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The Voice of Technology and Finance in Africa
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Transaction complexity - bring it on! Mobile Banking
We explore the opportunities and challenges that lie ahead for the mobile banking sector in 2014.
Getting up to Speed
Looking at the state of Africa’s mobile networks. Are they ready for the data revolution?
Wagging the Dog
Is the banking industry ready to embrace the opportunities that disruptive technologies provide?
Think ICT? Think CWG
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FROM THE EDITOR
Welcome to Technology Banker – Where technology and finance collide! Happy New Year! If you’re anything like me, the New Year always brings with it a mixed sense of excitement and uncertainty for the days ahead. Those feelings are, to some extent, reflected in the analyses of mobile technology and its potential to benefit the banking industry that you will find in this issue of Technology Banker. In its short history, mobile technology has transformed the way we communicate and retrieve information. It has made significant inroads into the problem of access to communication across all African nations and has begun the journey that will ultimately end in everybody being able to use the services of the financial sector. A great deal is written about the transformational potential of mobile payment and mobile banking services because they genuinely can revolutionise an industry that, because of a lack of infrastructure, had reached a physical obstruction to its expansion. There is however, a long way to go before that change is complete. In fact, it has barely begun and this is where the uncertainty strikes. Mobile banking or mobile payments? One or the other or both or neither? We really don’t know at this stage but it is a question that we explore in depth in this issue and there’s no better place to start than the interview with FNB’s Michael Kloeck in which he looks at the mobile challenges ahead. As well as the in depth look at mobile in 2014, we also have INETCO looking at the year ahead for transaction management, Gemalto examining the banking response to telco domination of the mobile money market and, to lighten things up, we have reviewed a range of some of the best mobile hardware that you can find. We’ve also cast our eye over a number of apps that will make your business life much easier.
Contact Details: Publisher - Stefan Grossetti stefan.grossetti@technologybanker.com Editor - Kirsten Morel kirsten.morel@technologybanker.com Deputy Editor - John Bennett john.bennett@technologybanker.com Sales & Marketing - Jenny Howard jenny.howard@technologybanker.com Managing Editor - Remi Akinjomo remi.akinjomo@technologybanker.com Head of Operations - Monika Derfinakova monika@technologybanker.com Sales & Marketing Executive - Peter Ayo Marpuri peter.marpuri@technologybanker.com Technology Banker Website www.technologybanker.com Technology Banker is a registered trademark of Technology Banker Group. All rights relating to the content of the publication are reserved to the rightful owners.
Technology Banker Offices: Head Office: 10th Floor, 88 Wood Street, London EC2V 7RS Tel: +44 (0) 208 528 1536 Fax: +44 (0) 208 528 1001
I hope you enjoy this issue of Technology Banker. Please feel free to email me with comments or stories at kirsten.morel@ technologybanker.com Kirsten Morel, Editor ABC Application Approved
The contents of this publication are subject to copyright protection and reproduction in whole or part, whether mechanical or electronic is expressly forbidden without prior written consent of the editor. Views expressed in the publication do not necessarily reflect those of the editor or publisher. We welcome contributions, however, publication is at the discretion of the editor. We also take no responsibility for the return of materials. Whilst every care is taken to ensure accuracy, we cannot be held liable for any inaccuracies. All rights reserved. ©Technology Banker 2014 ISSN 2051-9443
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CONTENTS
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Mobile Future An interview with Michael Kloeck of FNB in which he discusses the future for FNB and African banking.
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NEWS 6 7 8
COVER STORY 15
Transaction Complexity: the future for transaction banking
INTERVIEW 10
Transaction Complexity With unyielding and exponentially increasing complexity, what lies ahead for transaction banking?
Banking News Telecom News Security News
Mobile Futures: talking to Michael Kloeck of FNB about the future of African banking
FEATURES 12 20
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Mobile Banking: opportunities and challenges in 2014 Putting Banks in the Driving Seat: François Chaffard of Gemalto examines the digital future An Island in Transition: the rise of Mauritius and its finance sector
INSIGHT A World of Opportunity Could its lack of cross-border infrastructure be the ideal foundation for Africa to lead the world in payment technologies?
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An Island in Transition Remote but far from irrelevant, Mauritius has a burgeoning finance sector and leads Africa in a number of areas.
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A World of Opportunity: can Africa become a leader in payment technologies?
INFOGRAPHIC 17
Getting up to Speed: African Mobile Networks Infographic
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Events for Your Diary
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Vendors’ Directory
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LETTERS TO THE EDITOR
To the Editor: Your interview with Eddy Ogbogu Ecobank’s Group Executive Director operations and Technology and EDITOR’S FEEDBACK: Managing Director of eProcess international We received a great deal of interest in the S.A was a masterpiece. Eddy spoke like a interview with Eddy Ogbogu, triggered, visionary running a global bank as he boldly lay I believe by his open and clear vision for down the 10 innovative steps taken across the Ecobank’s technological future. Ecobank business. And this is a bank in Africa. As David points out, Ecobank isn’t Please do more a global corporation but it is a To champions of technology successful regional bank which the Editor: innovation interviews has grown in Africa. In many Your interview with Eddy like this. ways, companies like these are Odbogu was very powerful. Your able to respond more easily questions on steps Ecobank are taking Segun Ogunsola, to their African customers to drive innovation to realise operational Harvard and the challenges faced in efficiencies and reduce risk while improving University the marketplace because customer retention for me say it all. No wonAfricans are their sole der Ecobank as you said, is unique and truly a business focus. successful Pan-African bank and they are not I‘m pleased to say that headquartered in South Africa or Nigeria but we do intend to run more in a small country call TOGO in Africa. What interviews like this. If there is bank is the next champion of innovations anybody you think would be a in Africa? particularly interesting subject, please let us know. David Macartiney, Sokode, Togo Regards To the Editor: Hmmm ... Your article on “Tackling the cloud” shed some very valuable info. Although, not sure whether Africa is ready for this big leap of faith, moving to clouds, as banks here are more concerned about daily survival while tackling privacy and data security issues. Having said that, it’s definitely an opportunity for leapfrog.
EDITOR’S FEEDBACK: There’s no doubt that cloud is a critical technology that all companies need to be aware of and evaluate for use in their own portfolio. However, Reuben makes an important point in suggesting that some businesses may not Reuben Akinola, Abuja, be ready for it yet. Along Nigeria with cloud technologies, issues of data protection and privacy are raised, however, it seems clear that companies and national governments do need to get to grips with these challenges because to miss the opportunities offered by the cloud would only leave them further behind.
Kirsten Morel, Editor
IN THE NEXT ISSUE • Cyber Security • Regulatory and compliance • Mobile Technology Part 2 • Executive Interview • Technically Talking
Regards Kirsten Morel, Editor
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BANKING NEWS Standard Bank set for new frontiers in 2014 Standard Bank is set to become the first South African Bank to operate in Francophone Africa when it opens a representative office in Abidjan, Côte d’Ivoire. Once up and running, the office, which officially opens in February, will mark Côte d’Ivoire as the 19th African country in which Standard Bank operates. It is currently unknown whether Standard Bank will apply for a banking licence. What is known is that Hervé Boyer, the Managing Director of the Cote d’Ivoire operation sees the opportunity as being driven by client need and may result in expansion across the region. “We believe that the Côte d’Ivoire would be the most appropriate location from which to create a base to facilitate further business in the Ivory Coast, gain a better understanding of the West Francophone Africa region,” said Mr Boyer.
