Ideas from an eclectic mind; Pursuing the 'Cashless' Dream

In the past few weeks I have continuously come across an interesting ‘hashtag’ on twitter; #Byebyeborodero. The tweets are usually expressions of frustration born out of having to make needless trips to the bank to make small payments for mundane things like traffic fines, local government levies, and all sorts of registration fees among others. While reading the tweets, I constantly identified with the frustration. An experience from early last year comes to mind. In March 2015, I was on a field assignment that required me to drive to and from various trading centres on the peripheries of Musanze town. On one of the drives, I was pulled up by a traffic policeman wielding a speed gun. I smiled well knowing that my last glance at the speedometer pointed at a mark below 50km/hr. I was in for a shock! After asking for my driving license, the policeman flashed his speed gun in my face with a reading of 46km/hr and then informed me that I was in a below 40km/hr zone! I was at a loss of words. Regardless of my repeated pleas of not having seen any speed limit signs, I still got a ticket! This was only the beginning of my woes. Time check: 5.30pm, Location: between Musanze town and Byangabo trading centre. I had two options; 1. Drive back to Musanze to make a bank payment before 6pm and then try to find the policeman to get my license before he signed off for the day or 2. Go about my business and wait to make the payment till the next day and then pick up the license from a nearby police post. I chose to deal with it the next day. Lo and behold, I ended up wasting about 4 hours of my morning waiting for the policeman who had chosen to keep the licenses at his home! The #Byebyeborodero campaign is championed by Lucy Mbabazi, arguably the most active twitter user (tweep) living in Rwanda. Lucy, who is the country manager for Visa, got a chance to bring her campaign to the attention of policy makers at a recent event with the governor of Rwanda’s central bank in attendance. In his remarks, the governor acknowledged that the government was in full support of the #Byebyeborodero campaign. This marks a significant change in Rwanda’s ‘top-down’ approach to policy implementation where government normally spear heads such campaigns and the general population follows suit. Adoption of technology works best when led by the end user without necessarily being pushed down by its creator or sponsor. That’s why social media such as Facebook, Twitter, Whatsapp and Instagram have been very successful. In November 2015, the ministry of youth and ICT launched the ‘Smart Rwanda’ master plan (2015-2020). The grand idea is to promote innovation in ICTs so as to contribute to export growth within the Rwandan economy. This is a novel concept and bares testament to the government’s established global reputation in providing leadership in policy formulation. It’s evident that ICT presents unique opportunities for developing countries such as Rwanda. While the industrial revolution was characterized by proprietary technologies and its benefits only trickled down to Africa as an afterthought in the 20th century, the ICT revolution is slightly different. The benefits of technologies hatched up in California’s Silicon Valley are permeating down to the furthest corners of the world in a matter of a few years and in some cases a few months. The near absence of historically large investments in technology infrastructure ironically makes Africa and other developing regions of the world more suited for the adoption of these new ICTs. The mobile phone is a perfect example. For businesses that did not have a fixed telephone line, the acquisition of mobile phones was a no brainer. The bigger companies that already had fixed lines had to go through a transition phase of where the mobile phones were reserved for top executives and then gradually making their way to lower level staff. Similarly, it is no accident that mobile money services have gained a rapid and far reaching uptake in the developing world. The most extensive service is M-pesa pioneered by Vodafone in 2007 and run on the mobile phone network of Kenyan Telco, Safaricom. In the past eight years, this service (under many different names) has spread all around the African continent and to far flung places such as Afghanistan and Eastern Europe. While M-pesa was envisioned as a simple airtime credit transfer service, it has since grown to become a ‘de facto’ banking service providing money transfers, bill payments and saving options. The challenge that remains is addressing the limitations created by the fact that Mobile Network Operators (MNOs) who own the networks on which the service runs are not recognized as deposit taking institutions such as banks and microfinance institutions. This legally limits the size of transactions the service can provide hence the relatively low maximum deposit and transfer thresholds. To harness the full potential of this mobile payments technology, I dare to propose a new banking model for Rwanda. Any of the bigger banks within the market can take the lead and reap the associated ‘first mover’ benefits. The brave market leader would develop a secure online banking platform that integrates with the available mobile money services. This would allow for continuity for the ordinary mobile money customer. The said bank would then gradually convert its existing branch network into online working spaces with computer terminals very similar to those of internet cafes. The key purpose of these branches would be to act as service support centers. These branches would also facilitate larger transactions that tend to require physical interaction of parties and completion of transactions with witnesses. Think of Car purchases, land and other property transactions. To allow for transition, these branches would continue to take cash deposits from their clients and convert them to electronic money in the same way mobile money works. The basic banking services would be enabled on the client’s mobile money platform on their phone. This business model is not a pipe dream; as early as 1997 a partly similar albeit branchless online banking service had been pioneered in Canada by Dutch banking conglomerate International Netherlands Group (ING) under their online banking brand name, ING Direct. Today offshoots of this service such as Tangerine and Capital one 360 are thriving in North America and Europe. Due to the strong regulation surrounding banks, people are more willing to trust them with their money. This uniquely empowers banks to partner with the Mobile Network operators and lead the revolution that is ‘cashless’ mobile phone based payments. The author is a consultant and trainer specialising in Finance and Strategy. He is based in Kigali

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Ideas from an eclectic mind; Pursuing the 'Cashless' Dream