economist.com/node/21554749">bigger, wealthier banks are more likely to succeed</a> than smaller ones. This is partly because regulation has become more intrusive in the years since the financial crisis, so raising relative compliance costs that may inhibit the capacity of smaller banks to invest sufficiently in the requisite technology. </p>
<p>Furthermore, larger banks such as Citigroup, HSBC and Standard Chartered, appear <a href="http://www.economist.com/node/21554749">better able to standardise their procedures and systems</a>, and so can replicate their successful practices across the largely unserved but potentially highly lucrative banking markets in Asia and the Americas.</p>
<p><strong>Use branches to facilitate conversation, not transactions</strong></p>
<p>The third strategy is to leverage any face-to-face contact with customers towards engagement rather than transaction. This may enable banks to stay relevant to customers as a source of financial advice, a capacity that market disruptors will take time to develop.<a href="http://www.banking4tomorrow.com/wp-content/uploads/2012/05/Building-the-Best-Practice-Engagement-Bank.pdf">Banks are already heading in that direction</a>. For example, SNS in the Netherlands decided to <a href="http://www.banking4tomorrow.com/wp-content/uploads/2012/05/Building-the-Best-Practice-Engagement-Bank.pdf">remove cash from their branches</a> in 2009. In the middle of Paris, BNP Paribas’s flagship concept store contains red, green and yellow beanbags, and white benches with iPads and rooms with couches and flatscreen televisions. The idea is that a customer can <a href="http://www.economist.com/node/21554746">see a financial advisor while having a coffee</a>. ING Direct Café near San Francisco Union Square serves coffee, and the barista serving the latte asks whether the customer would like to talk about money or open a saving account. <a href="http://www.economist.com/node/21554746">Transactions are not permitted</a> at this bank branch.</p>
<p><strong>Trust: Brand</strong></p>
<p>Fourth, banks can leverage customer information entrusted to them to provide tailored products that retains a customer’s attention. Banks seem to have worked this out. A McKinsey report suggests that some banks have been able to <a href="http://www.economist.com/node/21554743">double the share of customers that accept offers of loans</a> and reduce loan losses by a quarter, simply by using data they already have. However, market disruptors are also getting on the act. In America,<a href="http://www.economist.com/node/21554743">Visa has teamed up with Gap</a>, a clothes retailer, to send discount offers to cardholders who swipe their cards near Gap’s stores.</p>
<p>Even then however, banks’ ability to leverage their supposed trust advantage may not last for long. Currently part of the reason that customers trust banks over market disruptors is because they are not used to the non face-to-face aspect of mobile banking. However, as a new generation grows up in which mobile banking is the norm, they may trust the market disruptors, so reducing the trust advantage of banks. In a recent MasterCard survey, 37% of respondents aged 35 and older said they would be comfortable paying for items via NFC, but this figure was <a href="http://newsroom.mastercard.com/2011/05/19/most-people-ready-to-make-payments-with-their-mobile-phone/">63% for those aged 18-34 years old</a>, suggesting that younger people are much more willing to interact with market disruptors than their parents’ and grandparents’ generations.</p>
<p>It is clear that banks will need to embrace the changes that mobile banking is forcing upon them. There are strategies that are available to them to do so, but they will need to move quickly. As Blockbuster or Borders might tell you, in the information age, the future belongs to those that are nimble and far-sighted enough to embrace it.</p>
<p><em>A version of this story first appeared on the <a href="http://www.clmr.unsw.edu.au/">UNSW Centre for Law, Markets and Regulation portal</a>.</em></p><img src="https://counter.theconversation.com/content/10288/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Greenacre is a Research Fellow at UNSW's Centre for Law, Markets and Regulation and a contributor to its online portal, which receives funding from the ARC.</span></em></p>How are retail banks — the incumbents of banking — likely to fare in the era of mobile banking? This is an increasingly crucial issue for banks. Mobile banking is a major technological development, and…Jonathan Greenacre, Research Fellow in the Centre for Law, Markets and Regulation, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/101912012-10-18T19:27:38Z2012-10-18T19:27:38ZSay goodbye to the branch — the future for banking is upwardly mobile<figure><img src="https://images.theconversation.com/files/16684/original/zq5xnfzb-1350535669.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In developing and developed countries alike, mobile banking is making its mark.</span> <span class="attribution"><span class="source">Flick\BankSimple</span></span></figcaption></figure><p>In developed countries such as the United States, United Kingdom and Australia, mobile banking — describing the use of mobile phones to make financial transactions — is transforming banking from a physical (requiring visits to a bank branch) to non-physical activity. </p>
