MTN has big digital ambitions

MTN Group is seeking to challenge rival Vodacom Group as Africa’s biggest digital bank by tripling its customer numbers within three years.

Already the continent’s biggest mobile-phone company by subscribers, MTN’s adding about 500 000 active banking customers a month, said CEO Rob Shuter. About 20 million people use MTN’s mobile banking now.

MTN, Vodacom and other competitors are using more affordable and faster internet to offer banking to people in countries where traditional financial services are scarce.

Mobile-money accounts allow users to deposit and withdraw funds via their phones and pay for everything from groceries to haircuts.

“We really are at that early-adoption stage of mobile internet” in Africa, said Shuter. In many of these markets, there isn’t sufficient fixed-line internet that would be needed for mobile banking or even other banking options.

Vodacom owns about 35% of Nairobi-based Safaricom, whose fast-growing M-Pesa banking service has made it Kenya’s biggest company.

Together they have about 32 million banking customers in Africa. CEO Shameel Joosub recently said Vodacom is the “biggest bank in Africa,” having moved about $100 billion through M-Pesa in the last year.

The number of mobile-money customers in the region is growing rapidly, having surpassed the amount of traditional bank accounts in 2015 to reach 277 million by the end of last year, according to GSMA. Orange SA and Bharti Airtel also provide the service on the continent.

MTN has operations in 17 countries across Africa, ranging from its largest market of Nigeria to Guinea Bissau, the smallest. Vodacom and Safaricom have networks in six African nations.

MTN’s mobile-money growth is dependent on the company’s ability to invest in and develop the digital technology needed to harness the service, Shuter said. Even in the carrier’s more mature markets, digital services only contribute about 20% of revenue. MTN also sees its number of active data customers, at about 30% of the total, as a relatively low level that could be improved. – Bloomberg