The great mobile money transfer (MMT) debate has become so synonymous with EcoCash that I could not resist naming this article “The Great EcoCash Debate” instead of “The Great Mobile Banking Debate.”
Financial Sector Spotlight with Omen Muza
It has largely been dominated by Econet’s loud and decidedly emphatic voice while banks, under the banner of the Bankers’ Association of Zimbabwe (BAZ), have adopted a more conciliatory tone.
The bone of contention apparently, is one of integration, interconnectivity or interoperability if you like.
According to banks, Econet insists that in order to grant them access to its EcoCash platform, they must discard their proprietary mobile banking products.
But EcoCash is not the first provider of mobile banking services; several players already had products on the market, banks contend. This probably explains why banks that had no proprietary mobile banking products such Agribank and Stanbic found it easy to integrate with EcoCash while the likes of FBC Bank (Mobile Moola) and CABS (textacash) have not had it easy.
Econet’s counter-argument is that having invested so much money in building its platform, it’s not only unfair, but also unreasonable for those who don’t bring much to the table by way of customer numbers to simply plug into EcoCash and play, gaining immediate access to Econet’s massive customer database.
Apparently, other Mobile Network Operators (MNOs) – Telecel and NetOne – are agreeable to banks accessing their communication gateways, we are told. I suppose that with no products to rival Econet’s EcoCash, they have nothing to lose and would give away anything just to dismantle EcoCash’s competitive advantage.
However, banks insist that Econet’s refusal to open its Unstructured Supplementary Service Data (USSD) communication gateway confers it with an unfair advantage.
“Everything that is licensed is a public good which should be available to all interested stakeholders. We can’t all build our own roads and airports, but we can pay a fee to access roads and airports built by others.
All banks are asking for is that the mobile banking space should be opened up so that interested players can get the opportunity to compete freely,” say George Guvamatanga, BAZ president.
While echoing Guvamatanga’s sentiments, immediate past president of BAZ John Mushayavanhu was, however, less conciliatory.
“I have no problem with EcoCash, but with Econet. I can take EcoCash head on any time. What we want is an open gateway and it’s a battle which we have almost won.”
For some time, this debate has generated more heat than light, but it now appears as if some light is finally emerging at the end of the tunnel.
FBC Bank for instance, has been negotiating with Econet for integration of Mobile Moola with EcoCash in order to enable FBC Bank customers who are also Econet subscribers to enjoy the best of both worlds in mobile banking. Econet is reportedly agreeable to the request, subject to a fee of $0,05 per message.
The interesting thing is that while banks pine for access to Econet’s MMT product, they openly acknowledge that EcoCash poses a huge competitive threat to their own value propositions.
“Strategic partnerships are a key factor in establishing financial reach which ensures viable financial inclusivity, in an increasingly competitive industry which mobile network operators have also entered with vigour and enthusiasm,” said John Mushayavanhu in a statement accompanying FBC Holdings’ financial statements for the year 31 December 2012.
While this discourse unfolds, where is – or rather- where should the regulator be in all this? I have, in a previous instalment of this column, made the case for mobile banking regulation and there is no doubt that the authorities are keenly aware of that imperative.
With mobile banking on the rise, central banks have no choice, but to explore new ways of streamlining the process for both users and telecom operators, while ensuring that the banking sector is not lost in the process.
Tanzania’s central bank, for instance, recently announced measures to tighten control over mobile money, aimed “at improving the oversight of mobile payments and the service providers that facilitate them”. The bank said that the new regulations were drafted “in a bid to enhance the sector’s stability and security”.
In the next instalment , FSS engages with a banking industry professional, who argues that the great discourse on mobile banking has been hijacked by vested interests, some of which are grounded in uninformed positions, making banks look like the villains of the piece.
There is another side to this story, which has not been well told, she argues.
Feedback: email@example.com. Omen N Muza writes in his personal capacity.