AFC secures $250 million facility Infrastructure financier, the Africa Finance Corporation (AFC) has signed a US$ 250 million syndicated term loan facility, marking its debut in the international syndicated loan market. The facility, which was oversubscribed, has a tenor of 2 years and will be used to enhance the corporation’s ability to support investment and trade finance across the continent, in line with AFC’s establishment agreement and charter. “This facility is a further endorsement of our approach to investment on the continent, following the completion of facilities with a number of multilateral financial institutions earlier this year,” said Andrew Alli, President and Chief Executive Officer of AFC. “Enhancing our ability to on-lend to projects across Africa is core to our strategic objective to broaden our asset portfolio on the continent and we are extremely pleased at the level of interest expressed”.
Secure online document exchange to ease KYC A new online document exchange and secure vault has been launched. KYCme promises to ease KYC and AML processes by providing companies and individuals with a single location from which they can securely store and share their legal documents, such as passports, birth certificates and so on. Over four years in the making, KYCme combines the security of a digital vault with an electronic authentication mechanism and a secure exchange system, so financial services providers are able to use the documents as part of the client on-boarding process. According to founder, Mehul Kotedia, KYCme’s service is also useful to individuals, providing them with a secure storage facility for sensitive documents, which can then be accessed in need of emergency.
AfDB backs Tanzania energy sector reforms The African Development Bank has approved supplementary African Development Fund (ADF) loan and grant financing totalling US$ 58.2 million for the Governance and Economic Competitiveness Support Programme (GECSP) in Tanzania. By specifically targeting private sector development through energy sector reforms, the operation will help to lay the foundation for an energy sector focused budget support operation planned for 2014. “The Bank will intensively coordinate with other development partners to get their buy-in for the energy sector reform strategy and road map. These triggers are designed to incentivize the government to make appropriate choices aimed at addressing the challenges of the energy sector,” said Lobe Ndoumbe, Director of the AfDB’s Governance, Economic and Financial Management Department.
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TELECOM NEWS Etisalat asks banks for patience on Maroc bid UAE – based telecoms giant, Etisalat, has asked banks that provided $8 billion of funding for the telco’s acquisition of Maroc Telecom, for an extension on their commitments. The deal, which was agreed in early November, has yet to be completed, leaving the funding banks with a loan commitment but no fees until the deal is done, which is not expected to be until January at the earliest. It is unusual for banks not to agree fees that are incurred in the period between agreeing a loan and the borrower actually drawing it down. The absence of such a ‘ticking fee’ in this deal indicates the strength that borrowers have in the current market and their desire to be involved in a large acquisition deal during a period when M&A activity has been slow.
MTN expands online retail presence MTN Group has announced a partnership agreement that will enable the telecoms operator to extend online retail and other essential digital services across Africa. MTN has partnered with Rocket Internet and Millicom International Cellular to develop internet businesses in Africa through Africa Internet Holding (AIH), in a move to develop e-commerce businesses across the continent. MTN, Millicom and Rocket Internet will each become 33.3% shareholders in AIH. AIH has developed several successful e-commerce ventures in the last 18 months. The investment in AIH is in line with MTN’s strategy of bringing the digital world to customers, adapting to their rapidly changing needs and delivering a consistent end-to-end user experience.
4G Trials start in Senegal All three of Senegal’s mobile network operators were scheduled to have started pilot trials of 4G networks by the beginning of this year. Orange Senegal, a subsidiary of incumbent operator, Sonatel began its trials in October, targeting areas of the capital Dakar and Saly, a tourist area north of Mbour. Tigo and Sudatel Senegal both received permission in October to undertake trials until the end of this year. The news that all three should have 4G operations in place throughout 2014 comes on the back of Tigo’s announcement that it had invested over USD100 million in its 3 and 3.5G networks, expanding coverage in Dakar and central regions of the country.
Google Translate expands African capabilities Google’s famed online translation service, Google Translate, has now been extended to include five more African languages. Three Nigerian languages are being added, Hausa, Igbo and Yoruba as well as Zulu and Somali. The choices are made according to the scale of online usage of the languages and on its Google Africa blog, the firm said that its choices reflect this fact. “This is the largest expansion into African languages to date (Google Translate supports Swahili and Afrikaans already). The more language is used on the web, the higher the chances for us to launch it one day.”
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SECURITY NEWS African banks caught up in bulk SMS scam Mobile security firm, Lookout, has uncovered a bulk SMS scam that has unwittingly been used by African banks, among many others worldwide. Bazuc is an Android app that was available on Google’s Play store until it was removed in December. Individuals were lured in with the promise of being paid money for enabling the app to resell their unused bundled text messages. The users received a tiny fee of US$ 0.001 per message. The unused text messages were sold to corporations and organisations that used bulk SMS services with the result that individual mobile accounts were being used to distribute thousands of SMS, costing Bazuc users a great deal more than they were being paid. The organisations were also unaware of the scam.
Privacy will be key issue in 2014 Cyber security firms Symantec and ESET have both placed Internet privacy at the top of their list of the security issues that they expect to see dominating in 2014. “Privacy issues have littered the headlines in 2013, delivering a wake-up call to people and businesses about the amount of personal information we share and that is collected everyday by everyone from your doctor to your social network,” wrote Keith Halstead on Symantec’s official blog. ESET sees privacy becoming more of an issue in the Middle East and Africa as organisations in both regions make further use of the cloud. In its ‘Trends for 2014: The Challenge of Internet Privacy’ report, ESET also highlights a response to these concerns by firms and prominent websites making people more aware of privacy issues.
2014 - the year for mobile fraud? In another look at the year ahead, UKFraud, sees mobile commerce and mobile payments causing problems in 2014. The young age of the mobile sector is, in the company’s view, a major reason for its attractiveness to fraudsters. “There have been so many start-ups, new joint ventures and new products in the mobile commerce and mobile payments market in 2013. Many of them have been created on the back of poor infrastructures. Accordingly, many of these will fail when fraudsters attack them and they will lose millions because of inadequate IT security, poor infrastructures and often a lack of effective authentication and thinking,” the company explained in its predictions.
Tanzania drafts cyber security law Tanzania is in the process of drafting a cyber security law which, it is hoped, will be adopted in April. The law has three elements: data protection, computer crime and cybercrime and electronic transfers. Once in place, it is expected that the law will bring Tanzania in line with the East Africa Community (EAC), Southern Africa Development Community (SADC) and the Africa Union (AU). “As we know the issue of cyber security has no boundaries, it is the responsibility of all of us to work together towards enhancement of our systems and protecting information so as to ensure adequate security around cyber infrastructure and contents,” said Professor Patrick Makungu, Permanent Secretary in the Ministry of Communication, Science and Technology.
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INTERVIEW
Mobile Futures Technology Banker spoke to Michael Kloeck, Head of Expansion, FNB Mobile and Connect, about the future for FNB and banking in Africa.
Q: Briefly describe the bank, its objectives and its coverage in Africa. We are striving to be the leading banking group on the African continent in the countries in which we operate, in our mature countries, this goal has been achieved. We are further providing extended banking services to our SA client base as we expand into the rest of Africa. Some of these banking services are also provided across the major trade routes between Africa, India and China. We have FNB branded banking operations in Namibia, Botswana, Swaziland, Lesotho, Mozambique, Zambia and Tanzania. Our group is further represented by RMB in Nigeria and has representative offices in Kenya and Angola. Some of our business entries have been though greenfield operations (startups). We find that our innovative product and service offerings make our operations very attractive and we are capturing meaningful market share. Q: What is FNB Mobile and Connect? FNB Mobile and Connect is a business unit within FNB responsible for the design, implementation and support of mobile solutions for FNB, including
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Cellphone Banking, the FNB Banking App, .Mobi and ADSL and Talk services via our own internet service provider, FNB Connect ISP. FNB is the only bank across the continent with its own ISP. We offer services for all types of customers and handsets, across the continent. We offer customers choice so that they may use the most convenient and appropriate service for them. Our solutions are scalable and offer Africa the same experience as South African customers.