<p>Visits to banks to deposit cheques, and cheques more generally, appear to be disappearing. A recent report from The Economist cited a finding from JP Morgan that over the past year in the United States, <a href="http://www.economist.com/node/21554746">customers deposited 10 million cheques by taking pictures of them</a> rather than visiting a branch. In the Netherlands, only <a href="http://www.economist.com/node/21554746">half of all bank customers</a> have stepped inside a branch in the past year.</p>
<p>iPods are making a difference by enabling customers to access internet banking through mobile technology. This process is new, but already well-pronounced in Australia. In the first two months of its existence, Westpac’s iPad banking app has been downloaded onto 58,000 devices and used in 137,000 transactions worth $125 million. Payments analyst Edgar Dunn & Co predicts there could be <a href="http://www.afr.com/p/technology/mobile_tellers_take_banking_by_storm_eWwNv2mVzB9IxvSnO3z1YM">250 million mobile banking transactions</a> each year in Australia by 2015. This uptake has been so prompt that at last week’s Finsia’s <a href="http://www.finsia.com/professional_development12/events1/conferences/2012-annual-conference">Annual Financial Services Conference</a>, leaders from a number of major Australian banks commented that technological developments — particularly mobile banking services — would eventually do away with physical banking altogether.</p>
<p>Interestingly, the early introduction of mobile banking has meant that much formal retail banking activity in many developing countries such as Kenya and the Philippines has tended to be non-physical in nature. In developed countries, banks generally relied on their branch networks and, more recently internet banking, to serve their customers.</p>
<p>This option has often not been available to banks operating in developing countries. Building bank branches in many developing countries is expensive, dangerous (particularly in countries in which corruption and violence are rampant), and often unprofitable given that transaction sizes are often very small (sometimes as small as $3-5). Internet banking is often not feasible due to a lack of reliable computer access for customers. As a result, many large populations in developing countries were considered “unbankable”, and so did not have access to formal banking services at all.</p>
<p>This situation has changed in recent years as the price of phones has decreased substantially, so enabling large numbers of the “unbanked” to buy them. For example, Africa’s mobile phone population grew from eight million in 1998 to over 120 million in 2007. By 2006 there were more phones and related services sold every day in Africa than in all of North America. This rapid growth has continued since this initial take-off, and the *BBC *has reported that there are now around <a href="http://www.bbc.co.uk/news/business-18643549">700 million mobile phone users in Africa</a>. This growth in the use of mobile phone use has extended to some of the least developed countries on earth. For example, the mobile phone population in Afghanistan expanded from 20,000 in 2001 to 1.3 million in 2006, and a report produced by the USAID-funded Afghanistan Media Development and Empowerment Project in 2012 put this figure at around <a href="http://www.internews.org/sites/default/files/resources/Internews_TelecomInternet_Afghanistan_2012-04.pdf">17.1 million</a>.</p>
<p>Many banks began to use mobile phones to reach these large unbanked populations and so many of the world’s largest mobile banking markets now exist in developing rather than developed countries. By the end of 2011, over 140 mobile money ventures operated globally, most of which were situated in developing countries. In a World Bank paper written by <a href="http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2011/05/18/000158349_20110518143113/Rendered/PDF/WPS5664.pdf">Michael Klein and Colin Mayer</a>, it was reported that 45 mobile banking schemes existed in Africa, 25 in Asia and the Pacific, and 12 in Latin America.</p>
<p>As a result, developing countries pioneered several aspects of mobile banking that may, in some form, be copied by developed countries. The first is the use of agents. For example, in Brazil and India, banks use agents in villages, equipped with mobile phones and card readers. Customers can make small deposits, withdrawals and money transfers through these agents instead of visiting bank branches which has greatly expanded the size of the retail banking market. M-Pesa in Kenya is the most famous example, and similar systems have been deployed in Bangladesh, Uganda, Nigeria and the Philippines.</p>
