Mobile Payments –  Almost every day, we hear about new FinTech startups that are springing up all over the world. As most of them have technology experience but almost zero experience in the banking or payment space, this makes this game more interesting. Because of their technology experience, the new entrants are making sure their products are best of class, with artificial intelligence, machine learning, blockchain, and data science at the bottom of every solution.

Did you remember my post from June 2014? You can find it here. Will banks ever be successful in mobile money or payments?

Lets Just Get Started – Payments and Banking

In areas where traditional banking holds sway, the focus often intensifies on fintech adoption for enhanced mobile money and financial inclusion, propelling a market shaped by agent-driven initiatives. Conversely, in robust banking landscapes, fintech’s momentum primarily accentuates a merchant-driven framework, emphasizing streamlined payment systems and seamless international remittances. The ever-evolving landscape of mobile payments witnesses the emergence of numerous cutting-edge

FinTech startups worldwide, boasting technological prowess yet limited exposure in the banking or payment sector. This blend of technological proficiency and minimal financial expertise continues to enrich the competitive sphere, fueling the development of innovative products infused with artificial intelligence, machine learning, blockchain, and data science at their core. Mobile Financial services and the new technologies along with futuristic techs will make this game gets more interesting though. Technologies like 5G, 6G(still a theoretical point), quantum computing will make sure that there is no paper or even plastic money at all in the near future. 

Indeed, the convergence of mobile financial services with emerging technologies is reshaping the landscape of digital transactions and paving the way for a cashless future. Here are some ways these technologies are influencing the trajectory of the financial industry:

1. 5G Technology: With its faster data transfer speeds and lower latency, 5G technology is facilitating quicker and more reliable mobile transactions. It enables seamless connectivity and supports the growth of various financial services, including mobile banking, mobile payments, and real-time transactions.
2. 6G Technology: While still in the theoretical phase, the potential of 6G technology is expected to revolutionize mobile financial services even further. Its projected capabilities include ultra-fast data speeds, improved connectivity in remote areas, and enhanced support for advanced applications like augmented reality (AR) and virtual reality (VR), which can potentially revolutionize the way financial services are delivered.

Enjoyed a great panel on #fintech #mobilemoney & products for next billion consumers with industry leaders. In April met excellent leaders from west and north Africa at  NGT Summit in Pretoria – South Africa and now in 1st week of May met with another set of good people in Nairobi-Kenya at dot finance Africa. Here is the link for my presentation at South Africa.  Africa is far ahead from rest of the world.

Mobile Money and Mobile Payments

Cutting-edge innovations will elevate Fintech excitement and futuristic technology will appeal to new heights. In regions where traditional banking is already well-established, the growth of fintech in the mobile money and financial inclusion sectors often takes a different trajectory. The focus shifts toward enhancing banking services and enabling more efficient financial transactions. Here’s how the dynamics play out:

Africa is the land of mobile money, and mobile is the most frequently used and widely accepted technological device of any other. Financial services are a key need for most people due to almost negligible banking penetration, and it makes sense to enable mobile devices with a set of financial tools and features as mobile handset penetration is more than 10 to 15 times higher than banking. The finance sector can take advantage of mobile devices to penetrate all classes of society, so the birth of mobile money

1. Mobile money services were essentially for unbanked and underprivileged customers.
2. Mobile money is supposed to improve life for the lower segment of society by
   1. Domestic remittances from cities to villages
   2. Availability of agents to withdraw cash
   3. Building Savings Culture
3. Acceptability of mobile money under Mobile Financial Services was the biggest breakthrough.
4. The role of a mobile money agent is crucial and very critical for the success of the service.
5. Who can be an agent and how agent distribution needs to be plotted on a city or country map are also very critical.
   1. Mobile money refers to payment services operated under financial regulation and performed from or via a mobile device. Instead of paying with cash, a check, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods.
   2. In developing countries, mobile money solutions have been deployed as a means of extending financial services to the community known as the “unbanked” or “underbanked,” which is estimated to be as much as 50% of the world’s adult population.
6. How Mobile Money Improves the Lives of the Lower Segment of Society
   1. Mobile money is mostly used for domestic remittances. Remittance transactions are usually from cities to villages. They emanate from the need for the working class to take care of their kin in rural areas. International remittances are also taking a good share of this pie.
   2. Mobile money thrives on accessibility of services, and a wide agent network in both cities and rural areas is required.
   3. Savings clubs have been a recent addition to mobile money services, and this has assisted club members to save up in an easy and electronic way outside the banking system.
7. Acceptability of Mobile Money
   1. Over the years, the acceptability of mobile money as a payment medium has improved, with most economies embarking on a cashless society drive to reduce dependence on paper currency.
   2. Most vendors, retailers, and transport operators accept mobile payment as an alternative to cash due to its elimination of cash handling expenses and risks.
   3. The introduction of NFC-driven payments has revolutionized the market for micropayments.
8. Role and importance of agents
   1. The success of mobile money heavily depends on accessibility.
   2. The agent is the primary access channel for mobile money as it conducts agent-centered transactions like registrations, cash in, and cash out transactions.
   3. Agents trade mobile money for a commission.
   4. They also act as the first point of contact for subscribers, and it is prudent for a mobile money operator to invest in agent education.
9. Who can or should be an agent?
   1. Agent qualification criteria are defined by the operator after considering the requirements of the regulator.
   2. Individuals and companies can qualify to be agents, and they have to meet the required KYC requirements.
   3. The operator’s agent officers are responsible for recruiting and managing relations with the agents.
   4. The density of agents has to be predefined by the operator to maintain the profitability of agents as well as their accessibility to subscribers.

