Financial services a key battleground in Africa’s digital transformation: Ecobank offers the unbanked KYC-lite accounts, card-less ATM payments, signs agreement with MTN

29 June 2018

Top Story

A key battleground in the digital transformation of Africa’s mobile industry is the flow of payments and financial services across the network and around the world. For all the success of mobile money payments, cash remains dominant and the potential for digital payments enormous. Russell Southwood spoke to Edward George, Head of Group Research, Ecobank earlier in the year and looks at how this might play out.

There are estimated to be 2 million mobile money agents in Sub-Saharan Africa and only 100,000 bank accounts. But despite this initial disparity, there are three players in the ring: the mobile operators; the larger Fintech start-ups (for example, I have recently covered MFS and Paystack); and the banks themselves. For the sake of completeness, it’s worth adding all crypto-currency/blockchain players as the wild card.

Having listened to around 20 investments funds targeted at African start-ups talk about fintech as an area they’re interested in, there’s no doubt that there’s going to be more investment in African fintech start-ups. But although it’s already starting to get a little overcrowded, it’s worth saying that there is a whole financial ecosystem to be built and it’s not just about one-off payments.

mPesa was built as a simple payment system and has had to be overhauled at least twice to keep up with the growing complexity of the financial ecosystem that has grown on top of it in Kenya.

But whilst a lot of African banks have launched apps for their customers, few have really thought hard about how to innovate to take advantage of the wider digital opportunity. Notable exceptions have been Ecobank (more of which below), FNB (recently named best digital bank in South Africa); Bank of Kigali (through BK Tech House: and Kenya’s Equity Bank. Both FNB and Equity Bank have launched MVNOs, the former with over 100,000 customers.

In this confusing new world that’s shaping up, everyone is trying to do something that someone else used to do. MTN through its investment in Jumia has acesss to 4.2 million customers. Less than 0.5% of Africa’s retail transactions might use e-commerce but if India can get to 2.6% then again there’s money that will flow through the digital ecosystem. It’s all about trust and behavior change and both of those are not the “real-soon-now” of start-up time but something that happens more slowly.

The most spectacular example of how the industry might upend itself was African payments company Wari trying to buy Millicom’s Tigo subsidiary. The sale has gone through with another buyer and Wari is suing in the courts. But it has already bought itself a bank and other financial institutions.

But it is not an all-out war between the players identified above. Some of them need each other and are entering into co-operation agreements. In April MTN entered into an agreement with Ecobank to enable payments between MTN Mobile Money and Ecobank bank accounts and to digitize international remittances and mobile lending and savings. As Ade Ayeyemi, Group CEO said when the agreement was signed:”People who cannot participate (in the financial system) cannot save…They need to be able to do transactions at a branch.”

The question that hovers over all of these kinds of arrangements is who is going to be the vehicle and who will be the road? At first sight, the mobile operators are providing the digital road (for a cost that will grow) but it will be the banks and start-ups who will be the vehicles, defining the line of travel through new products and services.

Ecobank is one of the banking players that is in a good position to make digital product innovations that will both change and open up the market to new customers. In May 2018 it won the best digital strategy award at the Retail Banker International’s awards ceremony in London.

The current digital strategy started when Ade Ayeyemi, Group CEO joined the company almost three years ago. But the roots of its digital strategy go much deeper because as a bank with a presence in 33 countries it had to digitize internally: Edward George explains: " In today’s financial sector it is widely believed that you can’t run profitably with so many branches. Digital turns this argument on its head. Ecobank has 33 banking licences. If you digitalise, you can transform the value of the network. Ecobank has certain advantages in tackling that process as a registered and regulated bank. It has a done a whole series of digital projects over the last 10 years, some have been unique and some not. A fintech can’t do that. In some markets, we’ve been there for over 30 years and we know the regulators really well”.

At the heart of its current digital strategy is the Ecobank app, which was originally aimed at existing banking customers:”We had around 11 million bank customers before launching the app. By end-June this year we had over 8 million customers download our app and open a digital bank account.

It’s picking up exponentially and the latest version of the app has been slimmed down so it’s not too data heavy". At the time of it signing the agreement with MTN, there were already 700,000 app users in Nigeria and 2.3 million in Francophone Africa:“The app is the workhorse for Ecobank’s digital strategy and is in ongoing development. The initial goal was on getting as many customers on board our app, and now our focus is on boosting the volume of transactions and services they use".