Q: In your view, do mobile banking applications have to take into account local markets and their individual dynamics or can one system operate across nations? The success of any app is about relevance and ease of use for customers. Therefore, it is important that apps are created with this in mind. As quickly as an app can be downloaded it can be deleted, so it is important to be relevant to the local market it is designed for. Our apps are
Q: Mobile banking is seen as an African success story, but outside of Kenya, mobile banking is still yet to really take off. What do you believe are the main constraints holding back the take up of mobile banking? In South Africa, mobile banking is growing in popularity at quite a fast pace and we are seeing customers move to our digital banking channels. The challenges we see across the continent are that of the “fear of the unknown� which must be overcome for customers to adopt a channel that is relatively new to them. It is a key priority for us to provide customer education about the safety and ease of use of our digital banking channels.
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native apps for the operating systems (iOS, BlackBerry, Android). We don’t believe in taking short cuts on customer experience. With the app, the possibilities for innovation and adding new features are endless. But we always try and find a balance between giving the customers features that they can get on other channels or the innovative elements which bring the “wow factor”. The app is an example of this. What you commonly find on other channels is available on the app, but you also get innovations that only the app can give, like free app-to-app calls, messaging and Geo Payments. In most of Africa, the cost of data and staying connected is more expensive than South Africa, therefore innovations such as these improve value for the customer. We also always ask whether new features are relevant and useful before including it on the app roadmap.
for FNB and we use the technology and systems that already exist in the bank to expand. Bank branches (“bricks and mortar”) are not always convenient for customers to travel to, are not quick to build and generally require time out of your life to go to. Our solution for Africa is that mobile is a way to reach more customers more efficiently without the challenges that physical infrastructures have. Q: In your view, are technological or regulatory issues the main obstacle to growth in mobile banking? Country specific regulations and banking licensing pose more of a challenge than technology. We continually look at ways of enhancing existing technologies or adopting new technologies as they become available. Q: Will the introduction of faster networks such as 4G benefit the growth of mobile banking?
Q: Africa’s lack of embedded banking infrastructure (over 40% of intraAfrican settlements involve banks outside of Africa) is seen by many as an opportunity to build a new system (or systems) fit for the 21st century, do you believe that this is the case?
Advancements in technology, such as the introduction of faster networks will undoubtedly benefit mobile banking. The better and faster the networks, the better the customer experience will be and the more complex transactions we’ll be able to introduce.
Digital banking as a whole is a priority
Q: What is the next step for mobile
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banking in Africa, if it is to become a major force in banking on the continent? User acceptance for mobile banking across our customer base is key, as well as enhancing our existing solutions to keep up with the most relevant and useful customer needs. Continued development is necessary, not only to keep pace with new devices and operating systems but also to ensure that we maintain our first mover advantage by continuing to outinnovate ourselves and surprise our customers with features that are going to enrich their mobile banking experience. Q: What does the immediate future hold for FNB? FNB is on a drive to get our customers to adopt and use our electronic banking channels, which is not only an efficiency measure but also quite empowering for our clients. We continually look for expansion and technology opportunities across the continent and this remains a focus for FNB.
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FEATURE
Mobile Banking: Opportunities and Challenges in 2014 Mobile banking is still the big news story for Africa’s banking industry. Matthew C White examines the opportunities and challenges that lie ahead for this growing market in 2014.
Despite Africa’s lowly position in the world research and development rankings, there is one area where the continent is in the forefront of technology usage: mobile money transfer, which is typically the first step in mobile banking. While still not widespread through the continent, use of mobile phones for funds transfer in Kenya, South Africa and Tanzania far outstrips that of most developed countries.
customers totalled 20.4 million in November 2012; this is 45% of the population. The meteoric growth in the money-transfer sector is shown in the more than 25-fold increase in monthly transactions from 1.9 million in 2010 to 48 million in September 2012. Money stored in mobile accounts increased from Sh3 billion in June 2009 to Sh157.8 billion in November 2012 — a more than 52-fold increase in just 25 months.
The M-Pesa system launched in Kenya in 2007 by mobile network operator Safaricom exceeded 17 million users — nearly 40% of the population — in February 2013, according to the company. Astonishingly, about 25% of the country’s gross national product flows through the system, said a 27 May 2013 report in the UK financial journal, The Economist.
In South Africa, “The Mobile Consumer in 2012” survey conducted by technology research and strategy company World Wide Worx, found money transfers, banking notifications and account access to be the most common transactions on mobile handsets after airtime purchases. The country now has 29 million mobile phone users — nearly 57% of the total population, and 78% of those are aged 15 and over.
Little wonder, then, that M-Pesa (M is for mobile, and pesa is the Swahili word for money) is recognised as the most developed mobile payment system in the world, allowing any user with a national ID card or passport to deposit, withdraw and transfer money easily with a mobile device. In neighbouring Tanzania, Government statistics say registered mobile
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While these figures are impressive, World Wide Worx Head, Arthur Goldstuck, cautions that what is often loosely called mobile banking is simply mobile money transfer. Bearing
this distinction in mind, he says: “The use of mobiles for banking in South Africa is very high, at 37% in 2013, having increased from 28% in 2012. In the rest of Africa, it is exceptionally low, as most consumers do not have a bank account. Mobile money transfer, on the other hand, is strong but varies dramatically from country to country.” According to Paul Edwards, Executive Chairman of Emerging Markets Payments Holdings (EMPH), which delivers payments services to banks, retailers, consumer finance institutions and governments in the Middle East and Africa, less than 20% of Africans have access to formal financial services. “That significantly reduces the number of people doing mobile banking,” he says, noting that mobile payment does not create a formal bank account as it utilises an e-wallet. “Adoption of mobile payments outside of Kenya has not been as strong, so the overall number of mobile banking users across Africa is still less than 50 million, demonstrating the enormous latent potential of mobile payments.”
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“The overall number of mobile banking users across Africa is still less than 50 million, demonstrating the enormous latent potential of mobile payments.” - Paul Edwards, Executive Chairman, EMP Holdings
Edwards identifies a number of areas where mobile banking can be improved. “Key challenges facing mobile payments are the creation of agency networks in order to handle cash-in and cash-out in under-banked areas, improved security and improved legislation to create clear and effective frameworks to operate in.” Hemmanth Singh, Managing Executive of M-commerce at Vodacom South Africa, sees other areas of potential improvement. “We need greater adoption in terms of both users and participating agents,” he says. “This requires more ubiquitous distribution, greater trust, improved value propositions and more integrated offerings. Having businesses and governments fully embracing mobile banking would also have a major positive impact.” Harmonisation is key Efforts to fulfil the latent demand for mobile banking services are being driven both by banks and telecommunications companies, but their interests are not necessarily aligned, warns Edwards. “Mobile banking and payments represent a potentially disruptive technology and banks are scrambling to keep up with the plethora of new mobile services,” he says. “Mobile network operators could pose a big challenge to traditional banks, as Safaricom has done. However, many central banks are wary of telcos and may make it
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increasingly difficult to operate in this space as they see telcos as effectively unregulated.” There is, however, little likelihood that banks would be able to stem the flow of innovation, even if they wanted to. Singh sees cross-border transfers and location-specific services as forming the next wave of breakthroughs. While there is much excitement in the technical media about 4G LTE, which is designed to increase the capacity and speed of wireless data networks using new digital signal processing techniques and modulations, only a handful of African countries have yet deployed this technology. Accordingly, Singh does not believe it will have a major impact in Africa in 2014 though he acknowledges that 4G provides a richer experience for users with compatible handsets. Edwards notes, however, that use of smart-phones is growing rapidly. “The big change that I foresee is improvement in data security, especially in relation to international remittances via mobile phones. VISA and MasterCard are now working on global standards and tokenisation, which provides better protection.’’ And he warns: “Smaller players may not be able to offer these protections.”
