Launching mobile money solutions in Africa. Best practices for corporate treasurers sitting many miles away

Transcription

1 Launching mobile money solutions in Africa Best practices for corporate treasurers sitting many miles away

2 Setting the scene Mobile banking in Africa is at an inflection point, with a convergence of megatrends putting today s corporate treasurers on the front line of the digital revolution. Technology is leapfrogging developed nations due to a number of factors, and the new normal in corporate treasury is a paradox of sorts cash is no longer king. With the unprecedented rise in disruptive technologies comes a growing appreciation of new methods to create, store and transfer value through alternative forms of financing that take advantage of a hyper-connected world of mobile and social platforms. Enabling a cashless economy This is particularly true in Africa, where mobile money is at the heart of enabling a cashless economy for inclusive growth and sustainable development. The proliferation of mobile phone networks has powerful implications and with the expansion in use of mobile money comes a learning curve that s hard to crack particularly from outside the region since the market is moving so quickly and has such specific nuances, country by country. Corporations moving into Africa are not necessarily able to lift and shift or retrofit conventional payment methods that work in other markets to fulfil their financial supply chain on the continent. For corporate treasurers sitting thousands of miles away, developing a strategy to launch mobile payments in Africa from the US, UK or rest of the world presents unique difficulties and opportunities. Understanding local payment market practices as well as managing cultural, language and time zone differences adds to the complexity and challenges associated with execution. Three governing principles frame a long distance go to market mobile payment strategy in Africa for today s corporate cash managers who are setting policy and implementing change management within the organisation. Corporations moving into Africa are not necessarily able to lift and shift or retrofit conventional payment methods that work in other markets to fulfil their financial supply chain on the continent. Principle 1: Digitisation in corporate treasury is a team sport Transformation requires a cross-disciplinary project team, including treasury, accounting, technology, legal, audit, procurement and banking partners to structure cashless flows that fulfil local clearing requirements and provide visibility and control at HQ for managing regional liquidity. Use of mobile money enables payments to local employees, suppliers and contractors and is becoming more widely accepted as treasurers who are on-the-go want to approve payments and monitor cash balances on demand. Lack of remittance data on mobile transactions and lack of standards to capture the information in a common format present IT challenges in terms of automated reconciliation, integration with enterprise resource planning and aggregation of Big Data. These challenges are being addressed by the financial community and software application providers but it will take time before harmonisation is achieved. Corporate treasurers who tap into talent across their organisation and bank group to resolve these challenges, and focus on digital financial assets for improved insight into working capital cycles, will have competitive advantage ultimately putting treasury in the driver s seat when shaping corporate strategy. The power of the team applies here. Where possible, use of ISO standards through industrial strength connectivity over SWIFT is a best practice. 2 of 6

