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The Voice for Banking and Finance in Africa
www.technologybanker.com
October 2012 ÂŁ3.99
Innovation Prize Africa: Improving African Economy through Innovation Mobile Money: The Platforms Behind The Service
The Cost of ATM Fraud and Crime in Africa
How banks defend themselves
We look at the different platforms behind the mobile money service in Africa
Where there is money, crime naturally follows. And ATM is no exception
Security is a real threat to the banking sector. So, how do banks fight back?
against cyber attacks
FROM THE EDITOR
Welcome to Technology Banker - Informing, Influencing and Insipiring Business Security in banking is the hot topic
the banks’ systems and how they can be prevented.
this month. In late September, two
Continuing with our security theme, we also look at the
of America’s top banks, JP Morgan
cost of ATM Frauds and other crimes against the banking
Chase and Bank of America were
and financial sector.
attacked by hackers. Speculations were rife about ‘who did what’.
I hope that you enjoy our October issue. If you want to
However, it highlighted the fact
express your opinions on any of the topics we covered
that, even top organisations
this month, feel free to e-mail me at hope.varnes@
with big security budgets are
technologybanker.com
vulnerable to attacks. And African Banks are not immune to cyber security threats. In fact, Deloitte & Touché in
For now, enjoy your copy of Technology Banker or visit our
2011, claimed that security threats are costing East
website for daily updates.
African banks in the region of $245 Million every year. In this issue, we examine the different methods of attacking
Hope Varnes, Editor
CONTENTS Page 4 The Cost of ATM Fraud and Crime in Africa Where there is money, crime naturally follows. And ATM is no exception. So, how much is it costing the financial institutions Page 6 Security news Is your Oracle Database Safe? Look out for the new Pushdo Botnets Page 7 Virtual defence: How banks defend themselves against cyber attacks Security is a real threat to the banking sector. So, how do banks fight back? Page 9 Nigeria: Attacks on Telecom Infrastructures Hang over Operators Four Telecoms infrastructure were attacked in September. But why? And what are the consequences?
Page 11 Banking News Latest news on banking organisations across Africa Page 12 Telecommunication News Latest telecommunication news across Africa and Asia Page 14 Mobile Banking Apps: The Benefit and the Hurdles that Banks Face We look at the hurdles that banks are facing in encouraging customers to maximise the use of mobile banking Page 17 Executive Interview Jean-Claude Bastos de Morias, co-founder of Innovation Africa Foundation talks about the inspiration behind Innovation Prize Africa and the success it has achieved in the last two years
Page 21 Mobile Money: The Platforms Behind The Service We look at the different platforms behind the mobile money service in Africa Page 26 New Appointments Who’s Who in the African Banking & Finance Sector Page 28 Events for your diary Events that you should not miss this month Page 29 Gadget Review We look at the top smartphone makers that are taking over Africa’s Smart Phone Market, and why they are popular
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FEATURE
The Cost of ATM Fraud and Crime in Africa In the last nine months, banks in Africa, South Africa in particular, have endured a spate of ATM bombings. At the time of printing, the last bombing reported happened on 19th August 2012, at about four in the morning. Three ATMs located at a shopping centre in Centurion were blasted. Two of them were owned by ABSA and one was by FNB By Aisha Benson
tatistics showed that bombings have gone up by 61% last year, from 247 in 2010 to 399 in 2011. As, 2012 is just half way through, it isn’t yet known whether there will be less or more attacks this year than last year. There is official figure on the amount of monetary losses that the banks incurred on last year’s attacks. However, in 2007, FNB disclosed that it cost the bank 300,000 rand ($35,863.00) to build an ATM site. Using this as a yardstick, we can hazard a guess that African banks had lost in excess of $14 Million last year, excluding the money that the criminals had stolen. However, bombings are not the only crime carried out against ATMs. Where there is money, crime naturally follows. And ATM is no exception. Since ATM is still a relatively young technology in Africa, advanced ATM security infrastructure and expertise are not yet fully in place. This makes Africa a vulnerable target for organised financial criminal syndicates, who have already gained high level experience cracking the security measures put up by Europe and America.
4 | Technology Banker October 2012
At present, it is not easy to measure the financial losses that banks are incurring from ATM fraud, as African banks are not forthcoming with the figures. However, according to the record provided by the European Information Security Agency (ENISA), European banks are sustaining around â‚Ź500 million losses through ATM fraud. If we take this figure as a yardstick, we can hazard a guess that ATM fraud is costing African banks millions of dollars.
Common ATM Crimes in Africa Card Swapping This method is done using sleight of hands trick. The criminal watches the customers enter their PINs, memorise it, then distract the customers and quickly change the card. This method is easily prevented customers by making sure that no one is observing when they are keying their PIN, or not be distracted during the transaction.
Card Jamming In this case, the criminal tampers the machine so that they can record the customers’ PIN when they key them in, and then keeps the card. Once the customers left, the criminal then removes the card and the recorded PIN. The only way the customers can prevent the criminals from using their cards is to call the bank within minutes after the card has been kept by the machine.
Vandalism ATM machines are purposely damaged. The vandals may simply smash the machine or jam the card reader so the customers can’t use it. The point behind the act is not to steal money, but simply to cause disruption in the service. Usually carried out by gangs rather than hardened criminals.
Physical attacks Bombing is the main method of physical attack on ATM in Africa, but some criminals also use ram raid or smash and grab attack. In ram-raid, the criminals knock the machine off its foundation by driving into it. They would then take the ATM in their hideout where they can break into it.
Customer Education: Key to Prevention Although bombings and other physical attacks require major investments in security, banks can considerably reduce their cost on protection and at the same time improving their relationship with customers. Banks are losing money, not only as a direct result of ATM fraud, but also through the loss of business from customers who moved their banking elsewhere due to loss of trust. When it comes to banking security, customers are the weakest link. It is a basic human instinct to take the easy way and criminals are not immune to it. Gathering information by tampering an ATM is easier than bombing it. It is therefore a preferred method of choice for criminals. By educating their customers, banks are ensuring that their customers are likely to spot possible fraud and act on it. Additionally, educated customers are more careful.
