Editorial: The future of banking is being invented in emerging countries

With the adoption of Mobile Money, Africa is reinventing retail banking under our very eyes.

The fact is undeniable: we are a minority to have benefited in the last few decades of banking services. In developped countries, these services seem universal. Today, there are more bank branches in our city centers than grocery stores. Our credit cards are accepted virtually everywhere and we can find, at any hour and in any place, an ATM near by.

Banking and financial services are so naturally a part of our daily lives that we cannot imagine how we used to transact without them. Yet billions of people around the world are excluded from these financial services because of the high cost for banks to enter emerging markets.

In the 1970s, had we all had mobile phones in our pockets, we would never have needed smart cards and other banking technologies; the mobile phone would have naturally become our personal banking tool. In emerging countries, 2 billion people have a mobile phone in one pocket, cash in the other, and never have had access to financial services. Their mobile phones will become their bank, right at their fingertips!

An extraordinary revolution in the banking world is at work in emerging countries thanks to the mobile phone. The incredible acceleration of mobile technology, which breaks all records in industrial history, is creating a new banking paradigm with new rules and new actors.

Starting from scratch, these neo-banks have freed themselves from the burdens imposed by the old Western banking architecture and their normative barriers. They are barbarians, destroying the old fortresses in order to build a new world. Regulators have understood this and are creating space for these new players, which include telecom operators.Technological innovations have made it possible for everyone to appropriate the mobile phone: you can receive or transfer money, pay bills, pay in a store or on the web and receive or pay back a microcredit. The mobile has become the next generation bank clerk, debit card, checkbook and authentication tool.

We thought that the Internet would revolutionize the bank, but the web is just another layer of complexity added to computer platforms designed 50 years ago for western markets. Neo-banks, by challenging traditional banking processes, will seamlessly enter into the pocket of 2 billion people. Western banks will have to follow suit to stay in the game.

Speech by TagPay CEO Yves Eonnet, delivered during Convergences in Paris

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