How Quality Data Can Differentiate Banks from Mobile Operators in the African Mobile Payments Market

The business case for data quality should consider how data impacts business outcomes.

Introduction

Traditional financial institutions and mobile operators are fiercely competing for the lucrative mobile payments market in Africa. With billions of dollars in transaction fees and deposits at stake, both parties are vying to tap into the traditionally unbanked population.

The European Perspective

In mature markets like Europe, where banking penetration is high, most mobile payment options work in partnership with existing banks. These mobile payment solutions typically leverage smartphone apps to facilitate transactions between buyers and sellers.

The African Reality

However, the outlook is different in large parts of Africa. A significant portion of the population operates on a cash-only basis due to low or sporadic income, resulting in many individuals without a bank account. Surprisingly, the penetration of mobile telephones in most African countries exceeds 80%.

Banks’ Opportunity

For banks, mobile payments represent a chance to introduce potential customers to full-service banking. To utilize mobile banking, customers need to have an account and deposit cash into it, enabling banks to expand their customer base.

Mobile Operators’ Strategy

On the other hand, mobile operators see an opportunity to bypass banks and charge fees directly for transactions, either by deducting airtime or imposing agreed-upon charges on merchants.

The Crucial Difference: Quality Data

The fundamental difference between banks and mobile operators lies in their understanding of customers. While mobile operators traditionally have limited insights into their customers, banks are required to capture extensive customer data due to compliance with Financial Services Anti-Money Laundering, Terrorism, and Sanctions legislation. Quality client data is paramount for three reasons:

1. Compliance: Banks must adhere to stringent regulations and maintain minimum standards of data capture to combat money laundering and terrorist financing.
2. Economics: Banks must accurately risk profile their customers to manage credit exposure and minimize the risk of financial crises.
3. Customer Experience: Banks communicate with customers through various channels, including post, email, and mobile phone, making effective data management essential for personalized service.

Building Trust with Quality Data

Building trust is crucial for both banks and mobile operators. While cost is a factor, trust plays a pivotal role in consumers’ decisions when moving money. African consumers have faced mobile scams, highlighting the need for trustworthy providers. Banks, by nature, are built on trust, requiring them to meet specific standards to obtain a banking license. They have also accumulated vast quantities of customer data, giving them a head start for data-driven personalisation and marketing when compared to mobile operators. Having said that, banks need to make a substantial investment in customer data management in order to capitalise on this head start.

The Power of Quality Data

Quality client data empowers banks to communicate appropriately, price competitively, and provide targeted value to their clients, resulting in positive customer experiences and enhanced word-of-mouth confidence within the broader community.

Conclusion

In the war for the mobile payments market in Africa, quality data will be a decisive factor. While mobile operators may need substantial investments in data to compete with banks on the trust front, banks already possess a substantial head start due to their existing customer data. In the end, the provider that can offer both cost-effective services and build trust through quality data will emerge victorious in this dynamic market.

---

data quality and communication. Ensure your messages are based on reliable data to foster understanding and trust.

Ever wondered how to make data quality sustainable? Discover actionable strategies and ensure your data remains reliable in the long run.