“Our original target was to have 100 million customers using our banking app by 2020, but the rate of downloads has increased from 185,000 in January 2017 to 1.2 million in April 2018".

A key part of the uptick in growth is the promotion of a Know-Your-Customer (KYC)-lite account Xpress Cash (more of which below):” We are really focused on financial inclusion and a large proportion of those who have on-boarded on the App have done so via Xpress Account. This means they are new to bank and we are reaching people who previously did not have access to financial services”.

"There are many reasons African don’t open bank accounts: they don’t have the right ID or proof of address, or they struggle to fill in all the forms (especially if they are semi-literate). The Xpress Account is designed specifically for them. It has light KYC to open account and takes its KYC information from their SIM. You can do basic payments but with amount limitations”.

For example, a bank customer can pay his domestic staff through an Xpress Account. They can transact electronically, paying merchants with Ecobank Pay (powered by Mastercard QR and mVisa QR), pay bills, buy airtime or withdraw cash from an Ecobank ATM without a card using Xpress Cash or via Ecobank Xpress Point agents.

“Within a country, there are multiple ways you can send money and not just digitally. We’re building up an agent network offering customers multiple points for cash-in cash-out. So for example, we have an agreement with Total & Oil Libya to use 3,000 petrol stations as Xpress Points where the customer can use a QR code to pay or withdraw money. Within a country or economic zone (for example the CFA Franc Zone in Francophone West Africa) you can also send cash using an e-token. Using this e-token the recipient can go to any Ecobank  ATM and take out cash”.

“If you want to take the next step and open a full bank account, you have to go into a branch but once you have done that the app which works in all 33 countries. There are some service limitations so for example you can do everything in Nigeria but less in Gambia”.

"Future versions of the app will get around the problem of KYC and you will be able to open an account from your mobile. So for example, in Nigeria you would take a photo of your BVN (Bank Verification Number) and a photo of yourself”. The Central Bank of Nigeria initiated the BVN scheme to provide a single biometric database for all banks’ customers nationwide. You need to present one of the following: Nigerian International Passport; Nigerian National ID Card; or Nigerian Driver’s License.

Ecobank is also developing an electronic remittance service for the African diaspora – Africa Rapid Transfer (ART). This builds on the bank’s existing Rapid Transfer network, which lets customers make instant payments between any account in Ecobank’s 33-country footprint. Using the new app customers will be able to attach any VISA or MasterCard to the app and make instant payments on the Ecobank network: "We charge 1% flat rate for remittances, which is cheaper than any competitor, and payments are made instantly to our African footprint. We also have the most competitive exchange rates because our local Affiliates have plenty of local currency".

“We are very focused on Africa’s young generation of ‘digital natives’ and it’s fascinating what’s happening with them in terms of handsets. Today’s so-called ‘feature phones’ are really low spec smartphone with basic internet connectivity and they cost just US$35-40. The price point for technology keeps falling and it won’t be long before all African adults have devices that give them access to the range of digital financial services on offer".

But the digital strategy combines analogue and digital:” The key to a successful network is not forcing customers to transact only on digital channels. We have multiple cash-in cash-out points, which encourages consumers to try out digital while always having the option to go back into cash quickly and easily. Cash is still king and to replace trust in cash with digital trust will be a long journey".




Opening of market for Internet Access and Service Providers in the Union of the Comoros.

As a part of the market liberalization of the Electronic Communications sector in the Union of the Comoros, the regulatory body, ANRTIC, welcomes all firms and individual wishing to set up as an internet access and services provider, to send a declaration of interest for installation and operation of the following activities, in line with the Comoros Communications Act (2014):

  1. The provision of internet services in the framework of independent (standalone) networks;
  2. The provision of internet access to the public using facilities provided by Comoros Telecom and / or TELCO S.A .;
  3. The provision of closed-user-group internet services to specific customers (banks, hotels, Universities, hospitals etc), using facilities provided by Comoros Telecom and / or TELCO S.A .

ANRTIC Moroni - Oasis Grande Comore

Contact ANRTIC:

Tel: 00 269 337 08 92 or 00 269 334 13 76

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