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SECURITY NEWS
Log On Protocol Left Oracle Databases Vulnerable A fault in the authentication protocol of Oracle Database 11g Releases 1 and 2, left the software open for remote hacking. As part of the authentication process of Oracle Database 11g, the server sends a session key and salt to the client. This process can be intercepted by the hacker On his interview with Threat Post, Esteban Martinez Fayo, a researcher at AppSec Inc, explained that “Once the attacker has a Session Key and a Salt, the attacker can perform a brute force attack on the session key by trying millions of passwords per second until the correct one is found. Rainbow tables can’ t be used because there is a Salt used for password hash generation, but advanced hardware can be used, like GPUs combined with advanced techniques like Dictionary hybrid attacks, which can make the cracking process much more efficient.” Oracle has now replaced the protocol version 11.1 authentication with version 12. However, it is not planning to fix the problem on version 11.1. Fayo is convinced that this will still leave the database service vulnerable. He recommends that Oracle change the server configurations to ensure that it will only allow version 12 to work.
South Africa: Second most targeted country for Phishing attacks According to Symantec.cloud Intelligence Report released by Symantec in July 2012, South Africa is vulnerable to cyber threats. 68.5 % of e-mail traffic to South Africa is spam. The country is also the second most targeted for phishing e-mails with 1 in 171.2 phishing e-mails was sent to South Africa. IT and Finance sectors are highly targeted with 1 in 750.9 emails sent to IT companies and 1 in 285.9 sent to the Finance industry.
6 | Technology Banker October 2012
Online Banking targeted by Android Trojan Attacks
SMS smartphone authentication systems are being targeted by criminals by intercepting the code to authenticate online banking transactions, security company Trusteer warns the public. Trusteer has seen an increase in mobile attacks based on Tatanga Trojan and SpyEye Trojan or SPITMO (SpyEye in the Mobile). Mechanics of each attack varies on the location. According to Trusteer CTO, Amit Klein, “Once fraudsters have infected a victim’s web and mobile endpoints, very few security mechanisms can prevent fraud from occurring.” The attacks are strongly focused on the use of smartphones in banking.
Small Websites Targeted by a new variant of Push Do Botnet Pushdo creates a backdoor in the infected machine so it can be manipulated remotely. It uses the same tactics as the Zeus Banking Trojan. The original version of Pushdo Trojan used infected machine to send out spam e-mail and also gathers e-mail addresses from the compromised computers.
FEATURE
Virtual Defence: How banks defend themselves against cyber attacks By Hope Varnes
n 20th September 2012, the financial sector in America was put on ‘high alert’ against cyber-attack, after Bank of America and JP Morgan Chase suffered a distributed denial of service (DDoS) attack. Early this year, Guardian Analytics and McAfee released their report on ‘Operation High Roller’, a cyber-attack that targeted ‘high roller’ consumers with an average of €250,000 to €500,000 in their accounts. The report revealed that cyber criminals have stolen just over €61,000,000 from European and American banks. Cyber security attacks like these are real threats in the banking sector worldwide. And as the African banking sector embraces online banking, it becomes more vulnerable to cyber threats, mainly due to the low budgets allocated for IT security systems and shortage of trained local experts. A report published by Deloitte & Touche in 2011, claimed that security threats are costing East African banks in the region of $245 Million every year. For banks to defend themselves, it is vital that they understand the types of attacks that they are up against. There are six main categories of cyber threats: Security Exploit, Social Engineering, Eavesdropping, Direct Attack, Backdoors, and Denialof-Service attack.
Security Exploit
Security Exploit is a software or a series of commands used by an attacker to take advantage of the misconfiguration or ’glitch’ in the computer system. The attackers use the exploit to work out the misconfiguration in the system and use it to break the security and gain access to the bank’s system or network. Once the attacker has gained entry, it can control the computer system allowing them to conduct any operations they wanted to do. T could be denial of service, or transferring customers’ money to different accounts.
Social Engineering
Social Engineering is the term used for taking advantage of people’s carelessness or deliberately deceiving them to reveal their personal details and password to gain access to a secure account in the computer system. Phishing is an example of social engineering.
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Eavesdropping
Eavesdropping is covertly listening to a private exchange between systems on a network. It is not only used by criminals but also by governments arm such as the FBI and NASA, which use programs like NarusInsight and Carnivore to observe the internet activities. Attackers are able to eavesdrop even on machines that are not connected to the internet by using tools like TEMPEST, which monitors the electro-magnetic transmission produced by the machine.
Direct Access Attack
As the name suggests, this type of attack is done through direct access into the computer. The attacker directly installs a device into the computer and breaks its security by installing software worms, listening devices or key loggers, allowing them to disrupt the function of the computer or monitor its activity. For instance, by installing a key logger, the attacker can capture bank account numbers and passwords.
‘Know thy self, know thy enemy.’ Sun Tzu (The Art of War)
Backdoor Attack
Sometimes, programmers create a backdoor in a computer algorithm that sidesteps the security system so they can access the program if they need to troubleshoot a problem. Attackers use this backdoor (or they install one as part of security exploit) to access the bank’s system remotely. Once inside, they’ll be able to perform any actions they want. A military theorist, Carl von Clausewitz popularised the quote: “The best defence is a good offense.” However, when it comes to cyber-attacks, ‘the best offense is definitely best defence.’ Fighting cyber-crime is about ‘protection...protection... protection.’ Fortunately, although cyber-criminals are getting clever in finding ways to breach security system, IT security companies are just as clever and quick on the defence. There is no shortage of tools available in the market to protect the banking consumers. The tools are three main security tools. These are security scanners, Layered Authentication, Real-Time Fraud Detection, and Public Key Infrastructure.
Security Scanner
A security scanner is used to detect the presence of security exploits in the system. There are two types of scanner: Host security scanner and Network Security scanner Host security scanner tests the operating system and application originally installed in the computer for any vulnerability in the system that can be exploited by attackers. While a Network Security Scanner examines a network of computer connections.
Strong Authentication or Layered Authentication
An authentication approach that relies, not just on log in ID and password authentication but also other identifiers such as security token (e.g. security code at the back of the card), biometrics and/or digital certificate.
