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Mobile networks holding back financial inclusion

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Out of 7.5 billion mobile users, two billion adults worldwide are unbanked. Although banking institutions offer solutions to bridge the gap, little impact is being achieved on the number of unbanked, says BRIAN RICHARDSON, founder of WIZZIT.

Financial inclusion is a key enabler of sustainable economic and social development. Initiatives by the United Nations and the World Bank Group continue to drive financial inclusion and it has become a priority for regulators and policymakers worldwide.

Out of 7.5 billion people and a mobile phone in almost every pocket, two billion adults worldwide are unbanked. Financial service providers (FSPs), FinTech’s and mobile network operators (MNOs) offer superior solutions to bridge the gap. However, despite the size, reach and power of banks and MNOs, little impact is being achieved on the number of unbanked.

Regulation is often blamed as a major barrier. What doesn’t help either are statements from European Central Bank executive board member Yves Mersch, who has given a spirited defence of cash, praising its ability to facilitate privacy, equality and security, insisting there is “no viable alternative”.

Digitalisation is the key to financial inclusion. Basic transactional accounts should be a birth right, together with a concerted effort by governments to remove cash and to support every effort towards financial inclusion. Illegal and illicit activities such as money laundering and funding of terrorist activities are facilitated predominantly through cash. The sooner we accept this fact, the better. What is urgently required is the removal of cash and the enforcement of policies that promote simple and seamless access to bank accounts for all. This provides full audit trails of every single transaction.

MNO’s have the reach and understand the power of marketing. Banks understand compliance and systems. As a leading global FinTech, WIZZIT International works effectively with all leading MNOs and banks in providing digital financial services. However, instead of embracing mutually beneficial partnerships, MNOs in some countries refuse to give banks access to their Unstructured Supplementary Service Data or USSD gateways.

The bulk of mobile phones in Africa are feature phones and the USSD channel provides functionality that is quick, safe and easily accessible from all mobile phones. For the vast majority, USSD will remain the clear channel of choice for many years to come. To date, it is the most successfully integrated and widely adopted technology for financial services in emerging markets and the lower end of the market.

MNOs in some countries seem to think that by denying banks access, they can create a bigger market for their own financial service offerings. This is most evident in countries like Angola and the Democratic Republic of Congo where the unbanked populations are 71% and 89% respectively. This abuse of power is tantamount to anti-competitive behaviour and is creating a major barrier to financial inclusion, something communication regulators should be aware of. The lack of progress in these and other emerging markets may well be the result of the prejudiced practices of Telcos gatekeeping access to the USSD gateway.

As smart phones become more affordable, so will the popularity of app-powered platforms as a channel for financial services. However, until there is a dramatic decrease in the cost of smart phones, the number of feature phones will remain at around 70%. USSD is still therefore critically important and banks will depend on MNOs for access – unless as has happened in some markets, banks get their own MNVO licence and control their own destiny.

A bigger pie or a bigger slice? 

The boundaries between the offerings of banks and MNOs are becoming increasingly blurred – yet the playing fields are not level. In some West African countries, for example, banks are by law not allowed to charge customers for deposits to bank accounts. MNOs, however, are unaffected by these laws and have the freedom to charge for deposits into mobile wallets.

Starting out as a convenient way to buy airtime and send money to family and friends, the financial services offering of MNOs has broadened to include offerings such as savings and loans. This is taking the banks on directly.

It will be argued that banks cannot be all things to all people and effectively service all segments of the market. It will also be argued that bank regulators are not there to protect banks from innovative competition from non-banks such as MNOs, Apple, Samsung, Google, Amazon, Pay Pal and Alipay. However, where governments and global agencies are putting enormous pressure on banks to drive financial inclusion, this is made increasingly difficult where banks are denied access to channels such as USSD.

To collaborate or not to collaborate

The Mobile Banking industry globally started some 12 years ago with WIZZIT (South Africa), Mpesa (Kenya) and GCash (Philippines) recognised as the early pioneers. It is interesting to note that there has not been a single successful partnership between banks and MNOs despite numerous attempts.

Perhaps a truly strategic collaborative model is still a ways off and competition between banks and MNOs is here to stay – at least for the foreseeable future. The question is whether or not this competition is supporting global efforts on financial inclusion through digital financial services.

