By Our Reporter
New Mobile Money innovation lets customers deposit and withdraw money from bank accounts.
As the world today grapples with the need to extend financial services to the unbanked, mobile money, an innovation that’s less than a decade old continues to offer the first realistic solution.
Over 28 years of economic stability in Uganda have led to under five million bank accounts, the largest player having less than 500,000 accounts.
Mobile Money on the other hand has already attracted tens of millions of users, with MTN Uganda alone having over 7 million. That is tangible evidence of the service’s potential. The question that remains, therefore, is what is its next milestone?
In March this year, MTN Uganda launched a service dubbed “Bank Push and Pull” that enable customers combine their Mobile Money transactions with their bank accounts.
MTN Mobile Money subscribers, after registering with partner banks – currently Stanbic, DFCU, Pride Microfinance and Centenary – are able to “pull” money from their bank accounts to mobile money accounts; and then “push” it to any other accounts of their choice.
It is in line with the prediction Bill and Melinda Gates made in their 2015 Annual Letter earlier this year:
“By 2030, two billion people [around the world] who don’t have a bank account today will be storing money and making payment with their phones. And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance,” noted world’s richest couple.
MTN Uganda CEO Brian Gouldie had also noted at the point of the launch of “Push and Pull” that Mobile Money’s next step is driving financial inclusion.
“One of the biggest benefits Mobile Money to Uganda continues to be the increase of access to financial services to customers across the country,” he said.
“This new solution further enhances that benefit by reducing the cost of banking while delivering convenience that we believe ultimately leads to increased productivity.”
The cost element is significant. Most of the unbanked people in Uganda still point to the cost of banking as the major barrier, as Economist and PHD student Rukundo Nshakira notes.
“Banking services are expensive and costly to many people. Monthly charges and in some cases transaction charges make it prohibitive. These make people prefer to have their money with themselves rather than in banks, and this is the benefit that mobile money offers,” he said.