3 Principle 2: Cross-border collaboration is key Clear and frequent communication within corporate treasury up, down and across the group is key to co-create a mobile policy framework that allows for differences per country. Collaboration between central treasury and field offices is essential to a localised approach when assessing payment needs, banking solutions and barriers to entry. Focus needs to be on KYC of the beneficiary when looking at a construct and deciding a method of payment. For example, when paying day workers for seasonal jobs where contact details are not known upfront, pre-paid cards may be ideal. For repetitive payments such as payroll, where a beneficiary s telephone number is known and can be pre-loaded to a batch file, payment to a mobile wallet or electronic funds transfer (EFT) through SWIFT may be ideal. Once agreed, best practice is for central treasury to institute a mobile policy framework through a top-down imperative that is documented, communicated (ideally in person) and audited. Without buy-in from treasury staff at the field office, it is likely the strategy will not take root. And a key success factor to local adoption is identifying a local champion(s) and ensuring staff are trained extensively on all aspects of the new mobile money channel. End-user training and a hand-held approach to on-boarding cannot be emphasised enough as significant investments in time that will pay dividends if managed upfront as part of a thoughtful implementation project plan that takes all stakeholders needs into consideration. Principle 3: The mobile money market is fluid Mobile money regulation is changing quickly. Innovation in cashless payments is thriving from FinTech start-ups as well as coalitions including the Better Than Cash Alliance, the Bill & Melinda Gates Foundation and USAID, who are advocating with the public and private sector, as well as development organisations, to accelerate the shift to digital payments in support of financial inclusion. In response to this rapid state of play, corporate treasurers are increasingly engaging directly with industry bodies and banking partners to ensure their voices and requirements are heard as it relates to cyber security, AML, sanctions screening, KYC registries and mobile remittance standards for systems integration with ERP and TMS. Looking back in time, some of the conversations draw parallels to when corporate treasurers started to initially evaluate the use of electronic banking systems and internet portals. As far as executing mobile money strategy, there isn t a secret sauce and every client has their own vision. At the time, it was considered avant-garde in many organisations, who initially resisted but eventually embraced the technology. The same is true of the mobile money market today. What was considered ground-breaking even just a few years ago with respect to mobile wallets is already starting to become wellestablished in some schools of thought, as virtual currencies and blockchain ledger technology gain traction as potentially the next big thing. It is safe to say the only constant is change. As far as executing mobile money strategy, there isn t a secret sauce and every client has their own vision. If corporates aren t seeing the demand for mobile money in Africa today then the demand may likely present itself in just a matter of time. 3 of 6

4 Checklist The following are suggested rules of the road for long distance drivers in treasury who are setting policy and implementing mobile money solutions in Africa while sitting many miles away from the continent: Organise a cross-functional project team led by treasury and identify internal champion(s) to institutionalise mobile money solutions across the company. Articulate a strategic vision and policy framework for mobile money in Africa based on a thorough cash management needs assessment at the field offices, as well as central treasury. Based upon a qualification of flows to be converted, an ROI should be calculated, appreciating that a key benefit to making the journey from cash to electronic payments will be unquantifiable with respect to a risk reduction including employee safety. Perform a market analysis including the availability of service providers (banks, mobile network operators (MNOs) and third party payment providers) and then select a country to pilot the mobile money flows and operational framework, taking into consideration local regulation and payments market practice. Identify the cashless payment construct for the target country and collaborate with your banking partner to resolve any potential barriers to entry. Peer-to-peer discussions are often helpful to gather market intelligence from clients who have already implemented in a specific geography. Partner with your bank on primary and contingency payment options, which are ideally interoperable, based on a thorough KYC of the beneficiary. IT colleagues should be included in the evaluation of electronic banking and/or other channels for back-up purposes. Define metrics and success factors for the pilot/ proof of concept, such as the number of transactions processed (debits and credits), types of transactions processed (e.g. payroll, T&E, utility bills etc.), number of transactions reconciled in ERP and number of users trained. This is in order to measure key performance indicators (KPIs) in support of operational readiness. Provide as much training as possible for local users to ensure comfort on the new workflow extensive training and a hand-held approach to the mobile payment on-boarding process are key success factors in driving behavioural change, adoption rates and staff endorsement. Test, test, test validate treasury policy and mobile money operating procedures and refine the existing processes needed to account for differences on a country-by-country basis. Measure actual vs. expected results, including ERP integration and reconciliation at central treasury the evaluation should include the mobile and back-up/contingency channels. Take a go/no-go decision on launching the mobile money channel into a scalable solution and apply lessons learned when approaching go to market strategy in future countries. Before moving to production and Business As Usual (BAU) governance, collaborate with your bank and/or service providers on a transition plan covering all angles including customer service. 4 of 6

