Going Cash-Lite is not Mobile Money – The Aspire Theory

A couple of weeks ago while discussing the cashless initiative, someone mentioned something amazing which I have dubbed the “Aspire Theory”. This theory inspired me to go do some digging and research and the results are what you will find in the rest of this post. Please feel free to share your views.

There are differing views on the CBN’s cashless policy, some in favor, others, not so much. The three major players – Banks, Mobile Money operators and Mobile Network Operators (telcos) have all mostly come to the market with some offering or the other.

For the banks, I hear a lot around reaching the un-banked as the primary business case for their cashless strategy which typically involves some form of a mobile wallet, mobile banking and more traditionally ATMs, POS and internet banking.

The Aspire Theory turns this entire approach on its head and I found it interesting for a few reasons:

1.  Any real growth in the consumer sector is almost always driven by the consumer. Look at iOS and its fanatical follower-ship  think about BlackBerry devices in Nigeria, and think about Facebook and Twitter. Real exponential growth needs the consumer in the driver’s seat
2. Payment is basically exchange of value. The generally accepted definition of value largely defines what for form payment takes, electronic or cash driven.
3. An ATM or mobile wallet doesn't automatically mean cashless, maybe cash-lite but not cashless because these platforms are just conduits for moving cash, the end point at the point of value exchange is still CASH.

Now when you hear about cashless/lite and mobile money, I can almost assure you that some sentences later someone will mention M-Pesa. 

M-Pesa is a mobile phone based money transfer service birthed in Kenya which essentially enables its users deposit, withdraw and transfer money using a mobile device with or without a traditional bank account.

The question then becomes because M-Pesa worked in Kenya does that automatically mean it is a model for Nigeria? Some fundamental facts about the growth of M-Pesa would indicate otherwise:

• M-Pesa was launched by one Telecommunications Company in 2007, the one with the largest market share at the time in what one would call a blue ocean. Competition did not begin till a couple of years later. In our case, we have 17 licensed Mobile Money Operators, over 20 banks and about 5 major telecommunications companies touting various mobile money platforms at the same time.
• reports show that M-Pesa has been adopted by the banked and un-banked in equal proportions debunking the theory of mobile money appealing more to the un-banked due to its ease of use.
•  In spite of the astronomical growth of M-Pesa since inception – 17m registered users by 2011, the banking industry in Kenya is also growing and opening more branches in spite of the hopes that M-Pesa would over time replace traditional bank accounts.
• Kenya was not trying to build a cashless economy so it didn't matter that the end result of the mobile money transaction turned out to be cash, in our case it does matter.
• M-Pesa is basically for high count, low volume transactions. If banks knew this, they wouldn't invest tens of millions in a mobile money platform which will turn over much less revenue than traditional internet and mobile banking:

This brings me to an interesting opinion, I think that so far the general approach for “going cashless/lite” is flawed. How about we focus more on building our electronic payment culture. Notice I used electronic and not mobile and culture not network because it really should not matter which platform I use as long as at the point of value exchange I can do just that!

Some inhibitors for electronic payments in Nigeria include:

1. Merchants do not traditionally accept mobile payments, some merchants are still reluctant to use POS machines! Now imagine trying to pay a cab driver using mobile money. Until we can make this initiative about electronic payments and eCommerce, we will not really go cashless.
2. The trust in the financial system is low. Customers fear the security of their investment, this includes merchants.
3. There are way too many options with not enough information and the fear of lock-down across providers. Confused consumers is never a good idea.

What do I recommend? This is where the Aspire Theory comes in! The growth of mobile phones and the leap away from fixed lines in Africa tells us one fundamental truth, consumers are social, social is virile, to grow, you need to leverage social.

This means:

1. Create a system that is so cool, everyone wants in! For example, half the Nigerians on twitter have no business tweeting but Twitter is cool and so they tweet! This approach will change from I use mobile money to send money to my aged mother in the village to I just used my phone to buy a cool outfit. Stop focusing on the un-banked and use the banked to grow this initiative, everyone will join in bank accounts or no.
2. Minimize the noise! This is where the regulators come in, who do consumers trust? Do I go with a bank or telco or MMO or better still leave the money under the mattress?
3. Banks should not worry about investing in a bank owned/led mobile money platform. Aside from the fact that it is not the core business of banking, focus should be on banking the telcos, MMOs and Agents.
4. Build eCommerce  I think getting more SMEs and microbusinesses online is a huge deal. Reports say that this segment accounts for 70% of our economy. The more SMEs and micro-businesses which are online will mean more transactions will be done using electronic means, then we can truly say we are going cashless!

Alright this is my 2 cents or maybe 5 cents. What do you think?