<p>Second, non-banks have begun to enter the market to provide mobile money (e-money issuers) and compete with banks. The <a href="http://www.cgap.org/sites/default/files/CGAP-Brief-Supervising-Nonbank-Emoney-Issuers-Jul-2012.pdf">World Bank reports</a> that currently e-money issuers exist in Afghanistan, Indonesia, Kenya, Malaysia, the Philippines, Rwanda, Sierra Leone and Sri Lanka. These e-money issuers are often dynamic and innovative, capable of expanding their business practices to squeeze market control from banks. For example, M-Pesa has combined with Western Union to let people in 45 countries send money directly to M-Pesa’s users in Kenya, so taking a sizeable share of the remittance industry, valued by the World Bank to be $US483 billion in 2011. Banks in developing countries have already learned to reinvigorate their activities to compete with e-money issuers, and some have been successful. For example, between 2008-2011, <a href="http://www.economist.com/node/21554740">India’s ICICI bank undertook internal reforms</a>, enabling it to increase its share of the remittance market by over 50%.</p>
<p>At this stage, many of the features of mobile banking markets in developed countries are different to developing countries. Most obviously, in developed countries, banks tend to dominate the mobile banking market rather than e-money issuers. However, this may be changing as a variety of institutions that resemble e-money issuers begin to provide mobile banking services. For example, PayPal has established a mobile wallet that can be used to pay for online purchases on a computer, and has begun to provide bank-like features such as loans. Google is designing a similar wallet. As a result, mobile banking markets in developed countries may start to encounter some of the regulatory issues faced in developing countries. Several may be particularly relevant.</p>
<p>The first is the limit to which electronic money should be permitted to operate. Electronic money is a form of credit to be exchanged between customers, and so is not money per se. However, in some countries, it has become a virtual currency that operates outside of the regular banking system. For example, over the course of its existence (2007-212), M-PESA has supplanted traditional banking in Kenya. Now the annual number of payments conducted through M-PESA accounts for almost 58% of the number of electronic payments in Kenya. The regulatory issue here is the extent to which electronic money, as a currency, should be permitted to operate outside of the formal banking system.</p>
<p>The second is the regulation of e-money issuers, many of which are <a href="http://blogs.worldbank.org/psd/what-s-next-for-mobile-money-0">growing and diversifying into fields such as savings and insurance</a>. For example, GCash services in the Philippines allows a wide range of payments, covering domestic and international remittances, utilities payments, interest and amortisation on loans, insurance premiums, school tuition, micro tax payments and business registration, airline tickets, and online purchases. The question here is if e-money issuers are permitted to provide such a range of services, what regulatory infrastructure should have oversight of them?</p>
<p>The third is the regulation of customers’ funds. In most schemes issued by e-money issuers, customers pay cash in exchange for electronic money, which is then kept on trust for the customer to be later reimbursed when necessary. Trusts law has yet to be applied to these particular types of schemes and so it is unclear what obligations will be placed on the e-money issuer, as trustee, when dealing with such funds.</p>
<p>The fourth is fraud. In May 2012, it was revealed that staff members of a mobile money provider called Telco MTN Uganda <a href="http://www.finextra.com/news/fullstory.aspx?newsitemid=23759">stole around US$3.5 million of customers’ funds</a>. The Rwandan Telecom regulator, Rwanda Utilities Regulatory Authority, has also reported incidents of fraud, particularly when a person steals a PIN of a client and uses it to transfer money to their phones. These events have prompted many regulators and e-money issuers to consider ways to minimise fraud. For example, on 23 August 2012, Safaricom in Kenya announced that it would partner with a UK-based firm, Neural Technologies to implement a fraud control solution that will further safeguard its M-PESA platform.</p>
<p>It is clear that mobile banking will change the face of banking. As this form of banking develops, banks and regulators in developed countries may wish to study some of the experiences of developing countries. These countries may have mobile banking markets that may be older and more sophisticated than those that exist in developed countries, so providing some guideposts on regulatory issues and how to deal with them.</p>
<p>A version of this story first appeared on the *<a href="http://www.clmr.unsw.edu.au/">UNSW Centre for Law, Markets and Regulation portal</a>. *</p><img src="https://counter.theconversation.com/content/10191/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Greenacre is a Research Fellow at UNSW's Centre for Law, Markets and Regulation and a contributor to its online portal, which receives funding from the ARC. </span></em></p>In developed countries such as the United States, United Kingdom and Australia, mobile banking — describing the use of mobile phones to make financial transactions — is transforming banking from a physical…Jonathan Greenacre, Research Fellow in the Centre for Law, Markets and Regulation, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.