Empowering Financial Inclusion Through Fintech

Mobile Money & Mobile Payments

Although Mobile Money had been designed as a peer-to-peer payment system, it has gone much beyond the basic idea, and as of today.

It helps with utility bill payments, airtime topup, micro-savings, micro-loans, etc., and this forms mobile payment ecosystems. Africa, especially the eastern and southern parts, is the home of mobile money. Mobile payments are the most frequently used and widely accepted technological payment instruments.

While financial services are a requirement for many, not everyone can easily avail themselves of the services offered by traditional banking institutions. Developing tools and features for mobile devices that can assist with financial management is a wise move. The reason behind it is that a significantly larger number of individuals possess mobile devices in comparison to those who possess bank accounts or dental hygiene equipment.

1. Fintech Innovation in Banking Services: In markets with strong banking infrastructure, fintech companies often concentrate on innovating banking services to provide customers with more convenient and technologically advanced solutions. This includes developing mobile banking applications, optimizing online banking experiences, and integrating advanced security features to ensure a seamless and secure financial experience for customers.
2. Digital Payment Solutions for Merchants: Fintech solutions geared towards merchants gain traction in robust banking markets. These solutions typically include digital payment platforms that streamline transactions for businesses, offer secure payment gateways, and provide data analytics to help businesses understand consumer behavior and trends. This promotes a more efficient and secure way for merchants to manage transactions and sales.
3. International Remittances and Cross-Border Transactions: Fintech platforms that facilitate international remittances and cross-border transactions also find a strong foothold in markets with robust banking systems. These platforms offer faster, more cost-effective, and secure ways for individuals and businesses to send and receive money internationally, thus catering to the needs of global businesses and expatriate communities.
4. Integration of Fintech with Established Banking Institutions: Fintech companies often collaborate with traditional banking institutions in strong banking markets to enhance the overall financial ecosystem. This collaboration may involve integrating fintech solutions into existing banking systems, thereby offering customers a seamless experience that combines the convenience of technology with the reliability and trust associated with established banks.
5. Regulatory Compliance and Security Enhancement: Fintech companies operating in strong banking markets prioritize regulatory compliance and security enhancements to build trust and credibility among users. These companies focus on meeting regulatory standards, implementing robust security protocols, and adopting measures to protect customer data and financial transactions.

Conclusion – In areas with established traditional banking, the development of fintech within mobile money and financial inclusion takes a distinct path. Emphasis moves to improving banking services and facilitating streamlined financial transactions. Here’s how this scenario typically unfolds: In such markets, the convergence of fintech with the robust banking sector fosters an environment where technological advancements complement the strengths of traditional financial institutions, ultimately leading to a more integrated and efficient financial ecosystem.

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Feedback & Further Question

Do you need more details or have any questions on topics such as technology (including conventional architecture, machine learning, and deep learning), advanced data analysis (such as data science or big data), blockchain, theoretical physics, or photography? Please feel free to ask your question either by leaving a comment or by sending me an  email. I will do my utmost to offer a response that meets your needs and expectations.

Points to Note:

it’s time to figure out when to use which tech—a tricky decision that can really only be tackled with a combination of experience and the type of problem in hand. So if you think you’ve got the right answer, take a bow and collect your credits! And don’t worry if you don’t get it right.

Books Referred & Other Material referred

• Self-Learning through Live Webinars, Conferences, Lectures, Seminars, Open Internet research, news portals and white papers reading
• Lab and hands-on experience of  @AILabPage (Self-taught learners group) members.

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