Commercial banks face growing threat from mobile phone technology

BY JACKSON  OKOTH

Commercial banks that fail to embrace technology risk losing business to mobile phone companies whose applications are already popular with those within the low-income segments.

“As matters stand, most banks are afraid of technology and only concentrate on the financially-savvy and not those at the bottom of the pyramid,” said Rajiv Bhatia, Head of Mobile Commerce Sales, Ericsson-Sweden.  He made these remarks on Thursday at the 7th Annual AITEC Banking and Mobile Money COMESA Conference, a two-day event that is taking place in Nairobi.

Bhatia said while banks are reluctant to embrace mobile phone applications, studies have shown that these technologies are able to reduce costs as well as create new customer experiences and opportunities.

“Banks should move away from the brick and mortar branch networks to more interactive models,” he added. He observed that while it costs more to get a customer into a physical bank branch, all it requires for one to use mobile banking applications is a simple handset that has internet connection.

One of the ways in which banks can reach the low-income segments of the population is forming partnership with firms that have large consumer bases.

There is room for banks to move those in the informal segment into mainstream banking platforms through the use of technology.

“The content of the conference covers priority challenges currently faced by the region’s financial sector, the need for high standards in consumer service, consumer education and financial inclusion and driving down costs through innovation and effective security,” said Sean Moroney, the AITEC Africa chairman.