MFS Africa CEO envisions borderless mobile money

Mobile technology is top of mind when thinking about financial inclusion in Africa because the ability to digitally move value around opens up many opportunities, according to Dare Okoudjou, CEO of MFS Africa, a pan-African fintech company that develops value-added services for mobile wallets.

“Mobile provides access to financial services at a scale that was unimaginable before. There are more than 300 million users across the continent with some sort of digital store of value and identity,” he says. In Africa, this is mainly in the form of mobile money (m-money).

“In addition, the data produced by digital transactions, and the ability to link this data to an individual’s identity via their mobile number, creates a better view of the user,” adds Mr Okoudjou. “Today, unique behaviour and ways of consuming can be analysed to tailor financial services to individuals.”

But fragmentation and a lack of interoperability are problematic. Mr Okoudjou says that fragmentation was the price to pay for the rapid development of m-money by telecommunications companies. “Each country has three to four networks, which is good for the consumer because there is competition, better prices and service. But it also leads to market fragmentation with different m-money schemes,” he explains.

Fragmentation adds complexity for institutions trying to expand their footprint in Africa, because they need to reinvent the same product many times over to reach scale, as well as integrate with multiple m-money networks in different countries. MFS Africa was created to address this challenge. The fintech, present in 32 African markets, connects multiple m-money schemes through its hub using simple application programming interfaces (APIs).

Banking partners

In December 2018, Ecobank appointed MFS Africa as its digital payments partner to enable cross-border, cross-platform payment services. “Ecobank has been able to deploy just one app across its 33 markets,” says Mr Okoudjou. “The app is connected through MFS Africa’s APIs to provide Ecobank’s users access to domestic services, as well as the ability to transact with someone using Safaricom in Kenya or MTN in Uganda, Tigo in Tanzania and so on.”

He adds that this example could be generalised to other services that rely on disbursement and repayment from m-money accounts, such as unsecured lending services. “Once a bank has proven a product’s profitability in one market, or even one scheme, we can help smooth the rollout to other markets because it only takes one integration to enable multiple markets,” he says.

Partnering with Ecobank was a landmark deal for MFS Africa, adds Mr Okoudjou, “because it showed that we could do with banks what we have been doing with mobile networks, and do it at scale”.

While person-to-person mobile transactions predominate, most are not remittances but cross-border trade transactions emanating from small and medium-sized enterprises (SMEs). MFS Africa also helps banks understand the SME segment, which has always been complicated to serve. “There has been a lot of talk about supporting SMEs, and now we have tools to help them, such as efficient ways to settle bills or make payments using their mobile device,” says Mr Okoudjou.

Reducing costs

In order to drive regional trade, the high cost of cross-border payments is something Mr Okoudjou says must be addressed. “The delivery channel matters: sending $200 digitally from one phone to another in Africa can be up to 70% cheaper than through cash networks,” he adds. “Digital is on the right side of history in terms of bringing costs down.”

But the other component of cost is regulation, which is disproportionate for low-value transactions, he argues. “We need to take another look at the regulations, so that the cost of delivering a $20 transaction in a compliant way is not the same as delivering a $2000 transaction,” says Mr Okoudjou.

He believes that technology will help resolve some regulatory issues, such as know your customer (KYC) and anti-money laundering. For example, he points to the KYC elements that are now captured and stored in the databases of m-money operators. “Because KYC information has become digitalised, it is now available for screening, for repeat use and can make it easy for a person to transact,” says Mr Okoudjou. “More companies, such as MFS Africa, are looking to leverage that. We can use the information to ensure that a good customer that is recognisable and identifiable on our network can benefit because they are now a part of a trust network.”

Mr Okoudjou envisions a world where his mobile device will be enough to engage in any financial transaction. “Today, if I move from South Africa to the UK, my WhatsApp account or my e-mail doesn’t change – so many things in my communication life stay the same and aren’t related to where I am. However, I always start from zero in banking and financial services,” he points out. “In the same way we created digital pathways for communication, we need to create digital pathways for financial services – starting with payments.”