Real-Time Fraud Detection
Real-Time fraud detector system monitors customer sessions and analyse the transaction and access information. It detects navigation patterns and speed, anomalies in IP addresses and then computes the risk related with a specific operation. If it identifies a risk, it automatically increases the security measures and requires further authentication.
Public Key Infrastructure (PKI)
A PKI is a system for creating, managing, distributing, using, storing and revoking digital certificates. The Public Key Infrastructure defends the bank’s system by creating a pair of keys: public and private keys, these are sets of long numbers generated randomly. The public keys, as the name implies are available to the public, while the private key is confidential and only privilege users have access. A secure data is encrypted with a public key, which only a corresponding private key can decrypt.
Customer and Personnel Education
The human factor in cyber-security should never be underestimated. Security software is only as good as the humans who implements. Human error and negligence can easily make security software useless. Strong authentication cannot stop an attacker from raiding a customers’ account, when said customer naively gave the attacker the authentication detail.
8 | Technology Banker October 2012
FEATURE
Nigeria: Attacks on Telecom Infrastructures Hang over Operators Five months after Islamist militant organization, Boko Haram, issued its warning to telecom operators, four infrastructures were attacked and destroyed, leaving operators with a big financial hole By Kingsley Kobo
In April 2012, Boko Haram, a jihadist militant organisation based in the northeast of Nigeria, issued a threat to telecom companies operating in the country, warning them not to break ethical obligations by helping the security forces to monitor and track down its members. The Islamist movement said it would carry out massive attacks on telecommunications infrastructure if its calls were not heeded. Nigerians, including the authorities, regarded the warnings as bluff by the group to get publicity. However, the police department took precaution by increasing the strategic security around telecommunication equipment and installations, especially in areas defined as danger zones.
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The initial apprehensions faded when nothing happened. However, in September, telecom infrastructures suffered simultaneous attacks in four northern states including Borno, Gombe, Yobe, and Kano. The attacks damaged base stations, towers and other equipment. I also disrupted mobile phone coverage. The Association of Licensed Telecommunication Operators of Nigeria (ALTON), says 25 Base Transceiver Stations (BTS) belonging to nine operators were ruined, with a total loss estimated at N20 billion ($120 m). The operators worst hit by the attacks, according to ALTON, are MTN Nigeria, Etisalat, Airtel, Globacom, Multi-Links, Helios Towers and HIS.
Why the attacks?
Barrister Jude Akinyola, a Lagos-based lawyer and expert in terrorism, told Technology Banker that Boko Haram is angry that telecom operators are taking sides. But ALTON has denied accusations that the operators in the country helped security forces to track down Boko Haram members through their call logs. Akinyola added that ‘the attacks were not meant to kick the operators out of business but to warm them of what they believe to be an action taken against them by the telecom operators, despite the operators’ rejection of any involvement.’ So far, Boko Haram has not officially confirmed that they are behind the attacks. However, military joint task force spokesman, Lt Col Sagir Musa from Maiduguri, said the group is the prime suspect.
Heavy financial and service consequences
The recent wave of attacks has dealt a big blow to the telecom operators’ finances. Earlier this year, the Nigerian Communication Commission (NCC) imposed a collective fine of N1.17 billion ($7,420,000) on four main operators for not meeting stipulated quality of service benchmarks set in the Key Performance Indicators. They could be slapped with another round of sanctions by the end of this year if the quality of their services does not improve. Operators blamed the delayed deployment of infrastructure for the poor quality connection, and the attacks just aggravated the problem. Telecom operators are currently on tenterhooks, waiting and hoping that there will be no follow-up attacks. Subscribers are also affected by the attacks as operators have to halt expansion plans. They now have to wait longer before they get better service. Additionally, telecom operators will have to recoup their losses, and the only way they will be able to do that is to increase charges in the future.
‘The attacks were not meant to kick the operators out of business but to warm them of what they believe to be an action taken against them by the telecom operators. Despite the operators’ rejection of any involvement.’Barrister Jude Akinyola
New Telecom Bill
Many Nigerians are not aware of this, but the attacks are yet to be recognised by the law as a criminal offense. And there are no penalties defined for such offences. This prompted the NCC to draft the Telecoms Infrastructure Bill. This has now been submitted to the National Assembly, but the passage is yet to be expedited despite the unprecedented pressure from the commission. If voted, the bill would make the vandalism of telecom infrastructures a criminal offence and would ensure the protection of telecomm infrastructure across the country. The question is: who will be brought to justice if nobody was caught in the act, as, unfortunately, in this case?
10 | Technology Banker October 2012
BANKING NEWS
Communication Campaign: The New Nelson Mandela Banknotes In September, the South African Reserve Bank launched the new Nelson Mandela banknotes The new release is part of the central bank’s best practice to fight counterfeiting. Gill Marcus, the current South African Reserve Bank Governor, said during her speech in Pretoria, that the currency is reflecting the country’s culture and heritage. The launch of the new bank noted was accompanied by a massive media campaign in order to educate the people about counterfeiting. The new banknotes is hoped to be in circulation by the end of the year and will co-circulate with the old notes.
Mobile Banking by Unity Bank Nigeria: Unity bank has re-launched its Mobile Banking application, through Unity Mobile platform. The re-launch was part of the banks regeneration process of upgrading and amending bank services for their clients. According to Sani Zaria, Head of Media Relations for Unity Bank said that its mobile banking application is simple to use. It will give customers access to their bank account 24 hours a day, any time they want. It assures customers that it is very secure as their IT infrastructure is powered by Oracle 11g. However, this last claim may be hanging on the balance in light of the news that the Oracle 11g log on protocol leaves databases open to hacking. (See security news on page 6)
Suspension of Naira Reforms Nigeria: President Goodluck Jonathan has suspended plans to introduce new series of banknotes in higher denomination and coins. The supposed introduction of new notes would have replaced the 1,000 naira notes with the new 5,000 naira notes and replace 20 naria and smaller notes with coins. The suspension intends to give the Central Bank more time to clarify the need for the reforms. Currently, Nigeria’s highest bank denomination is 1,000 naira notes.
