‘Telcos actions imply competition with banks’
The Head of Electronic Business of Cal Bank, Mrs Martha Acquaye has urged telcos to engage Banks efficiently in the sharing of data and ideas in order to grow the mobile money sector in Ghana.
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She said although the Electronic Money Issuers (EMI) guidelines clearly implied a collaborative effort to grow the sector, the actions of the telcos had implied competition instead.
Mr Acquaye said this at a Banking Conference which was on the theme “mobile money and banking: complementary or competitive.
Touching on the issue of data sharing, she said strategy and decision making was driven by data and as such, the lack of it stifled the potential of mobile banking in the country.
“Today, Mobile money transactions are overwhelming but banks have no idea who is spending on what, when and where, and so on. Customer spending pattern and transaction history is not available to the banks,” she stated.
She said personal information of subscribers and agents were difficult to access from the telcos on the basis of customer confidentiality even though the subscribers were customers of the bank based on the trustee relationship.
“If we see cash as the key challenge in building a cash lite economy then banks and telcos need to collaborate more in this regard to enrich user experience,” she pointed out.
Ownership of subscribers
Mrs Acquaye said one other thing that had implied the telcos were competing with the banks has to do with the ownership of subscribers, stating that “some of the telcos have taken over the subscription of agents hence there is little interaction between agents and banks during the onboarding process.”
She said this has made most customers oblivious of the trustee relationship between themselves and partner banks.
“Telcos determine the level of partnership with the banks leading to banks being categorized as partners or aggregators. As aggregators, it does not make financial sense to buy e-money with depositors fund to trade whiles the partner bank enjoys the float. We believe the telcos can make the aggregator role more appealing for Banks in order not to create an unhealthy competition amongst banks,” she added.
She said competition had also deprived users the opportunity to transfer funds across networks, and this was worrying if they wanted to make the service accessible and affordable and create the maximum impact on the cash lite agenda through mobile money.
High Interest Payment
The EMI guideline directed all banks to pay interest on float at current account rate, which ideally is zero for most banks.
The Bank of Ghana thereafter determined the existing current account interest rate as ranging from 1.5 per cent to 7 per cent.
Mrs Acquaye, however, accused the telcos of using this opportunity to create an unhealthy competition among the banks.
“In order to keep enjoying mobile money float, most banks proposed to pay the higher interest rate, which may be higher than actual current and savings account rates, thereby creating a fierce competition between mobile money and bank savings products”, she said.
She said banks would now have to look at their pricing structure all over again as mobile money interest rates had become the new competitor price benchmark.
EMI guidelines to become regulation
The Head of Payments Department at the Bank of Ghana, Dr Settor Amediku, for his part said the BoG was currently engaging the various stakeholders to change the EMI guidelines into a regulation to be passed by Parliament.
He said the rate at which mobile money was growing required a regulation to regulate the sector.
He said the total amount of mobile money transaction for 2015 totaled over GH¢35 billion, with telcos holding over GH¢600 million as floats in banks but this figure looks likely to be doubled as just the half year results for 2016 indicated a total transaction volume of over GH¢30 billion, with Telcos holding over GH¢700 million as floats in banks.