Mobile banking is not new to East Africa. M-Pesa, originally pioneered by Vodofone with DFID, has been working in Kenya and Tanzania since 2007 through Safaricom and Vodacom respectively. The same project was also implemented in Afghanistan and South Africa.
On Friday, Diamond Trust Bank announced that it would be introducing a new and comprehensive version of a mobile banking system to Tanzania early next year.
The new system, dubbed Touch 24/7, will make new features available to clients on their mobile devices, such as balance inquiries, statements of account, account reminders, and connectivity to Internet-based banking.
Two points make this good news:
- First, that Vodafone’s M-Pesa in Tanzania had a bumpy start but is seeing increased demand in mobile money transfers (see comments on its performance between 2008 and 2009); so people seem to want to use this kind of service in Tanzania.
- Second, that M-Pesa was introduced by a mobile phone service provider, and money transfers would be administered primarily by the provider; Touch 24/7 will be introduced by a commercial bank, which provides increased and improved banking services to clients.
However, while the product itself – mobile banking services – is likely to improve due to the entry of an additional player in the mobile banking industry, what can both companies, Vodafone and Diamond Trust Bank, do for subscribers primarily using M-Pesa to transfer their money? While M-Pesa has primarily been a money-transfer product, Touch 24/7 is set to introduce the same with a money-storage component in its release. Therefore, achieving the full utility of Touch 24/7’s services will require a shift in behaviour of mobile banking clients and subscribers. How sure can we be that (1) this shift will occur, and (2) that people will be able to navigate through their Touch 24/7 bank accounts easily and intuitively?
Considering these questions, what opportunities does Touch 24/7 create for youth? From my perspective, it seems this will make it very easy to do business. If the product is as far-reaching and accessible as M-Pesa (including rural villages), then the prospect of starting a formal bank account without going to a branch means more people from the informal sector can be account for. It also means that small-business transactions that used to involve physical cash can be recorded, and can later be used to review performance and do better. Depending on whether Touch 24/7 further develops services for savings accounts, I think this process of making formal procedures account for informal industries has vast potential in the East African region.
Related links:
- TradingMarkets.com article on Touch 24/7
- Diamond Trust Bank homepage
- Performance comment on Consultative Group to Assist the Poor (CGAP)
- April 2008 SlashPhone.com article on M-Pesa introduction in Tanzania
- M-Pesa description by Wikipedia
- Previous Vijana FM reports on mobile technology