greater ease, affordability and accessibility in opening bank accounts. The most likely breakthroughs will be seen in payment systems, with more efficient and secure means of making mobile payments from cellphones.” Clearly, despite the challenges, mobile banking in Africa represents a huge opportunity for banks and technology companies. Indeed, Shiletsi Makhofane, head of Sub-Saharan Africa marketing and strategy at Ericsson, the world’s second largest provider of wireless network equipment, has urged both to take advantage of the continent’s budding technology development. Speaking at the recent unveiling of the company’s Digital Agenda for Africa, Makhofane said banks and telecommunications operators should invest in infrastructure that would help in leveraging opportunities to address the challenges of the unbanked across Africa. He urged African leaders to consider five key parameters which include: harmonised spectrum policies, accelerated infrastructure rollout, implementation of light-touch regulatory policies, incentivising innovations, and improved regional integration.
Goldstuck concurs. “The most recent breakthrough has been the emergence of banking apps for smartphones and tablets that have almost greater functionality than online banking. The ideal is to have the same functionality in feature phones, combined with
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COVER STORY
Transaction complexity - bring it on! Brad Zaytsoff, Director of Marketing, INETCO Systems Ltd. shares his predictions for 2014 and what lies ahead in transaction banking.
All across Africa, we’re seeing the rapid expansion and adoption of new banking services and channels. In 2014, mobile banking applications will continue to be the fastest growing consumer access point for financial services in Africa and worldwide.
customers. Though to offer these services, financial institutions will also become more reliant on third party service providers, such as telcos who provide the mobile connectivity required, or payment back ends like Visa, Banserv, and Mastercard.
We also expect to see a proliferation of physical ATMs across Africa, as well as more value added services offered through them; services like lotto ticketing, mobile top-up and bill payment. With more mobile device and ATM availability, we foresee greater interconnectivity between the two—both in terms of traditional service delivery as well as the delivery of targeted marketing offers based on a customer’s financial profile.
To quickly recap: • There will be massive growth in new banking client numbers • Fewer transactions will follow simple, linear delivery paths • Transactions will increasingly touch multiple service providers before they can be completed
For example: Imagine that you’re making a deposit at an ATM and that rather than getting a printed receipt, you’ll get a message pushed to your mobile device. This message lets you know that not only has your deposit gone through, but that based on your banking profile (which pulls in all the data the bank has on you) they want to offer you a special interest rate on a line of credit. To take advantage of this offer, all you need to do is follow a link...
A need for careful management For others (who will be prepared) this rapidly growing number of transactions following non-linear paths will see the dropping of siloed and home-grown monitoring applications, and a move to robust business transaction management (BTM) solutions, like INETCO Insight, to counter “transaction-blindness”.
These market and technology changes will provide banks with more opportunities to service their
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And for those financial institutions that aren’t prepared—this will become an enormous headache to manage.
Leading institutions will recognize the need to monitor transactions as they move along all their multiple “hops” (from ATM, to switch, to server, to third party back end, to mobile network…) so that they can be alerted to
transaction slowdowns and security threats before these can affect the customer experience. Several leading African financial institutions have already found that by deploying INETCO Insight BTM, they can isolate transaction problems up to 75% faster (saving both time and labour costs), decrease transaction failures by 25%, and ultimately, ensure that end customers are kept happy. So as millions of new banking clients start taking advantage of new banking services, we’ll also see more financial institutions leverage business transaction management solutions like INETCO Insight to improve visibility into all their mobile, ATM, online, point-of-sale, and branch transactions. Through holistic, multi-channel (and path) awareness, these leading institutions will take on transaction complexity to ultimately improve operational efficiency and endcustomer experience.
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EXHIBITOR
INFOGRAPHIC
Getting up to speed No other continent is as reliant on mobile communications as Africa. Households and businesses that lack access to a landline network are able to communicate and access the Internet via mobile networks. This makes it increasingly important for Mobile Network Operators (MNOs) to keep up with the latest technologies. As they do so, the banking sector will have to move fast to ensure potential customers are not lost forever to the innovation of mobile app developers. Mobile network investment may cost less than landline network investment but that doesn’t make it cheap! In 2012, MTN Nigeria spent R13.7 billion (USD 1.3 billion) on upgrades to its 2G and 3G networks. In a sense, that’s just running to stand still as 4G has already hit the market. However, these figures are a good example of the need for continued investment in legacy systems in order to increase coverage. The result of the billions of Rand spent on the network was almost a tripling of the number of 2G and 3G sites that MTN has in the country. As far as pay-off is concerned, MTN saw an increase of 13.9% in its subscriber base, that’s 5.8 million more customers and shows why MNOs are continually being challenged not only to implement the latest technologies but to also maintain an eye on 2G expansion in order to provide communications to the millions who currently live without it. Africa has become well known for making the most of mobile technologies. Mobile payments systems developed for feature phones and more recently, the launch of Look4it, an offline real-time content service delivered by Vodacom in South Africa (see pages 30 / 31), are excellent examples of just how innovative the network operators can be and also how adaptable and versatile ‘old
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technology’ handsets really are. However, people do have a tendency to look forward rather than back and as 4G is tentatively rolled out across the globe, it is good to see that Africa is in many ways on a par with other regions. No country in the world has ubiquitous 4G access, instead, development is focused on the larger population centres. This will continue to be the case as the costs of rolling out 4G networks are high, forcing data pricing to rise and in turn, slowing adoption by customers.
The result of the billions of Rand spent on the network was almost a tripling of the number of 2G and 3G sites that MTN has in the country. As MNOs hold up their side of the bargain by providing high speed mobile data networks, banks will be expected to reach out.
Smartphones changing the game The advantages however, are there to be gained. African smartphone sales continue to increase, pushed by manufacturers like Samsung, which next year intends to double the ten million smartphones it sold in Africa this year, meaning that the South Korean firm will, by the end of 2014, have sold as many smartphones as were sold by all manufacturers in 2013. The result will be gradually changing consumer behaviour as people used to voice and text communications will begin to expect high quality data connections. With this will come an appetite for mobile apps and for banks, the potential to move people away from mobile payments and onto fully functional mobile banking.
Of course, for this to happen, banks will have to become more successful at reaching out to the unbanked millions. Mobile banking needs bank accounts and as MNOs hold up their side of the bargain by providing high speed mobile data networks, banks will be expected to reach out. If they don’t, then there is the possibility that Africans will continue to operate without banks and this could become an embedded behaviour as mobile payment apps continue to offer more advanced functionality that over time, could make the need for consumers to have a bank account, far less obvious. ‘Getting up to speed infographic, see overleaf’
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(inc. South Sudan)
Notes to diagram: This map shows the most advanced network type available in each African country, excluding Western Sahara. 3G+ networks can often be referred to as 4G because of the speeds they are capable of delivering. In this diagram, HSPA+ and DC HSPA+ have been labelled as 3G+. 4G WiMax is not always available to mobile phone users as it is often received via an antenna or dongle and used as home broadband. As network upgrades happen regularly, Technology Banker cannot be held responsible for information which is incorrect.
