Time is Money: The mobile money revolution in Zambia

As a new year beckons, it would be prudent to remind ourselves about one of the most precious blessings which we have at our disposal: time. For both individuals and organisations – time is arguably the most valuable resource at our disposal. It is possible for a person to make more money and recover that which was lost in the past but it is nearly impossible to recover lost time.

Recent research by the Harvard Business Review revealed that this generation is busier than any generation preceding it. The younger demographics of this generation in particular, the millennials; are said to be less patient and more inclined towards quicker or faster solutions. It is this ‘microwave-quick’ generation that forms the majority of prospective clients for financial service providers.

When it comes to choosing a bank or branch in which to transact, the average client’s main priority usually comes down to “which bank or branch is quicker, I would like to transact and leave as soon as possible.”

On the contrary, a number of banks in Zambia have a slow turn-around time. How often have we stepped into a branch to make a cash or cheque deposit or over the counter withdrawal and ended up spending at least half an hour in a queue. However, we cannot be too hard on our banks, they have endavoured to provide alternative pragmatic solutions such as 24 hours ATM Services. A few of our Zambian banks have introduced direct deposit service ATMs in urban areas and at major malls.

In 2017 alone, 3 of our major banks launched mobile banking applications which allow their clients to have 24 hour access to cashless money transfer services. In total 12 out of our 19 commercial banks have fully functional mobile banking applications, which is quite commendable. One can only wonder what the other 7 are still waiting for.

Having a mobile banking application is one thing, having one that works efficiently and effectively is another story. Discussions, blogs and social media comments by clients of certain banks leave much to be desired. Commentators argue that applications only work during “office hours” which almost defeats their purpose of existence. Other mobile applications are inconsistent and cause account reconciliation problems such as miss-posted transactions, miss-matching transaction reference details, erroneous debits/credits, duplicate bank charges and bouncing back of transfers. In a nutshell, some of our banks’ mobile applications make clients feel like each transaction is a gamble, leaving you guessing what will happen each time you transact. I personally remember banking with a certain bank whose mobile app could not even efficiently show me my correct account balance. Of course this is not the case with all banks, it’s just a reminder of how vast the gasp spans in terms of quality service provision depending on whom one decides to bank with.

With the advent of online scams growing rapidly, this is the last thing that any financial service provider would want; a situation where your clients settle with the notion that using your mobile app is unpredictable and at one’s own risk. Such a bad precedence has forced some people to ‘swear’ that they will never do any transaction online.

This is where the “New kids on the block” emerged and changed Zambia’s money transfer business for good. The first to join the marketplace were the mobile service providers and telecommunication companies. In 2002 Celpay, a subsidiary of Celtel, was incorporated and began offering mobile banking services. The company was later acquired by Zain and became its subsidiary. In 2010 Zain was subsequently bought by Bharti Airtel which finally rebranded to “Airtel” as we know it today.

In December 2013, then Airtel Money director Brenda Thole disclosed that the mobile money service had 1.2 million subscribers. MTN Zambia also launched mobile money services, with Zamtel only joining the bandwagon in 2017, launching a service dubbed “Zamtel Kwacha.” Next in line was the Zambia Postal Services Corporation (Zampost) which developed a new payment system called Swift cash. The newly developed payment system targeted clients in unbanked remote parts of the country and endavoured to help reduce the risk of moving large sums of money.

In my personal opinion, the real game changer was a seemingly small start up called “Zoona”; a modern day David going up against all the aforementioned more experienced and financially muscular industry giants.

Zoona was founded in Zambia in 2009 by two entrepreneurial brothers from Kitwe, Brad and Brett Magrath. The Magrath brothers wanted to address a problem major problem in the Zambian economy; providing financial services to the unbanked population.

A survey on Access and Usage of ICT in Zambia was conducted in 2015 by the Zambia Information and Communications Technology Authority (ZICTA) in collaboration with the Central Statistical Office (CSO) and the Ministry of Transport and Communications. The findings revealed that 86% of Zambians did not have bank accounts! Almost a year later, in June 2016, Lusakatimes reported then Minister of Finance, Honourable Chikwanda stating that the unbanked population had reduced to 42% due to newly enacted policies.

It is against this backdrop and startling statistics that Zoona joined the ultra-competitive mobile money market. Their target was mainly adults with limited or no access to formal financial services. They created a simple but highly efficient business model which only requires a customer’s national Identification card, mobile number and a security pin which they personally send to the beneficiary. Within a few minutes, the transaction is done and the beneficiary can collect their money from any Zoona both. The sender of the money pays a small commission which ranges from K5 to K250 or more, depending on the amount of money being sent.

By the end of 2016, approximately 1 million customers were using Zoona every 60 days, with over 1600 Zoona outlets dotted all over Zambia. Zoona reports that more than $1 billion dollars worth of mobile money transactions had been processed.

This simple looking business model has taken Zambia by storm. Bank branches are slowly getting decongested. Zoona’s clientele range from the Upper/middle class urban citizens to the part time employed low income earners.

The earlier mentioned ZICTA survey also revealed a significant increase in the number of mobile phone subscribers from 2.6 million in 2007 to 10.9 million in 2015 due to increased investment in the sub-sector by mobile service providers. Times are changing; 10.9 million potential clients now have mobile phones and access to the internet. However, not all of them are literate enough to easily navigate a complex mobile banking app, not all of them are willing to spend time filling forms and attaching the numerous mandatory KYC compliance documents. Some of them just want to urgently send money to a parent, child, relative,friend, worker, supplier and so on.

Time is money. This “fast” generation is too sophisticated for the conventional banking strategies of the yesteryears. We are too busy to spend time in a queue and yet we spend more time than ever before online. We can buy and sell online, we pay for bills online, and we send and receive money online.

The rules of engagement have changed. As an old adage says; “you cannot beat a river into submission, you must surrender to its current and use its power as your own.”

Mwa pya baisa! Aluta Continua dear banks !

By Mwatula Chiti

The author is a former Corporate Banker and currently working as a Finance Officer at the African Union Commission. He is also a Financial Analyst, Satirical Blogger and an Activist for Youth Financial Inclusion in Zambia.