It looks simple: mobile money agents have scaled faster than banks and ATMs in Africa. Yet, focusing on the MOMO agents, you will miss the real deal here. Yes, the real deal is what powers the MOMO agent. Largely, the telcos power them or they congregate around the infrastructure provided by telcos. The presence of airtime resellers and momo agents are well correlated. The implication is that, over time, expect a displacement where human-platform banking will continue to win more territories via telco networks.
Fast-forward, the bank is at a new game: human-platform banking. People call this agency banking. That is fair, but for me, it goes beyond agents if you read one of the key components of the CLOSA account (the bolded section below).
“Part of our activities in this space include the development of products such as the BETA and CLOSA accounts. BETA targets market traders and also supports small and medium enterprises (SMEs). The BETA account employs agents (called BETA friends) who go to the areas of comfort of these market traders and offer them all the financial services they need without impacting on their way of life, whilst the CLOSA account was created for those without Banks in their areas. People of influence in the community were selected to act as agents of the bank to ensure trust and those in the community were assured that the Bank would assume responsibility for their money once it was deposited with the agents.” Diamond Bank
There is no single reason to bet against the leading telcos like MTN and Airtel because they are well positioned to capture the most value in financial services including the latent credit services. It comes down to marginal cost efficiency which airtime reselling business model has perfected, and which telcos are well positioned to run.
Agents are the fastest way to convert cash to digital value and vice versa. About $124 billion in digital value pass through mobile money services and agents every year. There are 481 million registered mobile money accounts in Sub-Saharan Africa, 50 million of them were registered in 2019. Everything from remittances, airtime top-up to savings, mobile money has become an integral part of how money moves on the continent. (Source: TC Insights via newsletter)
Banks are late in this party and would need lots of adjustment to capture value.