Banking and mobile money - a powerful convergence

By Vision Reporter

THE power and versatility of the mobile phone to enable financial transactions is quickly being taken up by financial institutions as they strive to deepen their presence.

Mobile money is only about four years old but has attracted close to five million users while less than 15% of the Ugandan population use formal banking services in over 100 years of banking.

But the recent decision by dfcu Bank and other institutions to connect their services and clients to the mobile phone will kickstart deeper financial penetration and allow access to more financial services by the backward linkage between the phone and the bank, according to observers.

Mobile money has radically transformed financial transactions in East Africa. 

In Kenya, more money is moved on Safaricom’s M-Pesa compared to the global outfit Western Union.

In Uganda, MTN, the giant in this game moves some sh600b monthly while over three million of its customers are using mobile money.

Reports indicate that a regional bank doing business in Uganda is also set to launch a similar service while in Kenya, a slightly similar product is already on the market.

The Minister of ICT, Ruhakana Rugunda, said technology has given Africa and Uganda equal opportunity and places the country at the same pedestal with the rest of the world.

The dfcu mobile banking allows customers to access their bank accounts using their mobile phones anytime, anywhere and transact for fees as low as sh500. 

The development is a bonus and an improved delivery channel to other market services like internet banking and SMS services by banks like Centenary Bank.

Customers can make account inquiries, transfer of funds, pay bills including school fees, water and electricity and buy airtime from any mobile network.

To illustrate the emerging power of the mobile, Levi Nyakundi, the Airtel marketing director cited the order of priority in mobile usage-that is, making calls is now the fifth most used function on the mobile phone falling behind Facebook, games, music and the web, a true illustration of the power of convergence.

But there still exists immense opportunity with millions of people in rural areas yet to make their first calls and harness all the other capabilities of the mobile, like mobile banking.

By adapting mobile as a conveyor of financial services, the banks are going past the low internet penetration and harnessing the sheer power of mobile that is currently used by 16 million Ugandans.

“This ensures that banking services have been brought closer to the people, literally in their pockets, bags,” said Jude Kansiime, the dfcu marketing manager.

The tax paying platform through the mobile phone also now makes it easier for URA’s push to e-tax, which, according to observers, is going a long way in formalising the large informal sector, but also growing the tax base. 

Reports indicate that the tax authority collected about sh90b last year from e-tax payments.

“Mobile banking is accessible on every mobile phone device. It’s not limited by the technology of the phone,” said Kansiime.

The convergence between the mobile phone and formal banking not only creates convenience, but allows simultaneous activities to be conducted at the same time, thus saving time.

To use the mobile banking service, the customer simply invokes the banking menu by sending an SMS with the word ‘dfcu’ to a short code- 8001.

They then receive a user friendly menu and follow the transaction options that appear on the mobile phone screen. 

Whenever a customer is about to perform a transaction, they are prompted for a secret PIN code, only known to the customer.