South African Banks gone beyond expectations beating their counterparts According to a report published by PricewaterhouseCoopers on 19th September 2012, the combined earnings and average Return of Equity (RoE) of South Africa’s four biggest banks have outperformed those of their Western peers. During the time of extreme financial instability, FirstRand, Nedbank, Absa and Standard Bank, managed to achieve R21.3 Billion combined earning and 15.9% RoE. The four banks’ RoE was much higher compared to the RoE of the commercial banks in the US which only managed to achieve 2.1% and Canadian banks which achieve 14.7%. The continuous adaptation of evolving technology in banking could be part of the big success enjoyed by South African banks.
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TELECOMMUNICATION NEWS
Farmers to use Electronic Wallets by 2013
KENYA: NO MORE FAKE PHONES
Mobile phone services to consumers who are using fake phones in Kenya will be disconnected by 30th September
Mr Francis W. Wangusi, directorgeneral for Communications Commission of Kenya (CCK), has reiterated that there will be no further extension to the given deadline in cutting off services to consumers using fake phones. Subscribers are urged to handin their fake mobile phones to companies that are collecting for recycling and try to buy an original phone. Mr Wangusi claims that the campaign is not aimed to punish the subscribers but to eliminate the fake mobile phone market in Kenya. In his speech given during the launch of Samsung’s ‘Give up the Fake’ campaign, Mr Wangusi explained that fake phones are illegally imported in to Kenya, and therefore are not licensed and authenticated by CCK. As a result, CCK is missing out on revenue and so does the Kenya Revenue Authority, as it can’t collect importation duties on illegal imports. Mr Wangusi also added that the fake phones are health hazards. Consumers who breach the statute will face a Sh300,000 fine or a 3-year jail sentence or both.
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21st September 2012: Nigerian government announced that it will distribute 10 million mobile phones to farmers across the country by 2013, as part of the Growth Enhancement Support Scheme. The distribution of mobile phones is part of the drive to support local farmers. The mobile phones will give farmers easy access to seeds and fertilisers. In the current scheme, small farmers who are registered with the government will receive free maize, cotton and rice seeds. They will also pay a subsidised price for UREA and NPK fertilisers. The farmers can access the program online, using the phones provided by the government.
Blackberry customer suffered outage as iPhone 5 launched Simultaneous with the iPhone 5 launching, Blackberry users in Europe, Middle East and Africa, EMEA experienced an outage. The reported incident affected internet applications such as, email and BBM, excluding voice and text services. All Blackberry services in Europe and Africa were restored later that day. RIM CEO and President, Thorsten Heins, released a statement clarifying that the outage only resulted to delayed message delivery and disruption of reception. The outage only lasted for a maximum of 3 hours and there were no data lost.
Zimbabwe: Cheaper rates for mobile consumers According to Charles Sibanda, directorgeneral Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), the government body is working on a new costing model. At present, the Potraz is using the Cositu costing model, which has been in use since 2000, but is no longer relevant to the present set-up. Switching to a cost-based tariff will result to cheaper tariffs for consumers. The change is hoped to benefit all concerned, including operators, the government and the consumers.
VENDOR’S PAGE
Is Cashless ATM Possible? Meet RTM from KAL Technology Banker talks to Steve Hensley, KAL’s EVP for Global Sales, to find out about, RTM, and its possibilities in Africa
Can you give us more information about KAL? Do you currently have a presence in Africa?
KAL is an ATM software company and we’ve been in business for over 20 years. KAL’s headquarter is in Edinburgh, Scotland and we have offices in Cincinnati Ohio (USA), Sydney and Mumbai. We also have other global satellite offices. KAL software controls the ATM including the user interface and all of the business logic and KAL server-based software monitors the operation of all of the ATMs on the network in real-time.
Our clients include major banks like Citibank, Unicredit and China Construction Bank. In the case of Citi Bank, they use KAL software for their global network of ATMs including KAL’s monitoring and management system to keep all of the ATMs up-to-date and operating as efficiently as possible. Our large clients run our software in very large networks of many thousands of ATMs with many foreign languages and supporting all of the security and operating rules and regulations of many countries.
KAL sells our software directly to these big bank plus we have a large network of resellers who sell our software globally – in fact, KAL software is installed in over 80 countries today. Our presence in Africa is fairly evident. The Cooperative Bank of Kenya uses KAL. They use our ATM software to run their ATMs and also our KTC system to manage and monitor their ATM network. We also have other installations in Africa through our reseller partners.
How big is your market in Africa?
It is a new territory for us because as of today, we don’t have a direct sales focus in Africa. What we have been actively doing for the last several years is establishing distributor relationships with companies throughout Africa.
What is the idea behind RTM?
RTM was born from discussions with banks in countries where they really struggled to reach outlying areas. We looked closely at other ideas like M-Pesa and other things that are provided in Africa and we believe that they are all limited in what they can provide to the bank and to the consumer as well. Most importantly, they don’t provide cash. But people love cash. Cash circulation everywhere is increasing not decreasing. RTM is a way for banks to put a selfservice structure out in places where may not be efficient to have branches or ATMs. Some people have the idea that it will replace ATM, but that is not the goal of the RTM. Instead, it is for banks to extend their presence in places where the transaction volumes are relatively low and it doesn’t make sense or it is not cost effective to build a branch or put an ATM. The RTM was globally released on 19th June in New York.
So far, what is the response to RTM?
It’s been overwhelming. The banks in developing countries loved the idea. Banks, small and large, from developing countries and developed countries are coming to us saying that it fits with them as well. What many banks are saying to us is that the RTM can provide all of the basic banking services plus do new additional transactions. Also, the RTM can support video conferencing so the consumer can speak directly with a financial expert or customer support.
What is the future for KAL in Africa?
Currently, we are in the process of forming relationship with companies who will help distribute the RTM product in the region. Interest from Kenya, Nigeria and South Africa has been very strong.
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MOBILE BANKING
Mobile Banking Apps: The Benefit and the Hurdles that Banks Face Most customers will not use mobile banking apps, not because they do not want to or worried about security, but because they cannot be bothered By James Akinolu
he growing popularity of mobile money, the increasing affordability of smartphones and tablets, and customers’ familiarity with mobile applications are putting pressure on banks to launch their own banking apps or be left behind. This month we will examine the real benefits of banking apps to both the banks and the customers they serve. We will also look at main hurdle that is slowing the customers’ the uptake of banking apps.
