Another article on the topic of mobile banking in Africa  Earlier we posted a reference to Wizzit.  Here the Economist talks about the challenges of authentication, and usability, but there are several players in this space in Africa.

There appears to be a real need for the service.

A simplified kind of account called Mzansi was launched in 2004 to reach the unbanked, and portable banks and ATMs have been rolled out in townships and in the countryside. To this fast-changing scene, mobile-phone banking looks to be a promising addition. Millions of South Africans send money to their relatives in other parts of the country. And most of these sums, which add up to about 12 billion rand ($1.5 billion) each year, still move informally.

Some excerpts on the functionality, and issues being faced.

They could now leap from a world of cash to cellular banking. In Kenya, a pilot scheme called M-Pesa is being used to disburse and pay micro-loans by phone.

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But drawing the unbanked into the joys of cell-finance isn’t always easy. Many think banking too expensive and complicated, and helping new customers become financially literate takes time. The technology remains clunky in some cases, with downloads requiring dozens of text messages. Several rival platforms are still in the fight, but so far those that emphasise simplicity and ease-of-use over state-of-the-art technology and security have made the greatest strides. A lot also hangs on putting in place the right laws and regulations. They need to be tight enough to protect vulnerable users and discourage money laundering, but open enough to allow innovative mobile banking to grow.

If the transfer of money by mobile phone – between countries as well as within them – takes off, it could have implications far beyond the salons of Soweto. In 2005, according to the United Nations, global migrants remitted $232 billion, of which up to 20% was lost on the way, mostly in bank charges or fraud. If cellular transfers could slash that figure, mobile banking would prove to be a good call.

Source: Mobile telephony and banking | Phoney finance | Economist.com