Eritrea Gabon
2G+
Burkina Faso Togo
Cameroon Central African Republic Chad
2G
Liberia
Niger
Mali
Benin
Algeria
Cote d’Ivoire
Tunisia
Guinea Guinea-Bissau Djibouti
Congo 3G+
Democratic Republic of Congo Kenya
Equatorial Guinea
Ethiopia Zambia Madagascar
Sierra Leone
Lesotho
Mauritania
Malawi
Morocco Libya 3G
Sudan (including South Sudan)
Nigeria
Somalia
Angola
Rwanda
Namibia - MTC Namibia put the country among the pioneers of 4G in Africa with the launch of its Netman 4G service in 2012. Today, the network covers most major urban areas including Windhoek, Walvis Bay in the west, Oshakati in the north and Keetmanshoop in the south.
Burundi Mozambique
Senegal - 2014 will see trials of 4G networks in full flow. Orange began its trials in October 2013, whilst Tigo and Sudatel Senegal both have permission to begin trials this year.
4G expected 2014
Ghana - Ghana’s first 4G LTE network has been installed by Chinese telecoms equipment manufacturer, Huawei. Aimed at the business world, the firm sees it being ideal for video conferencing. Alcatel-Lucent has teamed up with telco, Surfline to provide 4G later this year. Egypt - Both Etisalat and Vodafone are ready to offer 4G services but are awaiting the spectrum with which to do so. Telecom Egypt, the landline operator which has been mooted as a potential Vodafone buyer, expects spectrum to be available later this year. Botswana
4G / LTE/ WiMax
South Africa - Vodacom launched South Africa’s first 4G LTE network in 2013. Capable of speeds up to 60Mbps, it is available in major towns and cities including Pretoria, Johannesburg, Cape Town and Durban. Zimbabwe Tanzania - Tanzania has a competitive 4G marketplace with both Smile and Tigo already offering 4G connectivity to mobile users. Last year, Vodacom completed trials of 4G in Dar es Salaam. Uganda Gambia Swaziland
INSIGHT
Putting banks in the driving seat François Chaffard, Gemalto’s Marketing Director for Banking & Retail in Africa, looks at the future for banking in a digital world.
Mobile Money and Banking in Africa As the second largest and secondmost-populous continent in the world, Africa is a land of abundant opportunity and complex challenges for the financial services sector. To fully appreciate the value of participating in the mobile payments arena, one needs only consider the statistics, which highlight the huge market potential. According to the World Bank’s most recent Global Findex, which reveals regional differences in financial inclusion worldwide, approximately 2.5 billion people across the globe - almost 36 percent of the world’s population – do not have a bank account. Most of these live in Africa. It is estimated that a staggering 80 percent of subSaharan Africa is unbanked. It’s not that financial transactions are not happening in Africa. The Findex correctly projected that African consumers would spend $1trillion in 2012. Interestingly, it also calculated
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that Africa’s financial sector will grow by 40 percent by 2020. This flurry of financial activity throughout the continent is taking place largely on the mobile phone. According to the Findex, 68 percent of Kenyan adults use mobile phones for financial transactions. Some 52 percent of Sudan’s adults do the same. Similar results were found throughout Africa. Banking differently Until now, Mobile Network Operators (MNOs) have been driving the mobile money marketplace in Africa, primarily because of their widely distributed infrastructure of retail agents across the continent. All of the new mobile banking services come complete with a wide network of agents across the countries so that end users can easily top up their mobile wallet, cash in, cash out and perform other transactions that necessitate equipment above and beyond the users’ mobile phones.
In contrast, banks in Africa often only have branches in the towns and cities. Meanwhile, large portions of the population live in remote rural areas, and have no means of making their way to a distant, city-based branch. With this limitation, even opening an account is unfeasible for the vast rural populations. It seems like a major oversight by the banks, however, the reality is that it is far from cost efficient to open, staff and run a branch in every community. The power of market share The MNOs also have the power of large market shares. In most African countries there are no more than three MNOs. Meanwhile, the market in the banking sector is extremely fragmented and if we look at markets such as Tanzania or Kenya for instance, as many as 40 banks are competing within one country. This lowers the number of clients per bank, making the investment in establishing a branch in every town unjustifiable.
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So what can banks learn? Fragmentation can be overcome through bank alliances and consortiums to reach the masses and overcome geographic hurdles. Banks can also take advantage of their interoperability and leverage this in the mobile money space. By developing interoperability in mobile money technology, banks’ mobile offerings could become just as attractive and ubiquitous as “accepted everywhere” debit and credit cards already are. Banks succeeding in the technology space Also on the rise in Africa is the use of innovative banking solutions and some banks are using multiapplication contactless and prepaid cards to address the unbanked. This concept has been successfully applied to consumer transport and means that the unbanked can use a prepaid transit card and top it up for transport, before using the conventional payment facility on the same card as a
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normal debit card for retail payments. South Africa’s Standard Bank has developed such a card, called the Muvo card, for transit and retail payments in the eThekwini municipality in KwaZulu Natal. The advantage of this card to Standard Bank is that it offers the unbanked a first step into the world of banking services, and paves the way for future value added applications to be offered on the same card. Other large African banks are teaming up with major retailers with huge rural footprints to provide a prepaid debit and customer loyalty card. While MNOs are currently winning the mobile money race, options remain for banks that are open to innovation and to harnessing the power of available technology platforms. Financial inclusion for the unbanked is vital to successful pan-African socioeconomic development. By combining the diverse resources and core competencies of a variety of players including banks, MNOs, retailers and
By developing interoperability in mobile money technology, banks’ mobile offerings could become just as attractive and ubiquitous as “accepted everywhere” debit and credit cards already are. By combining the diverse resources and core competencies of a variety of players, a framework for sustainable secure growth is emerging.
digital security providers, a framework for sustainable secure growth is emerging. One that combines mobile money applications, NFC technologies, leading edge EMV card solutions and continued creativity and innovation to address the challenges facing the continent.
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INSIGHT
A World of Opportunity Neil Burton, Director of Product Service Strategy at crossborder payment provider, Earthport, examines the case for Africa becoming a leader in payment technologies.
