For the past 15 years, the growth of mobile phones in Africa has helped fill the void poor banking infrastructure has created – with the technology being used to address the needs of the unbanked. For example, east Africa’s mobile money platform M-Pesa has allowed users to store and transfer money digitally via their phones; Zoona in Malawi and Zambia uses mobile phones and a network of kiosks to enable consumers to easily transfer money; and Kenya’s Tala offers microloans by analysing the data on an individual’s smartphone and determining their credit risk – within seconds.
But Ecobank’s new app doesn’t want to leapfrog the need for traditional bank accounts in Africa – it wants to make them relevant. The pan-African lender has managed to persuade regulators in 25 of the 33 African markets it holds a banking licence to allow citizens to quickly and easily open bank accounts via their mobile phones – without having to physically visit a bank branch, wait in long queues, or present any documents. To do this, the bank uses the know-your-customer (KYC) information, which was provided by the user when they registered their SIM card. The KYC data is necessary in helping to prevent banking fraud, money laundering and criminal activity.
“So basically if you have an African mobile phone you can open an account. Everything that you have done to get and register the SIM for the phone, the central bank will now accept that to get the KYC [for a bank account],” says Edward George, head of the bank’s UK representative office and group research.
Furthermore, the app allows rapid money transfers between Ecobank accounts.
“For example, if you are in Nigeria and someone is there from Kenya who wants to pay you for something… and they have an Ecobank account in Kenya but you don’t have one in Nigeria. Well, it’s no problem. You just download the app, open the account and five minutes later you have an account. They can then transfer the money from their Ecobank account in Kenya into your Ecobank account in Nigeria – and you get paid instantly.”
While there are exchange rate costs involved with international transfers between Ecobank accounts, transfers within countries are completely free. George says this is to encourage money to stay within the Ecobank system.
The app also leverages MasterCard’s MasterPass QR code to turn phones into point-of-sale devices. This allows small business owners or informal vendors to accept digital payments – effectively providing an incentive to open a bank account.
Changing traditional banking
Ecobank’s app is part of a wider initiative to digitise banking in Africa, and these services are also being extended to governments to enable tax collection. For example, the bank has recently partnered with the Tanzania Revenue Authority to collect and process import duties at border points. Prior to this, duties were paid with cash, which was difficult to track and exposed the process to bribes and inefficiencies. Now payments can be made through a variety of channels, including mobile wallets like M-Pesa and Tigo Pesa. The new digital process cuts out paperwork and makes it easier to trace payments.
Ecobank has also partnered with Total as part of its strategy towards agency banking on the continent. The partnership will allow bank clients to deposit money at Total fuel stations.
“So it’s another way of sucking it all in,” explains George. “So when we look at the future of branches in our digital strategy, there will probably be many more places where you can deposit money than before, but probably less branches of Ecobank.”