Today’s technology can make it cheaper to send money to Africa tomorrow
Artificial intelligence, the rise of the robots, cryptocurrencies? There is lots of excitement about the way that new technologies are expected to revolutionise the banking industry. But when it comes to reducing the cost of sending money abroad, we already have the technology.
Governments around the world that signed up to the Global Goals have made a commitment to reduce the cost of sending money aboard. The UK is one of those governments and is targeting a reduction in the cost of sending money from the UK to Africa to just 3 percent of the send amount. That would make a huge difference because it currently costs, on average, more than three times as much as their target.
Ghana is one of the global leaders in the use of digital biometric identification
For example, rather than visiting a local corner shop, laboriously filling out a paper form and handing over cash whilst the owner photocopies and verifies your ID, instead, from the comfort of home, you go online, create an account using a photo of your nationally recognised ID card and instruct a bank account transfer. In Ghana, your father doesn’t need to leave his home and travel to an agent in his local town, but instead he can be informed by SMS that the funds have been deposited into his mobile money wallet. In Ghana, one of the global leaders in the use of digital biometric identification, mobile money can be used to pay utility bills, do grocery shopping, to send to friends, in cafes, for taxis, you name it.
Sending money using an agent in the UK and paying out cash in Rwanda with one of the UK’s leading money transfer operators costs 19 percent of the send amount compared with only 7.5 percent using an online service provider, paying via card and receiving into a mobile money wallet . That is a huge difference.
And new technologies are working to automate the middle section too. Software solutions are helping to meet compliance and payment requirements and ‘big data analytics’ are being used by large firms, such as Western Union, to profile their customers and assist in identifying fraudulent patterns.
But even mobile money requires “boots on the ground”. In the medium term, the roll-out of mobile money wallets needs to be supported by trustworthy, cash-liquid, agent networks that can cash money in and out.
A society also needs to be both literate and financially literate enough to make the most of it. As people become comfortable and trust the technology the need for agents will diminish and the cost of remittances to the consumer will finally dramatically reduce.
Technologically, it is doable today. In reality, it’s not going to happen tomorrow.
I am proud of countries like Uganda , Nigeria , South Africa and Egypt