Of late, there has been a great deal of debate online and at conferences about mobile payments. With few exceptions, of which M-Pesa is one, the mobile payments revolution has spectacularly failed to live up to predictions. The same is true of mobile wallets, to date, uptake massively lags behind many analysts’ views. This may lead us to conclude that mobile payments isn’t, after all, a single ‘killer app’ with experience showing us that there is no single solution. A service designed for Kenyans not only won’t suit Americans, it won’t be adopted by Botswana either. The clear message at SWIFT’s African Regional Conference (ARC) in Gaborone earlier this year, ‘African solutions for African people’, is right, but it’s true not only for Africa, it is true the world over. Killer platform There may be no killer app but it would be a mistake to conclude that mobile devices aren’t a ‘killer platform.’ Although mobile payments may not be the right answer, the use of apps in financial services certainly is. However, they need to be geared to each local market and getting the underly-
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ing common infrastructure right to enable those is critically important. Linah K Mohohlo, Governor of the Bank of Botswana, giving the keynote speech at ARC noted that, like much of its infrastructure, Africa’s payments systems are not fit for today’s purposes. “The continent remains more directly linked with developed countries than with its constituent nations,” she told the audience. “It is not unusual to have better flight connections between African countries by first going to Europe. To a large extent, the priority of domestic rail and road infrastructure is outward linkages to seaports, rather than to neighbouring countries. Evidently, the bottlenecks are further compounded by weak, or even non-existent, direct cross-border payments infrastructure between countries. In fact, it is quicker to effect payments to Europe, North America and other developed markets than across borders within Africa.” Although this reality is disappointing,
the very different and diverse nations which comprise the African continent could not, in fact, be better placed to take advantage of their position. The payments systems in many developed economies are becoming increasingly unfit for today’s purposes too, but here there’s a critical difference; they are in place, and they have to be maintained. Most of the ongoing investment in them inevitably is designed to overcome their weaknesses, not to innovate. Critical resources are almost entirely tied up in the three top priorities of banks: restoring the trust of their customers following the Global Financial Crisis, tightening their operational systems and processes to meet increasingly challenging compliance requirements; and updating old systems simply to prevent them failing through old age. UK banks, for example, recently spent about £750m on an account switching programme, a service that reduces to seven days the time it takes to move an account from one bank to another. An innovator might prefer a completely different model; one in which consumers have an identity which can be moved between banks. But to do
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that would have cost the UK banks a lot more. They really had no choice. Choice In contrast, fast-growth African nations without legacy infrastructure, have more choice. They have compelling opportunities to drive projects and plenty of skilled resource with which to do it. Africa can, if it chooses to, leapfrog. It has already proven itself capable, M-Pesa continues to be the ‘poster-child’ for mobile payments at conferences worldwide. Even Somaliland has become a showcase: The Coca-Cola branch in Somaliland is the only cashless Coca-Cola company in Africa. The Governor’s comments encouraged SWIFT to research their data. At Sibos (SWIFT’s annual global conference), SWIFT published a paper which highlights the shocking extent of Africa’s reliance on other regions: • Nearly half of settlement processes within Africa involve banks outside of Africa • Nearly 40% of Africa’s financial flows go to the USA, though it accounts for only 9% of commercial flows •• More than 80% of the USD transactions sent from Africa to the US have their financial beneficiary in another region. The paper goes on to describe a series of regional projects whose goal is to build intra-African payments systems; these infrastructures have the potential to revolutionise trade within Africa. But infrastructure alone is not enough, products and services for customers are needed too and there are three market segments well positioned to provide opportunity for African innovators and developers: Cash African nations continue to use cash much more extensively than nations such as Sweden, where the benefits of electronic alternatives are well proven.
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The benefits to Africa are huge; acquiring 20 percent of unbanked MEA (Middle East and African) domestic flows would produce $10 billion to $12 billion in additional payments revenues. Small to Medium Enterprises SMEs are the lifeblood of any economy. SMEs produce 40% of Africa’s GDP and provide half its jobs. But, according to a Google executive speaking at Sibos, only about 10% of African SMEs are internet-enabled. In order to be commercially successful, firms need to be able to be ‘found’ online. Yet fewer than 10% of Africa’s SMEs are on the web. As these firms connect and get smart about using the web to market themselves within Africa and globally, Africa’s economic power will grow massively. According to McKinsey, the MEA region’s SMEs could create more than $40bn in new revenue. And SMEs don’t always stay small or medium-sized. Today’s largest global banks grew by following their small domestic customers as they globalized. Remittances Monetary flows from emigrants are certainly large enough to be of economic importance. Africa’s growing migrant-worker populations sent nearly $50bn via formal remittances in 2011. About $21bn of this was sent to sub-Saharan Africa, amounting to over 2% of GDP, of which nearly half went to Nigeria. For Kenya, remittances amounted to more than 5% of GDP; the global average fee paid to send a remittance is nearly 9%, so Kenya loses about 0.5% of GDP to fees. Improving the efficiency of money transfer channels, which can be achieved in part through better integration of, and cooperation between, mobile network operators and regulated payments services providers
can benefit senders, beneficiaries and whole economies. Inflows not only support basic needs, they are increasingly directed towards inward investment. For example, “some 80 per cent of all new business ventures in Somalia are funded by remittances,” according to the UK’s Overseas Development Institute. New directions A smartphone or tablet has way more power than all the computers NASA used to send the first Apollo to the moon (in 1969 – just four years before the birth of SWIFT). Today’s technology makes possible completely new approaches to old problems. It would be a shame to use it only to make the ‘old’ way of doing things better when, in fact, we can do better things. Absence of infrastructure may be a blessing; it cannot act as an inhibitor. Rather than emulating the infrastructure which underpins developed economies, Africa has the option – a very good option – to consider different, newer, more relevant approaches. There are plenty to choose from. With its local knowledge and creativity, there is no good reason why Africa cannot build on the common infrastructure and become a supplier of financial systems, and financial services, not only to itself, but also to the rest of the world. It would be a pity to miss that opportunity by adopting the models, systems and behaviours of the past.
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FEATURE
Wagging the dog Ian Ronayne looks at banking innovation and asks whether the banking industry is ready to embrace the opportunities disruptive technologies provide.
Ask anyone working in media or retail what has had the greatest impact on their industries in the last ten years and the answer is invariably the same. Technology, in its most disruptive form, has wreaked havoc – and the change is still happening. Now technology is threatening to have a similar effect on the traditional banking industry. It just seems to be taking longer than expected. Unfulfilled potential Technology has certainly demonstrated its potential to reshape financial services. The M-PESA mobile money service in Kenya, Tanzania and now elsewhere in the world has been one of the initiatives leading the way. But replicating that success has proved challenging, as M-PESA co-creator Susie Lonie recently acknowledged. ‘The runaway success of M-PESA in Kenya led many companies to believe that mobile money is an easy win at relatively low cost and with little effort,’ the former Vodafone executive blogged. ‘However, many organisational and regulatory challenges need to be overcome for it to reach its full potential. If these are not grasped and resolved, mobile money stands in danger of being written off as a niche
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product with specific application in just a few markets which “just happen to have the right conditions.”’ So it seems that success in a few markets does not equate to a global phenomenon, despite apparent demand for change. Research by US headquartered consultants the Yankee Group recently underlined this. It found that while around 70 percent of consumers are interested in the idea of mobile payments, less than 14 percent had actually completed a mobile transaction in the previous six months. The conclusion has to be that while mobile and other technologies have the potential to disrupt tradition, there are clearly factors limiting success to date.
One is that mobile operators – who should be well placed to exploit initiatives such as mobile money – have struggled to understand and deploy mobile payment ecosystems such as that found in Kenya because it is outside of their core competencies. Another is that most banks, weighed down by tradition, conservatism and regulation, have tried to constrain technology to limit disruption to traditional financial services. To anyone in retail and media, the situation may sound familiar. Longstanding industry institutions holding up or trying to shape change but history tells us that they are living on borrowed time – fundamental change is just around the corner.
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Aurimas Bakas, CEO, Worapay “While mobile and other technologies have the potential to disrupt tradition, there are clearly factors limiting success to date.”
innovation. At the same time, there has been controversy over the status and legality of aspects of the service. Yet it looks like Bitcoin will survive, and thrive, as a tech-savvy generation embraces alternatives to traditional banking systems. Holding back the tide What can banking, and mobile businesses, do in the face of technology disruption threatened by Amazon, Bitcoin and the rest? An option is to partner with one of the tech-savvy companies emerging in this sector. Their expertise is in technology, integration and customer behaviour. Worapay, a growing mobile wallet business, is one example.
