How mobile banking is taking off in Côte d'Ivoire 

In 2014, the Ivorian government began allowing high school students to pay for their tuition electronically. Today, around 94% of the country’s 1.5 million high school students pay their tuition via mobile money, according to the ministry of education.

The project was in part meant to check corruption, but it quickly turned out to be a stimulus for mobile money services, which a whopping 83% of the country now uses (link in French.) Orange (40.1%), MTN (34.9%) and Moov (25%) derive their profits mainly from transaction fees, with a fraction going to the state as taxes.

Traditional banking services are losing their appeal amid this mass adoption of mobile money in the west African country. Efforts by the government since 2012 to promote financial inclusion and ATM usage by waiving basic bank account fees have yielded paltry results. As banks struggle to keep their existing customers, and persuade new customers to sign up, official figures suggest that only 19% of the country’s 25 million people own a bank account, most of them civil servants, up from just 10% in 2011.

Local commercial banks have failed to meet the needs of the everyday customers, says Serge Dan Kouadio, a financial expert and lecturer in economic and development sciences at the University of Bouake, in Côte d’Ivoire’s second largest city.

“Banks have built their style of services around corporate citizens. Their branches are few, their ATMs are not accessible to many users, and their working hours are limited,” Kouadio says. “Many people, mostly the ordinary clients, are cut off from their services, and that is the gap mobile money is bridging.”

Since the launch of Kenya’s MPesa in 2007, mobile phone-based money transfer service apps have been adopted widely across Africa by tapping into the continent’s huge unbanked population.

Traditional banks are not standing idly by. They have begun inserting mobile money services, like popular cross border payment solutions, into their traditional banking offers.

But they have a lot of catching up to do. Kouadio says that the ease of use of mobile money services appeals particularly to people who are not financially literate, and who need to send money to far-off villages that don’t have bank branches. Many users carry out such operations at shops and kiosks within their vicinity in a quicker and more convenient manner. Transactions can also be done right from mobile phones, he adds.

Yet even before the advent of mobile money, a majority of Ivorians said they didn’t trust their local banks, according to a 2016 World Bank report. Sluggish services, faulty or empty ATMs, delays in the issuance of bank cards, and difficulties in obtaining a loan are some of the reasons why locals weren’t thrilled with the financial services on offer.

The president of the Ivorian Federation of Consumers (FICR), Soumahoro Ben N’Faly, says banks have struggled to adapt to people’s lifestyles the way mobile money services have.

“I feel banks are not observing society enough to understand how attitudes are evolving and how to adequately respond,” N’Faly says. He claims that banks are still operating the usual way by welcoming to their offices clients who would spend hours in a queue waiting to be served.

Another attraction offered by mobile money operators are short-term loan facilities. Once a registered user regularly operates their account, they can qualify for a 30-day consumer loan of up to 100,000 CFA francs ($200).

In some countries such as Kenya for example, regulators have cracked down on predatory loans offered by apps. But the Ivorian government has been quiet on mobile money loans, perhaps due to the massive enthusiasm they have generated and the low fees attached.

In the absence of a bank loan the mobile money credit serves as a buffer against the month-to-month economic stress many families face in the country.

“I have been using those loans. About 1% of interest is attached to it, which you don’t even feel, and you get the loan instantly in your mobile wallet after applying,” says Antoinette Ahou, a high school teacher based in Abidjan. “Although 30 days is quite short to pay back, it’s better than the banks that don’t even give you in the first place.”

Another major opportunity missed by banks is the distribution of debit cards in the country. While many transactions in Côte d’Ivoire are conducted in cash, banks could have played a significant part in steering the economy towards greater debit card usage.

This failure to innovate has meant that while point-of-sale machines are popular in some countries in the region, like Nigeria and neighboring Ghana, they are so scarce in Côte d’Ivoire that many citizens have not even seen one.

“Card payments could have been a strong option even in the wake of mobile money if banks had persuasively imposed that culture in our financial attitudes. They didn’t,” says Yao Kouamé Francis, a journalist at the state newspaper, Fraternité Matin. “When you open a bank account, they promise to issue a debit card within two weeks. But most times it takes between one to even three months. Users are in too much of a hurry to wait. There are other alternatives now.”

Mobile money by contrast “is available everywhere and every time.”

As a result, mobile money has created a new economy in the country, providing business and job opportunities for many, young and old, who earn a living by running kiosks or business centers that offer mobile money services for people to transfer or deposit cash, pay utility bills, buy airtime, and more.

To compete, several commercial banks have been running street-level campaigns to expose their services to potential clients. Almost all commercial banks in the country have gradually attached mobile money-friendly apps or facilities to their offers, in a bid to prevent their users from seeking the services elsewhere or to lure new customers.

A member of the country’s national association for banks and financial institutions admitted that banks need to do better on customer service and ATM repair. But he said that consumers may not be aware of the stringent rules banks are required to follow when providing financial services, such as obtaining evidence of collateral when approving loans. Even with these rules, “there are millions of losses on the necks of several banks,” says the person, who asked not to be named as he does not have permission to speak to the media.

He believes banks will continue to fill an important role in the country’s economy going forward. This is in large part due to the regulatory constraints surrounding mobile money, such as the daily limit of 1.5 million CFA francs ($3,000), and the fact that a bank account can help with administrative purposes like visa applications, salary payment, and public or private contracts.

He also points out that banks offer check facilities, which are still used by companies big and small.“Every citizen would be in need of a bank somehow, sometime,” he says.

It’s true that even though mobile money users don’t directly deal with banks, the shops and kiosks owners who operate the business keep their bulk of funds in the bank. But while banks hope to play the reservoir role for mobile money, they may likely keep losing individual clients who have found a new love in the mobile world.