14 | Technology Banker October 2012
The Benefits of Banking Apps Reduce cost Although creating banking applications require upfront investments, both on developing and marketing the products, in the long term, it reduces banks’ operational costs. Its self-service features reduce the need to build new branches, staff time spent on processing transactions and costs on printing statements and marketing materials. It will also reduce banking cost for customers.
Convenience and Accessibility In Africa, where there is only one bank branch per 100,000 populations, banking apps are the easiest way to make banks more accessible to customers. With banking apps, customers do not have to go to branches to check their balance, transfer money or pay their bills. They can all do it from their own home, at the office while they are at work, or while on holiday.
Security Security is always a major concern for customers when using their banks’ application. However, applications can also make banking more secure, as it makes it quicker for customers to spot anomalies on their accounts. Banks can also use their apps to alert customers about current frauds and scams in the marketplace.
Potential New Revenue Banks can use banking apps to sell value-added products to customers, including financial advice, insurance and loans. Selling these products to customers on the counter slows down the customers’ transactions and use up more staff time. Banking apps eliminate these concerns.
Extra Marketing Platform Apps can help banks increase their brand’s awareness by offering customers free value-added services, such GPRS, loan calculators, insurance calculators and financial planning tools and location map tools that shows merchants who accept credit cards or mobile money payment. All these services are important to customers.
Banking Apps Hurdles Security Concerns One of the major challenge banks are facing is customer’s concern about security. Mobile banking applications are still a new concept for customers, and it is right for them to be cautious. However, customer caution is not going to help banks to increase uptake of their application. The only way to overcome this problem is to educate customers. Bank should inform their customers about all the security precaution they put in place to protect their account. If banks are using third-party providers, they should thoroughly vet their providers’ security and service reliability. It is also recommended that apps should be stored in the banks’ secure host server rather than the customers’ mobile gadgets.
Apathy Apart from security, customers’ apathy is a major hurdle for banks to overcome. Most customers will not use mobile banking apps, not because they do not want to or worried about security, but because they cannot be bothered. If they are comfortable with the way they currently bank, it will be difficult to get them to change it. Change requires effort. It requires customers to spend time learning, time that they would rather use for something else. Banks can only overcome customers’ apathy by making it worth their while to make the change.
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EXECUTIVE INTERVIEW
Innovation Prize Africa: Improving African Economy through Innovation In July 2012, United Nations Economic Commission for Africa (ECA) and the African Innovation Foundation (AIF) called for applications for the 2013 Innovation Prize for Africa (IPA). Technology Banker talked with Jean-Claude Bastos de Morais, the AIF Founding Board member, to find out more about this initiative and how the banking industry can help promote technology innovation in Africa
How long has IPA been running?
This is the 2nd Edition of the program. Our 1st Edition was launched in 2011 and the Awards were given in March 2012. In the 1st Edition, we had 458 candidates applying, from 38 countries. For me this was a very successful launch of this initiative.
Where will it be hosted and what month?
We don’t have the final details yet. We got a lot of requests and offers from different countries. I was quite astonished. I thought we had to fight to get a place to host it. We are invited to do it again in Addis, but I think it will be good if we use a different venue every year. This year we’ve been asked to host the event in South Africa, which we are considering doing in 2014. For this year’s award, we are still finalizing details with UNECA, our partner based in Addis, and we will decide shortly.
What is the inspiration behind it?
IPA was inspired both personally and professionally. Firstly, I believe in the motto ‘Africa for Africa.’ I think it is time Africans do things for themselves. Otherwise, they will not have the right identity. Africa needs to create products for Africa.
Secondly, I have been involved in finance and venture capital fields and I have been working in Africa for the last 10 years. I have seen the problems of doing business in Africa. You have to fight all sorts of fights if you want to do business there. It is very complicated, and barriers need to be removed. In my opinion, this can only be changed by innovation. If Africans develop their own products, then African customers will have better products that are more appropriate for their needs.
On a personal level, before my Grandmother died, I made her a promise that I will do something for the continent.
www.technologybanker.com | 17
What is your view on mobile banking?
I think it is important because a lot of people in Africa are doing business in an informal market. But the requirements of the banking system are complicated and do not fit in with the African population. Banks put a lot of barriers for people, who are not poor but not rich either, to get a bank account. There are a lot of complicated questions to answer and forms to fill out. Not everyone has the ID, address and other data they require. So, I believe that mobile banking is definitely a solution for the population to have access to banking and to support small enterprises in their economic success.
What has IPA achieved so far?
We have achieved a lot, but one of the biggest successes is that IPA potential inspired African Ministers attending the 5th joined annual meeting of the African Union (AU) and the United Nations Economic Commission for Africa (UNECA) to pass a resolution to promote and focus on innovation over the next years. On the political level, members of the AU have declared officially that they will support innovation by passing this resolution. I think this is a big achievement for us.
The question is what happens next. So far, I’ve seen a lot of efforts in various countries to support innovations, and universities are better supported. My goal is to create a platform for innovators. And this platform will then create innovation ambassadors or stars, if you want to call them that.
We need innovation stars in Africa. We need people we can look up to and say ‘if they can manage to do that without money I can do it too.’ We need to create a platform so we can make our dreams come true and we can create an African dream based on that.
What are the contributions of the program to the development of the African economy?
We create a platform where innovators can come and get funding for their innovations which will drive the economy. For example, the winner of last year’s IPA is a professor, a genius in my eyes, who invented an antenna that the telephone companies and mobile banking providers can use to expand their coverage. It is lightweight, simple to implement and costs less. This means that providers can offer low cost solutions even to the poorest members of the society.
Additionally, through Innovation Prize for Africa, we’ve already generated a huge amount of interest for Africa. Africans in Diaspora are now focused on going back to their countries with their business ideas.
Finally, I think the biggest contribution of the program is that it attracts venture capitalists. Not from abroad, but from within Africa. And I think that this will be the greatest revolution for the continent.
When we have venture capitalists investing in innovation, Africa will have more small and medium size businesses; which Africa currently lacks. SMEs will generate more jobs, a degree of economic stability and independence from political relationship with multinational companies.