The rise of the alternative Some of the most disruptive technology giants will not wait while incumbent businesses sort themselves out. Amazon, Google and Apple are increasingly shifting their focus from using third-party payments systems to developing their own. While there has been mixed success to date, there can be no doubting the power or determination of these companies to expand their financial services. Somewhere near the other end of the spectrum is the rise of alternative
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electronic currencies. Among the most hyped is Bitcoin, an electronic money and payment system first launched in 2009. Like peer-to-peer file sharing, Bitcoin resides on a network of user machines rather than a central system. Bitcoins are transferred between users to make payments, with the process authenticated by the shared network. One of Bitcoin’s attractions is that it operates outside traditional financial networks. This has proved appealing to some progressively minded merchants looking for lower costs and greater
Commenting recently, it’s CEO Aurimas Bakas, said, ‘Mobile banking is not only about wire transfers and payments history. The question is how to innovate on the concept of a bank account. Banks could probably do it themselves, but it would take ages to agree on one unified solution. So technology partners such as WoraPay provide an open ecosystem where all mobile wallets can operate and which gives freedom to compete, innovate and create new value added services.’ We have not yet reached the point of crisis but make no mistake, technology is coming to the world of banking and it will bring change. Threat or opportunity? That depends on how disruptive you are willing to be.
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REVIEW
Mobile Apps for an Easier Life Make work that bit easier with this selection of mobile business apps Look4it– Mobile content without the Internet Look4it is a superb mobile content app designed specifically for feature phones by South African mobile operator, Vodacom. As a non-smartphone user, Look4it brings you one step closer to receiving smartphone style information. The service operates simply, you just dial a code into your handset and the local weather forecast, traffic updates or location of your nearest bank are sent straight to you, using the mobile network.
1Password - Keeping all your passwords secure One of the modern world’s great inconveniences is the need to create and remember an ever increasing number of passwords that include a complicated mix of characters, numbers and punctuation. 1Password has been designed to remember all of your passwords and keep them safe and contained in one place. All you have to do is simply remember a single Master Password. The app integrates directly with your web browser to automatically log you into websites, enter credit card information and fill registration forms. It easily generates strong passwords to keep your information safe. The app is available for Windows, Mac, iPhone, iPad and Android.
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Currently, Look4it is only available to Vodacom users in South Africa but given its mainly positive reception from users and in spite of a few difficulties with information relevancy, it looks set to become a popular choice for South Africa’s feature phone users. We just hope networks in other countries will offer a similar service soon.
Prowork– African app making business easier Apps that genuinely make it easier to collaborate across distance can be an invaluable aid to maintaining productivity. Prowork aims to be just that and it is impressive enough to have been selected to the shortlist of thirteen international finalists of the VentureOut Mobile App Challenge. Available on web browsers, Blackberry, Android, Java supporting phones, as well as feature phones (more great news for those without smartphones), Prowork enables you to create tasks, have live discussions, add notes, assign team members by entering their email addresses, and get instant update notifications.
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REVIEW
Mobile Hardware Hardware to keep you connected iPadAir – power without the weight Perfect for travelling, you won’t notice the weight of the incredibly light iPad Air. With a 43% thinner bezel and an overall weight that is 28% lighter than the standard iPad, the Air’s smooth design is the perfect tool for working on the move. Made from a single piece of aluminium, with a glass front, this 9.7 inch device is, like its larger cousin, extremely tough and durable. The iPad Air comes equipped with Apple’s A7 chip, 64-bit processing power, and a CPU that’s twice as fast as its predecessors. Importantly for life on the road, all of this comes without sacrificing any of its battery life. The Wi Fi and Cellular model also supports a range of 4G LTE bands enabling you to make quick, easy connections the world over.
Sony Xperia Z1 – Rugged and still smart If ever there was a smartphone that can take all you can throw at it, this is it. The Sony Xperia Z1 is both durable and smart.
Nokia Lumia 1020 –more than a Windows phone The Nokia Lumia 1020 Windows phone comes ready to synch with your personal and business Windows accounts, enabling easy collaboration and working via the cloud. With the Windows Phone 8 operating system you can keep all of your messages, emails and social networks in one place. The phone quickly launches apps and lets you see instant news, travel and weather updates via Live Tiles. You can also safely backup your files online and share them easily with others using SkyDrive. The Nokia 1020 uses a Qualcomm dual-core 1.5 GHz processor, is 4G ready and has up to 19 hours talk time, so you can make long conference calls without fear of being cut off.
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The external environment is not the only thing the Z1 can withstand. Its 2000mAh battery with intuitive stamina mode maximises functionality while minimising drain, so it won’t fail you when you are travelling and need it most. The Z1 is 4G ready and with a powerful 2.2 Ghz quad-core processor running the Android Jellybean operating system, it won’t seize up whilst you are downloading or streaming content.
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FEATURE
An Island in Transition A small island in the Indian Ocean, Mauritius is not one of Africa’s best known nations. However, it has weathered the economic storm of the global financial crisis extremely well and beats many African countries in terms of development rankings, it is even a world leader for economic freedom. Technology Banker takes a look at the Mauritian economy and finds out why its financial services sector in particular, is doing so well.
Dodos, sugar cane and sunshine are typical images that come to mind when thinking about Mauritius. As with many smaller states that don’t feature a great deal in the international media, Mauritius suffers from preconceptions born of historical reference. From an economic perspective, Mauritius is an island in the midst of enormous change. It no longer relies on its manufacturing and agricultural industries for the majority of its income, instead, the island has diversified and is successfully reaping the rewards of growth in tourism, finance and ICT. Given its unique and very tropical location, Mauritius has always been likely to attract the attention of sun-seeking travellers, however, its accessibility has increased as the cost of flying has reduced. In 2012, Mauritius welcomed 965,000 people to its shores, an increase of almost
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100,000 since 2009. This growth has led to an increase in earnings from the industry, which now brings in 44.4 million rupees compared to 35.7 million in 2009. Not a tax haven The big winner from a Mauritian perspective has been its financial services industry. Not only did it grow by 5.7% in 2012 but it also contributed 10.3% to GDP, a level which has been stable throughout the global financial crisis, something which in itself, is quite a feat.
As evidence of its compliance with international norms regarding taxation, Mauritius has signed numerous tax information exchange agreements (TIEAs) enabling details of those with money in the island to be shared with other countries,
Like small international finance centres the world over, Mauritius shuns the label of ‘tax haven’, preferring instead to be seen as a financial centre which benefits from low tax provisions. Indeed, both personal income tax and corporation tax are set at 15% but this tumbles to 3% for Global Business Companies (GBC) registered in the island, once the available tax credits are applied.
