Research shows that much of the population in Africa has limited access to financial services. As incomes in the continent rise, that has meant that it’s become one of the most attractive places for banking opportunities.
Mobile money has been on the increase in this continent with deployments increasing 39% annually in the past decade. Both transaction volume and the value of mobile money have also witnessed double-digit growth. Some of the reasons for the growth of mobile money can be attributed to a lack of formal savings or credit, something that is prevalent in emerging markets as well as the rise of the telecom sector.
That apart, non-participation in the formal economy owing to social and economic reasons also pushes the population towards digital finance. The pandemic further accelerated the pace of digital/ mobile money adoption especially as African governments made it easier to leverage mobile money by reducing the barriers to sign up. In Rwanda, for example, mobile money transactions increased fivefold during a lockdown as governments eased regulations and reduced/waived transaction fees. In Malawi, 2019 IMF statistics reveal that fewer than 170 of every 1,000 adults have deposits in a bank account, whereas nearly 600 have a mobile money account.
The mobile money boom presents tremendous opportunities to telecom players to leverage the burgeoning market. Research also shows banks looking to partner with telcos to add value to their portfolio of services and grab a share of the mobile money boom. Mobile money is making financial services more accessible without the dependencies on traditional infrastructure.
As Africa becomes the world’s hottest place for mobile money, here are a few things for telecom operators to consider:
Keeping security top of the mind
Telcos have to keep security top of their mind to drive mobile money acceptance and adoption. Ensuring secure transactions by enabling next-gen impenetrable, robust, and resilient SMS firewalls will play a crucial role to ensure secure transactions since authentication messages and OTP’s are sent through these messages.
That apart, they need to ensure that no revenue leaks and illegal traffic flow through their routes. Identifying and blocking grey route traffic will assume paramount importance to prevent fraud, block illegal traffic and increase customer reliance on their services. Technologies such as Real-time monitoring, System-level filtering, and Intelligent SMS Firewall Rules will be of immense help to overcome the grey route and security challenge for telecom operators.
Friction-less customer experiences
To emerge as mobile money winners, telecom operators have to ensure that they deliver a frictionless payments experience to their customers. Whether it is the security of transactions or the ease of setting up digital identities, telecom operators have to look at ways to improve customer experience by identifying customer pain points and challenges.
Enabling facilities such as eKYC to simplify the verification process, make it more accurate and seamless not only enhances the authentication process but also makes the process more secure. Technologies such as AI and Machine Learning can further help in optimizing the KYC process and simplify identity and document verification.
Elevating network security
Network security is essential for telecom operators to win the mobile money wars in the African continent. With the promise of 5G on the horizon and technologies such as AI and IoT becoming commonplace, telecom operators have to make sure that the network connection and endpoints are secured appropriately.
While legacy networks will struggle to meet the modern-day network security requirements, looking at network virtualization and other strategies such as network slicing, more detailed and individual authentication processes, and technologies that identify changes and anomalies in traffic or behaviour patterns become important areas to consider.
Update the technology stack
One of the challenges that telcos need to navigate in Africa is that of the unavailability of skills in modern technology and a heavy reliance on ageing technology. Inadequate IT infrastructure and insufficient skills and experience with modern-day telecom tech can impact the pace of growth when telcos want to increase their portfolio and cash in on the mobile money trend.
Updating the technology stack to drive better security, ensuring end-point security, developing applications that are robust, fast, thoroughly tested, and optimized for speed and security, network infrastructure security and zero-trust application security architectures can help telcos expand their capabilities to increase their service portfolio.
These considerations apart, telecom players will also have to navigate the challenge of SIM jacking, SMS phishing, and SMA Spoofing to prevent information manipulation. Enabling proactive route testing, home routing and rerouting capabilities come in handy here.
Analysing the information exchanged between two parties to identify discrepancies proactively also becomes important for ensuring secure transactions. AI-ML-based voice firewalls, features such as global tile blocking, legal interception, blocking messages based on system-level filtering, intelligent SMS firewall rules, map operation codes, Live GUI, and CDR for analysis, etc are other ways to ensure greater security to prevent fraud and unhappy customers.
Currently, there are about 100 million active mobile financial services customers across Africa. The total MFS opportunity in this market is close to $2.1 billion or approximately two per cent of total African banking revenue pools. While banks identify ways to increase their footprint and get a share of this pie, telcos already have a large number of unbanked people on their networks. The ones to win the mobile money game will be those who can roll out the right products according to customer needs more securely. Telcos have already got one piece of the puzzle sorted. They can win the latter with advanced and cutting-edge telecom solutions with ease.