It was announced this week at the Commonwealth Telecommunications Organisation’s Annual Forum in Nigeria, that the
Alliance for Affordable Internet (A4AI) is to be launched to drive down the artificially high internet prices in emerging African economies. Supported by individuals like Sir Tim Berners-Lee, the founder of the Web, and organisations
such as Google, the Commonwealth and USAID, the Alliance for Affordable Internet will campaign for cheaper Internet access – aiming to reduce the cost of Internet access to below 5% of monthly income worldwide, a target set by the UN Broadband Commission.
In Mozambique, just 1GB of data can cost over two months’ wages for an average citizen.
This initiative should be setting the banking industry a-buzz with excitement across Africa.
For the last few years, players like Safaricom with MPesa or Airtel Money have been eating into the payments space and customers have built relationships with phone networks rather than banks. As telcos have built up deep insights into the behaviours of
retail customers and have slowly moved deeper into the banking territory, banks have been steadily edged out of the picture.
But in a role-reversal, banks now have the opportunity to tilt the balance of influence away from telcos by disintermediating these mobile money providers and recapturing market share through internet and mobile banking. This is particularly important for
customers in Africa – as it will enable banks to put a more sophisticated range of products and services into the hands of their customer than is available today from the telcos.
We know banks in Africa are keen to take up innovative financial services products – as shown by the widespread adoption of mobile payments. By offering a suite of new payment products and functionality via Internet or mobile, banks can encourage customers
to stay within bank-owned payments ecosystems. This will bypass the telecoms companies’ USSD offerings. In addition, banks will be able to retain all the customer behaviour data – which is so invaluable for banks seeking to model customer behaviours and product
Furthermore, widespread Internet access will provide banks with the opportunity to grow their customer penetration without a heavy investment in new branch infrastructure. Customers instead will be acquired and serviced remotely through digital channels.
This can only be good news for consumers and the banks of Africa – providing a wider range of products and services and supporting economic growth.