Mobile commerce vs banking

Posted on January 8, 2010

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The money market landscape has since changed considerably.This is as mobile phone companies enter the credit space with electronic accounts, to challenge the dominance of commercial banks.

Gone are days when local subsidiaries of multinational banks could suddenly raise minimum deposit requirements, effectively closing down thousands of accounts belonging to small depositors.

Even those who had shut down rural branches have been aggressively resuming services, especially to the retail segment they had previously turned their backs on.

It is the customer who is king with an option of opening a bank account, without any minimum balance while having the option of running a mobile phone account. This is especially so for the low-end of the market, still cut off from the formal banking system.

Commercial banks now face competition for deposits from M-PESA and ZAP money transfer facilities provided by Safaricom and Zain. “Licensing of micro financiers as deposit taking institutions is also putting upward pressure on deposit rates,” says a banking update by African Alliance Kenya.

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