The way forward

Digitisation and mobile penetration will continue to drive the growing trend of MNOs and FSPs infiltrating each other’s space to gain traction in new services. However, these rapidly blurring lines are bound to spark territorial claims regarding customers. This could impede financial inclusion if it lacks the required consumer protection measures and regulations.

Governments must regulate competitive behaviour amongst all role players and promote cross-sector collaboration towards financial inclusion. It is essential for countries to enforce policies that promote responsible financial access, financial capability, innovative products and delivery mechanisms. Any initiative that promotes financial inclusion should be praised and much work needs to be done.

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Password managers don’t protect you from hackers

Using a password manager to protect yourself online? Research reveals serious weaknesses…

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Top password manager products have fundamental flaws that expose the data they are designed to protect, rendering them no more secure than saving passwords in a text file, according to a new study by researchers at Independent Security Evaluators (ISE).

“100 percent of the products that ISE analyzed failed to provide the security to safeguard a user’s passwords as advertised,” says ISE CEO Stephen Bono. “Although password managers provide some utility for storing login/passwords and limit password reuse, these applications are a vulnerable target for the mass collection of this data through malicious hacking campaigns.”

In the new report titled “Under the Hood of Secrets Management,” ISE researchers revealed serious weaknesses with top password managers: 1Password, Dashlane, KeePass and LastPass.  ISE examined the underlying functionality of these products on Windows 10 to understand how users’ secrets are stored even when the password manager is locked. More than 60 million individuals 93,000 businesses worldwide rely on password managers. Click here for a copy of the report.

Password managers are marketed as a solution to eliminate the security risks of storing passwords or secrets for applications and browsers in plain text documents. Having previously examined these and other password managers, ISE researchers expected an improved level of security standards preventing malicious credential extraction. Instead ISE found just the opposite. 

Click here to read the findings from the report.

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MWC: Next generation of inflight connectivity to be unveiled

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Next week at Mobile World Congress, the Seamless Air Alliance will reveal progress on its mission towards enabling the next generation of inflight connectivity. This follows a significant start for the Alliance, which has seen membership increase five-fold since the first meeting in June of last year. The Alliance has a new research laboratory setup and continues progress through its three working groups, writing specifications for the technology, requirements, and operations.

These developments represent a huge leap towards the goal of making connectivity as easy and enjoyable in the skies as it is on the ground. Appearing as part of the Airbus stand (Hall 6, stand 6G34), the Seamless Air Alliance will reveal specification topics that have been completed and published to its membership.

“The passenger experience with inflight connectivity remains one of the great technology challenges. From Day One we have been determined to deliver on our mission to bring industries and technologies together to make the inflight internet experience simple to access and a delight to use,” said the Alliance’s Chief Executive Officer, Jack Mandala.

“I have been tremendously encouraged by the enthusiastic and committed response we have seen and the widening areas of expertise we can call upon as more and more companies and organisations continue to join us,” he added.

Announced during MWC 2018, the Seamless Air Alliance has since grown to twenty-three membercompanies with more than one-hundred key personnel from across the membership participating in its three working groups, with numbers continuing to increase.

The Seamless Air Alliance was created by founding members Airbus, Airtel, Delta Air Lines, OneWeb and Sprint, and quickly joined by Air France KLM, Aeromexico, and GOL Linhas Aereas Inteligentes and global technology leaders including Astronics, Collins Aerospace, Comtech, Cyient, iDirect, Inmarsat, Intelsat, Latecoere, Nokia, and Panasonic. 

Today, the Alliance is pleased to announce five additional new members: Adaptive Channel, Etihad Airways, GlobalReach Technology, Safran, and SITAONAIR.

“We are extremely pleased to have these companies join and be a part of the companies driving the next generation of connectivity.” said Mr Mandala.

The Seamless Air Alliance will enable travelers boarding any flight, on any airline, anywhere in the world, to use their own devices to automatically connect to the Internet with no complicated login process nor paywall to scramble over.

The Alliance is also announcing the release of a new research study on the economic benefit of standardization on the inflight connectivity market at Mobile World Congress. This report is available for download at https://www.seamlessalliance.com/publications/

The Alliance is moving rapidly towards an expected demonstration of the technology later in 2019 and anticipates massive interest in Barcelona from the whole communications eco-system.

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