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Mobile Banking In Africa Without Banks

Last night, the "60 Minutes" news magazine broadcast an interesting segment about mobile banking in Kenya without banks. Since 80 percent of citizens have mobile phones, the country' took the innovative approach of allowing consumers to easily and securely pay for products and services via their mobile phone provider.

Meet M-PESA. Mobile banking without banks.

It is possible. It can happen. No bank accounts. No credit reports. No prepaid cards. No payroll cards. No digital wallets. No payment processors. And, Kenyans don't need the latest Apple iPhone or Android Galaxy phone. A far simpler system. Safaricom, the Kenyan mobile service provider, launched M-PESA in 2007. The mobile payments system was designed for the most basic phones with text messaging capabilities. A smart approach that puts consumers' needs first.

The segment highlights several issues:

  • All digital wallets are built based upon traditional banks and payment processors. No so with M-PESA
  • Silicon Savannah: digital innovation is happening globally, and not only in Silicon Valley
  • Banking deserts: traditional banking, with branch offices and tellers, comes with a cost structure making it difficult to provide services to poor people. Yes, there are banking deserts in the USA, too. (Bankers prefer to label consumers in banking deserts as unbanked or underbanked.) Read about HOPE which servers farmers in the USA
  • We live in disrupting times. Online services like AirBnB and Home Away have disrupted the hotel industry. Services like Lyft and Uber have disrupted the taxi industry. Perhaps, the banking industry is next, given its hold on politicians, politics, government regulation, and the economy by "too big to fail" banks or "too big to jail" bankers
  • Mobile devices are marketed in the USA like cars, with slick advertisements that imply: in order to be happy and productive, consumers must have the latest device. The Kenyan M-PESA system proves otherwise.

Watch the 60 Minutes segment, "The Future of Money" or read the transcript. What are your opinions of M-PESA? Of banking deserts?


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