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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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Samsung in lock-step with its rivals?

Tonight Samsung will kick off the next round in the smartphone wars with the S10 range, writes ARTHUR GOLDSTUCK.

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When Samsung unveils the new S10 smartphone at an event in San Francisco today, it will mark the beginning of the 2019 round of World War S. That stands for smartphone wars, although Samsung would like it to be all about the S.

Ever since the launch of the Samsung Galaxy S4 in 2013, Samsung has held both technology and thought leadership in the handset world. Back then, Apple’s iPhone 5 was the last device from the American manufacturer that could lay claim to being the best smartphone in the world. With the 2013 launch of the iPhone 5s, Apple entered an era of incremental improvement, playing catch-up, and succumbing to market trends driven by its competitors.

Six years later, Samsung is fighting off the same threat. Its Chinese rival, Huawei, suddenly wrested away leadership in the past year, with the P20 Pro and Mate 20 Pro regarded as at last equal to the Samsung Galaxy S9 Plus and Galaxy Note 9 – if not superior. Certainly, from a cost perspective, Huawei took the lead with its more competitive prices, and therefore more value for money.

Huawei also succeeded where Apple failed: introducing more economical versions of its flagship phones. The iPhone 5c, SE and XR have all been disappointments in the sales department, mainly because the price difference was not massive enough to attract lower-income users. In contrast, the Lite editions of the Huawei P9, P10 and P20 have been huge successes, especially in South Africa.

Today, for the first time in half a decade, Samsung goes into battle on a field laid out by its competitors. It is expected to launch the Galaxy S10 Plus, S10 and S10 e, with the latter being the Samsung answer to the strategy of the iPhone XR and Huawei P20 Lite.

Does this mean Samsung is now in lock-step with its rivals, focused on matching their strategies rather than running ahead of them?

It may seem that way, but Samsung has a few tricks up its electronic sleeve. For example, it is possible it will use the S10 launch to announce its coming range of foldable phones, expected to be called the Galaxy X, Galaxy F, Galaxy Fold or Galaxy Flex. It previewed the technology at a developer conference in San Francisco last November, and this will be the ideal moment to reclaim technology leadership by going into production with foldables – even if the S10 range itself does not shoot out the lights.

However, the S10 handsets will look very different to their predecessors. First, before switching on the phone, they will be notable by the introduction of what is being called the punch-hole display, which breaks away from the current trend of having a notch at the top of the phone to house front-facing cameras and speakers. Instead, the punch-hole is a single round cut-out that will contain the front camera. It is the key element of Samsung’s “Infinity O” display – the O represents the punchhole – which will be the first truly edge-to-edge display, on the sides and top.

The S10 range will use the new Samsung user interface, One UI, also unveiled at the developer conference. It replaces the previous “skin”, unimaginatively called the Samsung Experience, to introduce a strong new interface brand.

One UI went live on the Note 8 last month, giving us a foretaste, and giving Samsung a chance to iron out the bugs in the field. It is a less cluttered interface, addressing one of the biggest complaints about most manufacturer skins. Only Nokia and Google Pixel handsets offer pure Android in the local market, but One UI is Samsung’s best compromise yet.

It introduces a new interaction area, in the bottom half, reachable with the thumb, with a viewing area at the top, allowing the user to work one-handed on the bottom area while still having apps or related content visible above. One UI also improves gesture navigation – the phone picks up hand movements without being touched – and notification management.

The S10 range will be the first phones to feature the latest Qualcomm Snapdragon 855 chip, at least for the South African and American markets. That makes it 5G compatible, for when this next generation of mobile broadband becomes available in these markets.

They will also be the first phones to feature Wi-Fi 6, the next generation of the Wi-Fi mobile wireless standard. It will perform better in congested areas, and data transfer will be up to 40% faster than the previous generation.

The phones will be the first to use ultrasound for fingerprint detection. If Samsung gets it right, this will make it the fastest in-screen fingerprint sensor on the market, and allows for a little leeway if one pushes the finger down slightly outside the fingerprint reader surface. It does mean, however, that screen protectors will have to be redesigned to avoid blocking the detection.

Not enough firsts? There are a few more.

Most notably, it will be the first phone range to feature 1 Terabyte (TB) storage – that’s a thousand Gigabytes (GB) – at least for the top-of-the-range devices. Samsung last month announced that it would be the first manufacturer to make 1TB built-in onboard flash storage. Today, it will deploy this massive advantage as it once again weaponises its technology in the fight for smartphone domination.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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IoT set to improve authentication

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By Sherry Zameer, Senior Vice President, Internet of Things Solutions for CISMEA region at Gemalto

As it rapidly approaches maturity, the Internet of Things (IoT) is set to continue a transformational trajectory, introducing new efficiencies in multiple fields by allowing measurement and analysis on a scale that has never been possible before. From agriculture to logistics, from retail to hospitality, from traffic to health, from the home to the office, the applications for monitoring ”things” are limited only by the imagination.

And South African (and African) businesses are showing abundant imagination in their practical deployments of IoT solutions in multiple settings, creating a better tomorrow through almost universal measurement and the introduction of new levels of convenience – including how to access locations, devices and services securely.

Any company, whether South African or international, should bear in mind that understanding consumer expectations can be the key to unlocking the full potential of IoT devices and related smart services.

According to Gemalto’s latest Connected Living study, improving the way consumers authenticate themselves to services is one of the most anticipated benefits of IoT, highlighting a desire for a more seamless and secure IoT experience.

Consumers are interested in advanced ways of authenticating themselves through automatic (based on behavioral patterns) or biometric techniques, lessening the need to have to intervene manually, all in the name of a much more streamlined authentication process. Smartphone manufacturers like Apple and Samsung have already placed fingerprint and facial recognition high on the agenda. There is also a widespread positive sentiment towards IoT’s potential for improving the quality of home life through connected, smart appliances.

Personalised services is something else that wins consumers over. In fact, a fluid, personalised and unified experience with continuity of services, together with security and privacy, is critical for the successful implementation of any technology.

And those types of services are today quite possible. With everything being connected – from small gadgets to digital solutions for large enterprises – IoT is no longer just a buzzword. That much is clear in a piece from Vodacom IoT managing executive Deon Liebenberg. Writing for IOL Online, Liebenberg provides insight into the sheer range of applications for IoT: the 20 use cases he cites range from the obvious, like transport and logistics, to the connected home and wearables; he even suggests tagging pets with IoT transmitters, for those who always need to know the whereabouts of the family cat.

Low-cost tags fitted to cats, dogs, lamp posts, shipping containers or other items are just one part of the puzzle, however. There are other two pieces; arguably the most complex part is the availability of communication networks in areas where there aren’t any WiFi networks, or indeed, anything else.

And that’s where the bigger takeaway from Liebenberg’s piece and other IoT trends articles becomes apparent. The communication networks are there, as are those tags: dedicated IoT networks (like LoraWAN, SigFox and narrowband IoT) are all available in South Africa.

So, too, is the third and final essential component. Software which is able to process the data generated by the tag and transmitted over the IoT network and into the internet. In this regard, there’s no shortage of solutions available from cloud providers like AWS and Azure; electronics giant Siemens, too, is in on the action, having recently launched a new cloud-based IoT operating system to develop applications and services for process industries, including oil and gas and water management.

This combination means it is quite possible right now to enable just about any use case. Business owners, who will know best how IoT can add value in their organisation, can now see their ideas becoming reality. Most crucial of all, IoT solutions delivering new levels of efficiency and convenience are not only possible, they are able to be offered with the simple and effective security that will drive consumer acceptance.

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