2012 IPA Winner: Mohamed Sanad
2012 IPA Runner Up: Zeinou Abdelyamine
18 | Technology Banker October 2012
2013 Press Briefing, Attribute: UNECA, Addis Ababa
How can businesses, especially banks, help to encourage innovation in Africa?
Due to the lack of venture capital, the banks in Africa have very stringent rules. A bank is normally a lending institution. They have to lend, then they get the profit. With their profit, they get a leverage to lend to the population, and they get interest rates.
The problem is if you have a very low capital or equity base when you start a business, the main risk of your business is transferred to the bank and they take a big risk in lending you money. So they ask for high collaterals and charge a very high interest rate. I think this is legitimate for the banks, but it’s not helping the economy.
In my opinion, the only way to help a country is to have venture capitalists who are willing to take the first layer of risk. Then, the banks take the second layer. It is then justified for the banks to reduce their interest rates.
I really believe that the first risk should be taken by the entrepreneurs and the venture capitalists, which is normally 20% to 30% at the beginning or early stage of the business. Once the business is starting to have recurring revenue and has gone beyond just an idea, then the banks can come in. If banks start to become venture capitalists, they will fail.
We cannot ask banks to take too much risk. If banks start lending money at the beginning of the business they will have a lot of bad loans in their books. So, they will need to be bailed out by a bigger bank, by the state, or they go bankrupt. Once this happens, they’ll become too afraid for their business. They will have too many rules. This happened in the ‘60s and the ‘80s. It’s cyclical. In Africa, we need to create an industry that is equity driven and then work hand and hand with the bank.
What is your message for Africans in Diaspora?
Come back to the continent because that is where the growth is going to be next. If you have ideas and have the courage to launch your ideas as an entrepreneur, you should come back. If you are professionals, come back and have the courage to work with the local institutions and increase the quality of services and talents. Innovation Prize for Africa is now accepting submissions from all African innovators including those in the diaspora. The deadline is October 31st, 2012. For more information about ‘Innovation Prize for Africa,’ visit: www.innovationprizeforafrica.org or e-mail ipainfo@africaninnovation.org
www.technologybanker.com | 19
TECHNOLOGY VOICE FROM AFRICA
Technology Voice from Africa By Paul Ndichu he African landscape has changed tremendously over the last five years and its future has never looked brighter. It is by far the fastest growing continent with a projected increase in population of over 500 million over the next 20 years. Fifty per cent of Africans are now in the middle class, with at least some discretionary income at their disposal. And there are now over 400 companies in Africa with revenues of over one billion dollars. With 70 per cent mobile penetration, Africans are marching into the digital age with gusto, experiencing the internet and a variety of other digital innovations for the first time primarily via their mobile devices.
Paul Ndichu is Cellulant’s Chief Business Officer for Africa
In mobile financial services, Africa has against all odds, taken the lead globally, with MPESA, leading the way with 12 million active users in Kenya and daily transactions of over one billion ksh. While mobile network operators are dramatically shifting the financial inclusion landscape, the banking sector is experiencing an identity crisis. The traditional banking model no longer suffices, but it has yet to create a viable new model. Savings accounts are no longer ‘sexy’. The ROA on physical branches is unattractive at best. To keep growing, banks have no choice but to proactively leverage alternative channels that reach and serve the African consumer. That’s where innovative technology comes in. Africa is ready, even eager to absorb technological innovation with a youthful population (40% are under the age of 14) marching into young adulthood. The time is ripe for the banking business model to transform into – Payments, Products & Channels to drive growth in liabilities, earning margins pertaining to it and creating ‘needs’ driven assets (loans) through technology. Paul Ndichu is Cellulant’s Chief Business Officer for Africa. Cellulant operates Africa’s largest mobile commerce network, providing solutions to industries such as banking, airline industry, insurance, music, utilities, retail & manufacturing. It has deployed mobile commerce platforms to over 40 banks and over 200 companies enabling banking, merchant services, digital services, bulk payments and agency banking via applications on android, iOS (apple) and related access channels such as USSD, SMS and Java applications. It operates over ten countries across Africa, including Kenya, Nigeria, Ghana, Tanzania, Mauritius, Zimbabwe, Mozambique, Rwanda, Uganda, Zambia, Botswana and Malawi.
20 | Technology Banker October 2012
MOBILE MONEY
Mobile Money: The Platforms Behind The Service By Hope Varnes
obile money is probably one of the most significant innovations that hit Africa in the last decade. Since Safaricom introduced M-Pesa in 2007, more than sixty mobile money services were deployed in the region. Just in September alone, three services were launch in Nigeria. Zenith Bank and Visafone introduced EaZy Money in early September and Etisalat followed with Easy Wallet and First Bank with Firstmonie. Mobile money has had a definite positive effect on the banking landscape in the region. First, it gave the large unbanked population access to a safe, easy and quick money transfer facility. Second, it offered small businesses the ability to accept payment. And finally, it made paying bills and receiving salary easy. Although mobile telecom operators were the first, and so far had the most success in the mobile money market, mobile money service isn’t exclusive to mobile network operators. Nor should banks set out to compete against them. A solid partnership between banks and mobile network operators will take mobile money implementation to a higher level, providing customers with more sophisticated financial services that will include credit, loans, savings and insurance products.
www.technologybanker.com | 21
The Infrastructures that power mobile money Behind what seems to be a seamless mobile money transaction is a complicated platform that ensures the safe and quick delivery of service to customers. This platform is a major investment and can take time to develop. However, this should not deter medium size and small financial organisations and mobile network operators from launching their mobile money products. Although Safaricom has its own in-house platform, a number of mobile money services offered by banks and MNOs are powered by third party platforms that offer a fast ‘go-to-market’ solutions. These platforms provide everything from costumer facing interface to back-end administrative functions.
Fundamo: the power behind MTN and Celpay The general public may not have heard much about Fundamo, but many are enjoying its service. Fundamo is based in South Africa and provide MNOs and banks the mobile wallet infrastructure. It is the platform that allows MTN and Celpay to offer P2P transfers, bill payments, balance enquiries, airtime purchase ad card and pin management. MTN is using Fundamo’s Mobile Wallet product to support MTN Mobile Money in a contract that cost $10 Million.
