I was at a program where we talked about the ‘now’ and the ‘future’ of payment systems. It was interesting to note how technology and particularly the internet of things have ripped our world apart giving inhabitants very little options to evolve or die.
Digital Finance as has been known for some time refers to anything financially digital. Some terminologies just jump to mind E-money, mobile money (momo), electronic payment cards, POSs, ATMs, ACH, etc.
What do they mean to individuals, industries, corporate organisations, governments, churches, the urban and rural settlements and in fact everybody?
These were my immediate thoughts.
It’s amazing how industries are now highly connected because of the current trends. Recent trends in Africa have seen telecommunications and financial services merge in a spectacular fashion. The internet and communications has long been established. In Kenya M-Pesa has blazed the trail making telcos more relevant in financial services than banks. Ghana is following fast on Kenya’s heels with agency banking services and momo (mobile money) sweeping across Ghana. Now out of six (6) telcos in Ghana, four (4) are providing momo services. The interbank settlement platform in Ghana, GhiPPS, introduced the E-Zwich which was meant to spearhead the achievement of a cashless system in Ghana and also bring convenience in banking. Traditionally, no one can enter a bank they are not a customer of and transact, but with E-Zwich it is possible. The entry (and acceptance) into the market was not without problems (which is for another time) and after 9 years have been able to partner banks to register 2.5 million people in Ghana. Their ghlink platform also connects ATMs in a similar fashion. Their hybrid POS has the capability to extend banking services like momo, bill payment, money transfer, remittance, mobile to account, card transactions to purchase, withdraw or deposit cash and a lot more. I hear it’s the first in the world. What is fascinating here is the fact that now you are no longer limited to transact with one bank if you are on E-Zwich. This will make it more convenient for all, bringing financial services to our doorstep even in off-line mode.
Reducing Transaction Cost
I thought technology is expensive and the more it is deployed the higher the cost. This may be initially true for new techs deployed but cost dives down with time as higher specs come up. One can see the same with these tools in which transaction cost across the financial interface becomes cheaper as network widens and more people use it. The possible impact here on us is the reduction of banks’ transaction costs as they may no longer need to print cheque books in large quantities, have less people in the banking halls, make payments for services on a much cheaper basis because one no longer needs to spend hours in traffic to go to the bank.
The way to benefit directly on this is to accept that technology has changed things and to accept them. You also just need to shop around to see whose cost is down most and bingo there you go!
Improved Data Collection
In the program a company called E-Dapt showcased a system which separates data collection from processing transactions and yet is interlinked. If such a concept is adapted by all, there would be more efficiency in data collection and therefore its processing. Analyzing data could be easier and cheaper. More applicable and relevant data could be churned out for productive use. It would also improve activities like business analysis and crime investigations among others.
Momo practitioners and users are faced with one major risk in its application, IDENTITY THEFT! Much is being done to mitigate this challenge. However some of these payment platforms, like the E-Zwich is biometric in nature. This biometric system identifies persons for who they are. This cuts out a good part of the overall risk facing digital finance. As if that’s not enough; the Executive Director of the Ghana National Service Scheme, Dr. Michael Kpersah Whyte shared a practical outcome where by the use of the E-Zwich system to pay service personnel 35,000 fraudsters have been weeded out of the payroll in one year and saving Ghs12.2 million ($3.2 million) a month. Instead of paying 75,000 ‘service personnel’ they now pay 40,000. Why? Just by adapting the biometric system. What it means to us is the lowered probability that someone could impersonate us and steal our money. The cheque payment system and credit cards systems have all been prone to these crimes but this has taken it further.
Driving More Adept Innovations
The last 20 years of technology has moved faster than the previous 50 years. It tells of how one emergent innovation spurs on further adroit developments. This whole revolution has just started and there is more to come may be at a breakneck speed. The platform owners, financial institutions, retail outlets, IT vendors and everyone is to play a role to make such systems beneficial. You either jump on the ship (of technology) or you are eaten by a shark (obsolete). Evolve or Die!
Author: Yaw Korankye Antwi || Ghanatalksbusiness.com