Friday, February 20, 2009

Is Regulatory really the biggest barrier?

During this week, so many people spoke about regulatory reasons being the biggest barrier to mobile banking (and specifically banking the unbanked). I must be honest, this was really surpising to me, as I do not see it as a barrier. It is hard work, and will take a lot of effort, but it is not a barrier.

I must confess some of recent announcements (the Reserve Bank of India and the stories about ZAP and mPesa in Kenya), probably triggered some of these thoughts. In both of these cases, however, the central bank had to react after the fact. It is important, I believe, to get things sorted before the fact. Money regulators have important jobs. If they do not do their jobs then we see financial systems collapse and we get situations like the economic meltdown of last year.

If we act irresponsible, then we should expect the regulator to stop us. That is why it is so important to take the time (in the beginning) to make sure that what you intend deploying conforms to the law (both in the letter and the spirit). I have found that in more than twenty countries that we have done business that the laws can be implemented with mobile banking. It is not necessary to change the laws, but it is important to study them, think about them and then to conform to them.

It is possible to to this, and we in the mobile banking industry have the responsibility to do this. We (at Fundamo) have a lot of collateral and experience with all the issues, I am looking at ways that we can share this with the industry, without compromising our intellectual property.

1 comment:

Philippe BREUL said...

Thanks for this courageous position (so much done around regulation!). I indeed met some mobile operator in Togo who thought Regulation was a blocking point when the BCEAO is making every effort to promote their pro E-Money approach, ... so indeed, in numerous countries, regulation is not the biggest issue (even an issue). On top of that, if we consider "Financial Inclusion", even in countries with "good" regulation, no evidence has been given that the current approaches / models have positive impacts, !!!... The next question would then be what are the main issues ! Warm regards, Philippe.