5 More to come Current talk on the future of money, internet of things and evolving disruptors includes wearables, cryptographic currencies such as Bitcoin, versatile ledger technology, and tokenised digital identity, with many defining questions still to be answered around KYC, central bank approval, local merchant acceptance and the ability to integrate all of this Big Data into predictive analytics for today s corporate cash managers. Time will tell what s next on the mobile frontier and it is the role of treasury professionals to closely monitor the emerging trends and next generation of solutions that will enhance bottom line performance. As the continent is predicted to double in size, reaching two billion people by 2045*, there is a significant opportunity for corporates. And if past performance with M-PESA is an indicator of future success across the continent, it s clear the ubiquitous mobile phone will be at the centre of corporate cash and treasury management in Africa for the foreseeable future. Two billion The predicted population of the African continent by 2045.* *Source: The Economist Calculating the true cost of cash There are three primary cost categories for cash, as defined as paper currency and coins. Many are hidden costs but need to be taken into consideration, given the inherent risks. Costs to supply cash Logistics and handling storage, security, guards, alarms, vault fees, armoured cars, delivery Insurance Shrinkage (e.g. theft, loss or soiled notes) Fraud losses (e.g. counterfeit) Device costs (e.g. safes, note counters) FX fees 2. Costs to access cash Bank fees (e.g. cash deposit, ordering, cheque processing in select geographies) Exchange fees Opportunity costs from time spent travelling to get the cash Healthcare costs (e.g. risk to personal safety and infection from bacteria on soiled notes) 3. Costs for greater society and governments Under-reported taxes and tax evasion Budget spent on recovering lost cash The greatest cost of cash is the personal risk it places on human resources and their families, particularly for staff who may need to travel long distances. 5 of 6

6 Unlocking the value of mobile money for corporate treasury you, too, can ace the implementation process Barclays offers the following tips on becoming a client s Go-To cash management bank in Africa, based on its experience in developing local and cross-border mobile payment and reporting solutions: 1. Assess collaborate with your bank to understand local payment market practice per country and, together, perform a proximity analysis per beneficiary in order to assess the optimal payment method with a view on the last mile challenge. These assessments around local footprint, including accessibility to mobile agents, are critical to ensure the recipient can safely and securely access liquidity at their final destination. It is a critical part of the KYC process and mapping the flow of funds. 2. Customise tailor a hand-held approach to on-boarding any new form of payment in-market and at HQ. The transformation process should include documenting changes to standard operational procedures in treasury and simplifying the new payment workflow as much as possible. It is recommended that the procedures be validated during the testing phase and updated, iteratively, as needed until you gain Audit and Compliance sign-off and the staff are comfortable. These steps are integral to institutionalising an in-house centre of expertise for supporting mobile money in treasury. 3. Educate offer staff detailed training and education on the envisaged mobile money solution including the mechanics on how it works, the roles/ responsibilities of every participant in the payment chain (bank, MNO, hybrid etc.), how it differs from the current form of payment and how it changes the overall client experience for your client and your client s clients. If a training session does not resonate the first time then offer additional sessions by different trainers and ensure they are conducted in the local language. About the author Helene Rosenberg Cash Origination Barclays US In her role within Corporate Banking Origination at Barclays, Helene works with corporations, NGOs and non-bank financial institutions on structuring global cash management solutions in Africa and Europe. Her emphasis is on innovation in payments, the digital client experience and developing go to market strategies with clients who are entering new markets. Prior to joining Barclays, Helene worked at SWIFT, where she held roles in Global and Key Account Management as well as Consulting Services, where she launched a line of advisory services. Helene has been published in the Journal of Corporate Treasury Management (London). barclays.com/corporatebanking Every attempt has been made to ensure that the information provided is accurate. However, neither Barclays Bank PLC ( Barclays ) nor any of its employees makes any representation or warranty (express or implied) in relation to the accuracy, reliability or completeness of any information or assumptions on which this document may be based and cannot be held responsible for any errors. No liability is accepted by Barclays (or any of its affiliates) for any loss (whether direct or indirect) arising from the use of the information provided. Barclays is a trading name of Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register No ). Registered in England. Registered number is with registered office at 1 Churchill Place, London E14 5HP. June of 6