Comviva: the backbone behind EcoCash In August, Zimbabwe’s mobile operator Econet moved its EcoCash service Pattern Matched Technologies’ platform to Comviva’s “Mobiquity” platform. The platform is already used by over 55 banks and MNOs globally. The move was to enable Econet to incorporate over-the-counter merchant payments in its EcoCash service and allow its subscribers to use EcoCash to pay for their retails purchases. The Mobiquity platform also facilitates bulk payments, allowing employers to pay wages directly to their employees’ EcoCash wallets. It also integrates with banks, allowing customers to transfer money from their bank accounts t to their EcoCash wallet and back.
Obopay: Driving Warid Pesa, Uganda’s Mobile Money Service Obopay’s platform isn’t as sophisticated as Fundamo and Comviva, but it still provides the basics in mobile money service. It allows MNOs to offer P2P money payment, deposit cash to an agent or ATM and bill payments.
Choosing the Right Platform for Your Mobile Money Service •
Range of Products
•
Ease of Use
•
Ease of Updates
•
Cost
22 | Technology Banker October 2012
S
Who is going to tell them about the bright side of African economy?
The Voice for Banking and Finance in Africa www.technologybanker.com | 23
MOBILE MONEY
Mobile Money: Increasing Customer Uptake and Trust through Education There are over 50 million mobile money customers registered across the world but approximately less than 10 million are active. And it looks like majority of active customers are using mobile money for airtime top up and not financial transactions By Andrew Thompson
24 | Technology Banker October 2012
By Gates Foundation obile money has definitely made it easy for Africans to do p2p money transfers and pay their bills. However, the use for mobile money seemed to have stopped there. It hasn’t been used as a depository for cash or as alternative to a banks savings account. According to a report released by the Financial Sector Deepening Kenya, only 34% of mobile money customers maintain a balance in their account, while 68% were immediately withdrawing the money transferred into their account. And only one sixth of thee 34% use it for saving money. According to MasterCard, there are 130 mobile money deployments across the world, with a total of approximately 50 million registered mobile money customers. However, only 8 mobile money providers have over 1 million active users, 6 of them are in East Africa. A further study by MMU (Mobile Money for the Unbanked) also estimates that out of 5.5 mobile money transactions per active person per month, 3.3 transactions are for airtime top-ups. So, the question is ‘why are people not maximising the use of mobile money?’ Looking at the way mobile money providers are marketing their service, one can say that they have been quite successful. When Safaricom launched mobile money in 2007, their main value proposition was: send money home across the country easily. Five years on, and it hasn’t changed and the rest of mobile money deployment followed the value proposition. However, mobile money platforms have now evolved and offer more than just money transfer and airtime top up. So, why aren’t people using the service? How can mobile money providers increase the numbers of active customers and embrace mobile money in its totality? Financial education is the key solution to drive customers to use mobile money beyond cash transfer. It is of course fool hardy for providers to totally deviate their marketing message from money transfer to saving and financial security. After all that what the market wants. However, if mobile money has to move beyond its basic use, customers will have to use it differently, and providers have to keep teaching customers how to do it. Customers need to see first-hand how they can benefit from the latest offerings. They need to feel confident and comfortable about using their mobile phones over the counter. Their confidence can only developed by continuously showing them how it is done and the benefits for doing it. Using cash is an ingrained habit. People have been using cash for hundreds of years. Asking them to push a button on their mobile to pay at the counter instead of handing out hard cold cash is not going to happen overnight.
www.technologybanker.com | 25
NEW APPOINTMENTS:
Who’s Who in the African Banking & Finance Sector The banking and finance industry is only as good as the people behind it. Technology Banker has compiled a short list of professionals who have changed job, position or company recently in the line of duty for excellence, richer experience, gains, or in the wake of unpalatable developments By Kingsley Kobo Tineyi Mawocha Appointment: Tetrad Group, October 2012 Country: South Africa Specialty: Banking and Management At the end of September, Tineyi Mawocha is no longer the Managing Director of Standard Bank Swaziland. He has been snagged by Tetrad Group, a newly founded commercial bank in Zimbabwe. Mawocah holds a Masters in Development Finance from the University of Stellenbosch in South Africa. He joined Standard Bank in 2001 as Area Business Manager. In 2005, he became a director and was sent to Swaziland. Mawocha is also currently the President of the Federation of Swaziland Employers & Chamber of Commerce. “I have decided it is time for me to move on and broaden my experience by joining a different organisation,” he says.
Gregory Ovie Jobome Appointment: President of RIMAN, September 2012 Country: Nigeria Specialty: Risk Management Dr. Gregory Ovie Jobome became the new president of the Risk Managers Association of Nigeria (RIMAN) in early September 2012. For one year, he will be steering the affairs of the association of risk professionals comprising both institutional and individual members in the financial services sector. He has been tasked with building and sustaining a credible risk management environment through proactive advocacy, capacity building, knowledge sharing and promotion of high professional standards in the country. Jobome holds a first class degree in Economics from the University of Maiduguri in Nigeria and a PhD in Economics and Finance from Loughborough University in the UK. He has been a Risk Officer at Nigeria’s Access Bank and was consultant for Guaranty Trust Bank (GTBank) on risk-related projects.
26 | Technology Banker September 2012
Heba Bayoumi Appointment: New Country Manager for Gulfmanagers and Gulfbankers, September 2012 Country: Egypt Specialty: Recruiter, Business Development, Human Resources Heba Bayoumi has been appointed as Country Manager for Gulfmanagers and Gulfbankers’ operations in Egypt, but will be based in the firm’s Head Office in Dubai, and will also handle matters focused on the Gulf, Middle East and North Africa region. Gulfbankers is a premier regional provider of talent management solutions specialising in the FMCG, Retail, Industrial, Telecomm, Banking and Financial Industry. Ms. Bayoumi holds a Bachelor of Art in Law from Cairo University and Human Resources Management Diploma from The American University in Cairo.