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should investigations warrant it. These moves to enable sharing have also led to the nation being placed on the OECD’s white list for implementation of the globally agreed tax standard, which officially means that it is not considered to be a tax haven. “We’re not a tax haven because there is no secrecy,” Mauritius’ Vice Prime Minister and Finance Minister Xavier-Luc Duval told the Africa Report (theafricareport.com). “You can’t open a bank account here without giving your full details. We are happy to exchange tax information with all our partners.” Bipartite regulation Naturally, in order to maintain its position on the white list, Mauritius needs to ensure that its regulatory standards are maintained. The island has a bipartite system of regulation for the financial services industry with responsibilities split between the original regulator, the Bank of Mauritius and the newer body, set up
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in 2001, the Mauritius Financial Services Commission. The latter licenses and regulates the majority of the industry, keeping an eye on insurance companies, pension funds, capital markets, global business and other non-bank financial institutions. The banking sector is subject to licensing and regulation by the Bank of Mauritius. The Mauritian financial services sector is perhaps best known for servicing Indian investors and this has led to it provoking the ire of the Indian government. Relations between the two countries have improved and India even maintains a tax official in its embassy in Port Louis so as to ease the exchange of tax information. A full arsenal Whether investors are from India or elsewhere is unimportant to Mauritius, which maintains a wide spread of legislation enabling a full arsenal of entities and making it attractive as an international finance
centre. Companies, trusts, protected cell companies, limited partnerships and foundations are all available to tax structuring experts seeking to minimise their clients’ tax liabilities. Mauritius’ economic transition may well have been successful so far but it is a long way from being complete. The nation now stands higher than all other African nations in the World Economic Forum’s “Global Competitiveness Report” where it is ranked 49th in the world, having climbed nine places to replace South Africa as the continent’s most competitive economy. It is also developing an ICT industry which is growing stronger and has helped Mauritius to reach 72nd in the ITU’s global ICT Development Index (IDI). Among African nations, this is the second highest ranking coming in after the Seychelles. The two jurisdictions are the only African countries to exceed the global IDI average. In terms of global rankings, perhaps Mauritius’ most impressive achievement and some would say the main reason for the island’s economic success, is its position in the top ten of the most economically free countries on Earth. According to the Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal, Mauritius scores well for regulatory efficiency, business freedom, open markets and property rights, where it falls down is in freedom from corruption. If the powers that be are able to reduce corrupt activity, Mauritius may well be able to rise above its current eighth position and could even become a leading light for freedom of economic activity.
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JANUARY EVENTS FOR YOUR DIARY What: 4th Annual Middle East and Africa Insurance Summit When: 20 - 21 January 2014 Where: Dusit Thani, Dubai, United Arab Emirates Website: http://finance.fleminggulf.com/middleeast-africa-insurance
What: OMNICARD When: 21 - 23 January 2014 Where: Berlin, Germany Website: www.omnicard.de
What: Wincor World 2014 When: 21 - 23 January 2014 Where: A2 Forum, Rheda-Wiedenbrueck, Germany Website: www.wincor-nixdorf.com
What: Mobile Money and Digital Payments Asia When: 21 - 23 January 2014 Where: Jakarta, Indonesia Website: http://www.mobile-money-gateway.com/event/mobilemoney-and-digital-payments-asia-2014
What: NFC Symposium 2014 When: 22 - 24 January 2014 Where: Stockholm, Sweden Website: www.nfcsymposium.com
What: IBEX India 2014 When: 23 - 25 January 2014 Where: MMRDA Grounds, Bandra Kurla Complex, Mumbai, India Website: http://www.ibexindia.com
What: Winter Mobile Payments Conference When: 29 - 30 January 2014 Where: Miami Beach Convention Center, Miami, Florida, USA Website: www.mobilepaymentconference.com
What: Card Innovation Summit When: 30 - 31 January 2014 Where: Phoenix Marriott Tempe at The Buttes, Phoenix, USA Website: www.card-innovation.com
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FEBRUARY EVENTS FOR YOUR DIARY What: Enterprise Mobility Africa Summit 2014 When: 6 - 7 Februray 2014 Where: The Maslow Hotel, Johannesburg, South Africa Website: http://www.emasummit.com/
What: World Cards and Payments Summit When: 10 -12 February 2014 Where: Dubai, UAE Website: http://finance.fleminggulf.com/cards-and-paymentssummit/venue What: Islamic Finance Summit When: 10 - 12 February 2014 Where: Marriott Grosvenor Square, London, UK Website: http://www.euromoneyseminars.com/ EventDetails/0/6663/13th-Annual-Islamic-Finance-Summit.html
What: FinovateEurope When: 11 - 12 February 2014 Where: London, UK Website: http://www.finovate.com/europe2014/
What: MobileMoneyExpo 2014 When: 12 - 13 February 2014 Where: Lagos, Nigeria Website: www.mobilemoneyexpo.com
What: Mobile East Africa When: 12 - 13 February 2014 Where: Southern Sun Mayfair, Nairobi, Kenya Website: http://mobileeastafrica.com/2014/
What: China ATMs 2014 When: 25 - 26 February 2014 Where: Ritz-Carlton Beijing Financial Street, Beijing, China Website: http://www.rbrlondon.com/events/china
What: Customer Analytics & Insights in Retail Financial Services When: 26 - 27 February 2014 Where: Marriott Regents Park, London, UK Website: www.customer-analytics-in-finance.com
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Ecobank is the leading pan-African bank with operations in 33 countries, contributing to the economic and financial integration and development of the African continent.
Fiserv, Inc., a leading global provider of information management and electronic commerce systems for the financial services industry, providing integrated technology and services that create value and results for our clients.
Website: http://www.ecobank.com/ default.aspx
Website: http://www.fiserv.com/index. Website: http://www.inmarsat.com/ htm
Global Bankers Institute is a Training, Communication and Consulting Firm dedicated to serving the financial services community. It provides modern training without sacrificing the principles on which today’s banks were built.
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Website: http://www.globalbankersin- Website: http://www.infosys.com/ stitute.com/index.php pages/index.aspx
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Entersekt is an innovator in transaction authentication and introducing an isolated communication channel between phone and financial institution that avoids reliance on the open Internet for user and transaction verification. Website: http://www.entersekt.com/
INETCO and our global partner community provide business transaction management, communication gateway solutions, consulting and implementation services for the electronic processing and financial payments industry.
VCASH allows you to transfer and receive money locally and through Western Union using your phone or online, plus much more. VCASH is fully licensed by the Central Bank of Nigeria to deploy mobile payment services in Nigeria.
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Website: http://www.inetco.com/
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Website: http://www.satadsl.net/
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Human Capital Performance Improvement Audit Are you completely satisfied with the Return on Investment (ROI) from your current training? Are your training budgets driven by business goals and Key Performance Indicators (KPIs)? Are you holding training vendors accountable for quantifiable business improvements? Based on over 25 years of providing the BEST! Training, Communication and Consulting Solutions to the banking industry worldwide, the leaders of Global Bankers Institute have designed the Human Capital Performance Improvement (HCPI) Audit. The HCPI Audit is the first-of-its-kind service to offer the following benefits: 1) Ongoing Performance Improvement Plan based on cascading Strategic and Operational Goals. 2) Comprehensive Training Plan with behavioral outcomes aligned to Key Performance Indicators (KPIs) and Key Performance Measures (KPMs) resulting in a concrete Return on Investment for all training. 3) Effective Training showing measurable benefits in Sales, Customer Satisfaction, Operations Productivity and Quality, Employee Motivation, Risk, and Compliance, as well as any other identified bank goal. 4) Efficient Use of Training Budget through improved curriculum priorities and vendor selection and negotiation. 5) Holding Training Vendors Accountable by making them partners in the HCPI Audit process and requiring that they accept responsibility for delivering measureable improvement through their programs. Please contact me to let us know how we may best serve you. Global Bankers Institute brings experience, innovation and value, providing the BEST! Training, Communication and Consulting solutions to the financial services industry.
Dr. Linda Eagle Founder and President Global Bankers Institute 245 Park Avenue New York, NY 10167 +1.212.579.5500 ext. 3106 +1.646.236.7538 (mobile) linda.eagle@globalbankersinstitute.com www.globalbankersinstitute.com
Global Bankers Institute
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ASIA’S PREMIER BANKING TECHNOLOGY EVENT IS BACK !
6TH ASIA’S PREMIER BANKING TECHNOLOGY EVENT
23 & 24 SEPTEMBER 2014
KUALA LUMPUR CONVENTION CENTRE www.banktechasia.com For more info please contact : Email : info@banktechasia.com Tel : +603 2170 1588 Web : www.banktechasia.com organised by :