Zambia to tax online calls.

Zambia to tax
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Wednesday, Aug 15th

IBM banking on insight from mobile phone use in Africa

IBM banking on insight from mobile phone use in Africa

IBM has expressed confidence that its ongoing study aimed at achieving more inclusive financial services on the African continent will make a lasting impact once it is completed in 2018.

The company says it is conducting the research in partnership with a Kenyan bank and mobile network operator mostly from its Nairobi Research Lab, although the Johannesburg Research Lab also plays an important role.

Speaking at the Executive Machine Learning Africa 2017 event hosted in South Africa, Dr Skyler Speakman, Research Scientist at the IBM Research Lab in Kenya says the development of mobile money is now at a stage where we can try to solve more complicated questions on what the nature of advanced financial services - like credit, insurance and investments - would look like on the platform.

"The reason we set up a Labs in Africa is that we do believe that there is money to be made here and we are curious about the role that technology can play in addressing the continent's greatest challenges. We take that fairly seriously...as part of the inclusive financial services team, we look at how mobile phone data can help some of the more complex financial services (and) at how we can offer these services to people who are traditionally either unbanked or underbanked. We are making the assumption that payments and savings are already in place like we see through M-Pesa."

Speakman says the researchers have to balance the fine line between monetising data streams of rich banks and telcos versus giving poor people credit as a force for good as determine by, among others, the UN in its sustainable development goals.

He adds that the research, currently underway with IBM's banking and telco partner, will rely on machine learning and data analytics to a large extent.

"We need to decide, for example, who is able to borrow money and how much they are able to borrow as well as what data we need to use to make this decision. We don't have income statements, we don't have collateral and this is what we have to address."

Speakman says insights gained thus far includes is a better sense of the best time to borrow someone money (during the day rather than at night), as well as a finding that mobile phone users who regularly "borrow airtime" from their mobile operator are unlikely to pay for a monetary loan.

"This was an interesting insight because we picked up not the character of the person in their ability to take loans, but actually their lack of capacity. These people had poor money inflows, they were regularly running out of money and having to borrow airtime. Their repayment was not voluntary as they could not enjoy use of the phone without repaying the borrowed airtime."

The GSMA’s State of Mobile Money in Sub-Saharan Africa review, released in July 2017, shows that Sub-Saharan Africa contributes to more than half of all mobile money services worldwide.

The review also reveals that number of active mobile money organisations operations in the region had reached 140 across 39 counties at the end of 2016, accounting for more than half of the 277 mobile money programs across the globe.

Information also points to the adoption of mobile money service in West Africa - almost 29% of active mobile money accounts in Sub-Saharan Africa are now based in West Africa, compared to just 8% five years earlier.

Results from the IBM research will be made available next year.

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