Ecobank, the pan-African banking group with a presence in 35 countries worldwide, has appointed four new directors to its Board. They are: • Thierry Tanoh, Group Chief Executive Officer Designate • Dan Matjila, Chief Investment Officer (CIO) and Executive Director of Public Investment Corporation (PIC), as a Non-Executive Director • Patrick Akinwuntan, Group Executive - Domestic Bank, as an Executive Director • Eddy Ogbogu, Group Executive, Operations and Technology, as an Executive Director
Other Appointments at a glance: The Governor of the Bank
Ghana’s First Atlantic Bank
First Bank of Nigeria Plc
Commercial Bank of
of Algeria Mohammed
has appointed Martin Ofori
(FBN), West Africa’s largest
Africa (CBA) for Kenya has
Laksaci is now the new
as Acting Managing Director
bank, has appointed Dr. Oba
appointed Jeremy Ngunze
chairman of the Association
following the rejection of
Otudeko as Chairman of FBN
as the new Chief Executive
of African Central Banks
Yomi Akapo by the central
Holdings Plc, the bank’s new
Officer. He succeeds Isaac
(AACB).
bank of Ghana to head
administrative structure
Awuondo, who has been
He will be assisted by the
the group, in the wake of
established in compliance
promoted as the group’s
Governor of the Bank of
accusations of breaching
with the Central Bank of
CEO to oversee the lender’s
Mauritius, Rundheersing
foreign exchange laws.
Nigeria (CBN) regulation.
affairs in the East African
Bheenick, who was
region.
appointed as Vice-Chairman.
www.technologybanker.com | 27
EVENTS FOR YOUR DIARY
What: Symantec Government Symposium When: 7 November 2012 Where: Walter E. Washington Convention Center, Washington, D.C. Website: www.symantecgovsymposium.com
What: IT Nations 2012 When: 10 - 12 November 2012 Where: Orlando, Florida Website: www.theitnation.com
What: Euro-Africa Cooperation Forums on ICT Research 2012 When: 28 - 29 November 2012 Where: Centro Cultural de Belém, Lisbon (Portugal) Website: www.euroafrica-ict.org
What: World Conference on International Telecommunications (WCIT-12) When: 03 - 14 December 2012 Where: Dubai, United Arab Emirates Website: www.itu.int
What: MOBILE MONEY GLOBAL 2012 When: 19 – 22 November 2012 Where: Atlantis, The Palm, Dubai Website: www.mobile-money-gateway.com
What: The Future of Retail Banking When: 29 – 28 November 2012 Where: Hilton Tower Bridge, London Website: www. marketforce.eu.com
What: Islamic Banking Summit Africa When: 6-7 November 2012 Where: Djibouti Palace, Kempinski, Djibouti Website: http://islamicbankingafrica.megaevents.net/
What: The Africa CEO Forum When: 20 – 21 November 2012 Where: Geneva, Switzerland Website: www.theafricaceoforum.com
28 | Technology Banker October 2012
GADGET REVIEW
Top Smart Phone Makers for the African Market As Apple basks in the glory of its recent successes, with the launch of iPhone 5 and their legal victory over Samsung in the US, its penetration in the African market is still very low. Technology Banker looks at Apple’s competitors that are taking over Africa’s Smart Phone Market By Kingsley Kobo Nokia Price Range: $150 - $750 Attraction: Durability, audio quality, battery life Nokia remains the number one mobile phone brand in South Africa, with 50% market share. However, Nokia smartphones are not as popular in other African countries outside South Africa. Across the world, the onetime world’s largest handset maker is suffering a decline due to the incursions of Apple’s iPhone series and Android phones from the likes of Samsung. As a result, Nokia’s growth is stunted in Africa. “Most of the top features and apps you find on Nokia smartphones are now available elsewhere at a more competitive prices, so the trend has shifted away from Nokia in Africa and it is still shifting,” Kouadio Narcisse, editor of Ivory Coast-based Gadget Revue told Technology Banker.
Samsung Price Range: $100 - $450 Attraction: Easy to manipulate, cute designs Samsung is currently the top vendors in Africa, mainly for its competitive prices and usability. The sleek and sublime designs being regularly churned out by Samsung have also contributed to keeping the brand on top. Samsung is one of the few phone makers whose products have successfully cut across different cultures and demographics in Africa. The products are popular in both Anglophone and Francophone countries as well as in the Maghreb, thanks to an uncomplicated language facility and easy access to accessories. And with most phones allowing multi-tasking and native 3rd party apps, as well as Internet connection, African users are likely stick to Samsung for long.
www.technologybanker.com | 29
Blackberry Price Range: $150 - $600 Attraction: Push Email and Instant Messages The recent report, ‘The Mobile Consumer in SA 2012’from Goldstuck, shows Research in Motion’s BlackBerry remains the dominant player in African market. Its share in South Africa has grown from 4% at the end of 2010 to 18% by mid-2012, the highest progression in Africa so far. According to the report, of the 10 million smartphones sold in South Africa in the past 18 months, about 4.8 million were BlackBerry devices, with the brand holding 28% market amongst the 16- to 25-year age bracket. Nigeria is the second African largest market for Blackberry with about 2.4 million users to date. Nearly all RIM’s customers are using the BlackBerry Messenger (BBM). On the downside, Blackberry is on the higher end of the market, and it is notorious for its tiny keyboard and low ring tones. The current spate of service malfunctions has also dimmed its popularity.
HTC Price Range: $200 - $350 Attraction: Speedy Downloads Android and Windows Phone-based smartphones from HTC are new to the African market. But it is gradually gaining traction. Thanks to its ultra-fast wireless connectivity with optional hotspot capability, multi-touch SLCD screen, good camera, access to thousands of apps from Android Market and high quality video recording. The highly competitive prices of the devices and easy manipulation have also attracted new users. It has even taken a bit of Samsung’s market share. However, due to its multitasking capability, HTC devices have short battery life, much to customers’ annoyance.
Apple’s iPhone is not on the top list as it only makes up a tiny part of the 6% to 8% of smartphone users on the continent. It looks like Apple isn’t interested in emerging markets like Africa. The iPhone is still an item of luxury and the few Africans who use it either have the means to afford it or have to make sacrifices in order to enjoy its exciting features.
30 | Technology Banker October 2012
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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
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