Mobile Banking Sees Success in Senegal
Financial services are reaching the world’s poorest by mobile phone.
Thanks to a mobile banking system launched last month in Senegal, people with no previous access to bank accounts were able to watch the World Cup via satellite services that they paid for electronically with a few taps on a mobile phone. The service is a clear sign that mobile banking is taking off in Africa, giving some of the world’s poorest people a way to access financial services.
The system, which is called Yoban’tel by Obopay and was launched on June 24 by Obopay and Société Générale de Banques au Sénégal, lets customers use text messages to transfer money to satellite and cell-phone providers. Users walk into a participating store and make a deposit into their Yoban’tel account. They can then use that money to pay bills. Obopay hopes to extend Yoban’tel to other utilities, like electricity and water. Other collaborators in the country include Tigo, a telecommunications provider; CanalSat Horizons, a satellite provider; and Crédit Mutuel du Sénégal.
“[People can] load money into their account, pick up money if someone sent it to them, and also pay their bills,” says David Schwartz, Obopay’s head of product and corporate marketing. Obopay’s goal, Schwartz says, is to “empower people by giving them the first access to financial services.”
“In developed countries, there were a lot of mobile banking services and they failed,” says Ignacio Mas, an economist who works for the Bill and Melinda Gates Foundation. The reason, he believes, is that for people who already have access to banks, as most people in the developed world do, it’s difficult for such services to compete.
For poor people in the developing world, however, banking facilities are limited, and almost all transactions are carried out with cash. “There’s no business case for banks to build banks and ATMs where poor people live,” says Mas. Typical transactions in such places would be so small that it’s not cost-effective for banks to operate there. With no way to store or send their money electronically, people who want to give money to family in another village have to bring it themselves. Mobile phones offer banks a way to tap into existing infrastructure to deliver these services inexpensively. In the last 10 years, a bevy of mobile service providers, banks, and independent organizations have launched mobile money transfer facilities in the Philippines, India, Pakistan, and Kenya.
“In terms of strategic fit, you see Africa as the place where this has a lot of potential,” says Mas. “That has to do with the magnitude of the need [for financial services] and the fact that connectivity is available for the first time.”
Kenya’s M-Pesa is by far the most successful example of a mobile money transfer service anywhere, says Mas. Launched by the mobile provider Safaricom in 2007, it started as a way for people to send money home to their families. The service quickly evolved to let people transfer money to business partners, pay bills, and create savings accounts. In just three years it has grown to include more than nine million users, representing about 40 percent of the country’s adult population. Encouraged by M-Pesa’s success, mobile operators, banks, and independent companies are introducing variations of the money transfer system in other areas of the continent.
“In Africa we are seeing an explosion of these things in terms of mobile operators or people who want to do it,” says Mas. “It’s hard to get off the ground, but once you do that, you a see a snowballing effect and can make them extremely powerful, as M-Pesa has demonstrated.”
Obopay was founded in the United States and launched in India in 2007 in partnership with Nokia, which dominates the mobile-phone market in that country. Nokia invested $70 million in the company in 2009. Earlier this year, Obopay launched a banking service in collaboration with Yes Bank in India. It also has a Kenyan operation called yuCash, which opened in December of last year. Securite General and Obopay hope to expand Yoban’tel’s reach, possibly to Senegal’s neighbors.
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