In 2014, the Ivorian government began allowing high school students to pay their tuition fees electronically. Today, about 94% of the country’s 1.5 million high school students pay their tuition fees via mobile money, according to the Education Ministry.
Part of the project was aimed at tackling corruption, but it quickly proved to be a stimulus for mobile money services, including a whopping 83% of the country now uses (link in French.) Orange (40.1%), MTN (34.9%) and Moov (25%) derive their profits mainly from transaction costs, a fraction going to the State in the form of ‘taxes.
Traditional banking services are losing their appeal amid this massive adoption of mobile money in this West African country. The government’s efforts since 2012 to promote financial inclusion and the use of ATMs by removing basic bank account fees have yielded paltry results. As banks struggle to retain existing customers and persuade new customers to sign up, banks The figures suggest that only 19% of the country’s 25 million people have a bank account, most of them civil servants, up from just 10% in 2011.
Local commercial banks have failed to meet the needs of ordinary customers, explains Serge Dan Kouadio, financial expert and lecturer in economics and development at the University of Bouaké, in Côte d’Ivoire’s second city. .
“Banks have built their style of service around corporate citizens. Their branches are few, their ATMs are not accessible to many users and their working hours are limited, ”explains Kouadio. “A lot of people, mostly regular customers, are cut off from their services, and this is the gap that mobile money is bridging. “
Mobile money offers convenience and customer service
Since the launch of MPesa in Kenya in 2007, mobile phone money transfer service applications have been widely adopted across Africa by tapping into the continent’s huge unbanked population.
Traditional banks do not sit idly by. They have started to insert mobile money services, such as popular cross-border payment solutions, into their traditional banking offerings.
But they have a lot of catching up to do. Kouadio says the ease of use of mobile money services is particularly appealing to people who lack financial literacy and need to send money to remote villages that do not have bank branches. Many users perform such operations in nearby stores and kiosks in a faster and more convenient manner. Transactions can also be done directly from mobile phones, he adds.
Yet even before the advent of mobile money, a majority of Ivorians said they did not trust their local banks, according to to a 2016 World Bank report. Slow services, faulty or empty ATMs, delays in issuing bank cards, and difficulty getting a loan are some of the reasons locals were not happy with the financial services on offer.
The president of the Ivorian Consumers’ Federation (FICR), Soumahoro Ben N’Faly, says banks have struggled to adapt to people’s lifestyles as mobile money services have.
“I have the impression that banks are not observing society enough to understand how attitudes are changing and how to respond appropriately,” says N’Faly. He says banks still operate in the usual way, welcoming customers to their offices who would spend hours in a queue waiting to be served.
Another attraction offered by mobile money operators are the short term loan facilities. Once a registered user regularly operates their account, they are eligible for a 30-day consumer loan of up to 100,000 CFA francs ($ 200).
In some countries like Kenya for example, regulators have cracked down on predatory loans offered by apps. But the Ivorian government has remained silent on mobile money lending, perhaps because of the massive enthusiasm it has generated and the low fees associated with it.
In the absence of a bank loan, mobile money credit acts as a buffer against the monthly economic stress that many families face in the country.
“I used these loans. About 1% of the interest is attached to it, which you don’t even feel, and you get the loan instantly in your mobile wallet after you apply, ”explains Antoinette Ahou, a high school teacher based in Abidjan. “Although 30 days is short enough to pay off, it’s better than banks that don’t even give you in the first place.”
An opportunity missed by the banks
Another major opportunity missed by banks is the distribution of debit cards in the country. While many transactions in Côte d’Ivoire are done in cash, banks may have played an important role in steering the economy towards greater use of debit cards.
This lack of innovation means that while point-of-sale machines are popular in some countries in the region, like Nigeria and neighboring Ghana, they are so rare in Côte d’Ivoire that many citizens don’t even have them. seen.
“Card payments might have been a solid option, even in the wake of mobile money, if the banks had persuasively imposed this culture on our financial attitudes. They did not do it, ”explains Yao Kouamé Francis, journalist for the state newspaper Fraternité Matin. “When you open a bank account, they promise to issue a debit card within two weeks. But most of the time, it takes anywhere from one to three months. Users are in too much of a hurry to wait. There are other alternatives now.
Mobile money, on the other hand, “is available everywhere and every time”.
As a result, mobile money has created a new economy in the country, providing business and employment opportunities for many people, young and old, who make a living by running kiosks or business centers. that provide mobile money services for people to transfer or deposit money, pay utility bills, purchase airtime, and more.
Banks are trying to catch up
To compete, several commercial banks have conducted street-level campaigns to expose their services to potential clients. Almost all of the country’s commercial banks have gradually included mobile money-friendly applications or facilities with their offerings, with the aim of preventing their users from seeking the services elsewhere or attracting new customers.
A member of the country’s national association for banks and financial institutions admitted that banks need to do better when it comes to customer service and ATM repairs. But he said consumers may not be aware of the strict rules banks are required to follow when providing financial services, such as obtaining proof of collateral when approving loans. Even with these rules, “there are millions of losses on the necks of several banks,” said the person, who asked not to be named because she is not allowed to speak to the media.
He believes that banks will continue to play an important role in the country’s economy in the future. This is largely due to regulatory constraints surrounding mobile money, such as the daily limit of 1.5 million CFA francs ($ 3,000), and the fact that a bank account can help with administrative purposes such as visa applications, payment of salaries and private contracts.
He also points out that banks offer checking facilities, which are still used by businesses large and small. “Every citizen would need a bank in one way or another,” he says.
It is true that while mobile money users do not deal directly with banks, the store and kiosk owners who run the business keep most of their funds in the bank. But while banks hope to act as a reservoir for mobile money, they may continue to lose individual customers who have found new love in the mobile world.
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