An Audience of Innovators. A Stage of Incumbents.

August 4th, 2016 Posted by Cryptofinance technologies, Mobile money 0 comments on “An Audience of Innovators. A Stage of Incumbents.”

The recent GSMA360 event held in Dar es Salaam, Tanzania highlighted the great progress in mobile tech on the African continent. With the world’s first global distribution platform now at the fingertips of hundreds of millions of Africans, companies–small and large–are delivering new tools that help add value and stability to people’s lives digitally. Companies are utilising mobile for a variety of cases: from digital health products, risk profiling and lending, to digital recruitment tools that aid growing enterprises perfectly match with prospective candidates. At the event, it was apparent that one thing was missing, however: a clear look towards the innovations of tomorrow.

Today’s digital revolution is changing the way we see and use technology and it’s changing fast. We have seen the cost of phones drop drastically allowing the long tail of the population to now find value in a device that until recently they didn’t even know they needed. WhatsApp managed to cut the predatory costs of the SMS message and allowed users to communicate globally at nearly no cost. Other tools, such as health applications, have seen their user base grow by millions while distribution costs drop. Now there’s no need to go visit a hospital hours away to ask a basic medical question. Other innovators in the room, such as Branch.co, have solved a problem that local banks have been failing to do for a century: they can now create accurate risk profiles of unbanked customers. Collecting a wide array of data points across various mediums, including social media and phone usage, Branch uses machine learning to accurately assign a risk profile to be used in lending for someone with only a smartphone. Adoption has been rapid. Branch issued more than 70,000 small loans in their first few months of operation. To solve the age old problem of how to connect the labor market with companies looking to expand, Duma Works has connected over 3,000 candidates to 350 companies in East Africa via an innovative SMS platform that matches talent with employer.

These are examples of real progress. Presentations on innovation at GSMA360, however, were less than inspirational. A panel on the “Next Generation of Mobile Money,” focused on front-end changes and the need for regulatory support to better make things work. In regards to ecosystem development, the presenters believe it’s the responsibility of the operators to work together and increase the usability of mobile money platforms. At a time where we see Orange charging double digit fees to their customers for low-value transfers, it’s hard to imagine them innovating to the extent necessary to create the inclusive digital ecosystem that so far has been unachievable.

When asked about how a Central Bank issued Digital Currencies (CBDC) will impact mobile money, many incumbent presenters were unaware of developments that occurred in the last few years. Sagaciously, the impact investment fund Omidyar Networkexpressed interest in the subject and seemed to be making bold steps in the right direction with their financing of eCurrency, a company that develops software for central banks. The impact of a CBDC will solve the problems faced today in mobile financial services by reducing the transfer cost to a negligible level, allowing for $0.01 transactions, and facilitating global network agnostic transfers (a WhatsApp, for value). Most incumbents still see this as science fiction, but they are unaware that even theBank of England’s report on this exact subject determined–amongst the many benefits–a 3% uptick in GDP. Mark Carney, Governor of the Bank of England, is a strong proponent of this digital future. He recognizes its potential to deliver “a more inclusive financial system, domestically and globally; with people better connected, more informed, and increasingly empowered.” In addition, Adam Ludwin of Chain recentlyspoke on the subject at the Federal Reserve in Washington DC with over 100 interested central bankers; swift developments in this arena are already happening.

These technologies aren’t a dream of the future. Most people can’t imagine how fast things develop and the speed of which creative destruction occurs with the introduction of software. Ten years ago, there was no iPhone. Today, over 127 million Africans have a Facebook page. Watching a panel of established players is certainly compelling, however it is important to understand that their experiential bias can result in an underestimation of the speed and scale at which technologies and societal practices can change. GSMA360 offered attendees an enthralling insight into the current state of the industry, however, we can be certain that the incumbents on the stage will not be the sole drivers of our future digital financial services. Partnerships and collaboration with the innovators in the audience is vital.

Disclaimer: Blog posts reflect the views of the respective authors, and do not necessarily represent the official view of Monetas.