mbarking on a daring personal challenge just a fortnight ago, I set out on a mission to test the feasibility of living an entire day without cash. Absentmindedly leaving my trusty ATM card behind, I wanted to push the boundaries and see if it was possible to navigate through various transactions solely relying on digital means. Little did I know that this experiment would turn into a fascinating journey, showcasing the remarkable strides Ethiopia has made in embracing digitalization.
The adventure commenced with a visit to the fuel station. To my surprise, the government’s implementation of a mandatory policy requiring fuel retailers to exclusively transact through digital platforms ensured a seamless and successful refueling experience.
Encouraged by this initial triumph, I ventured into a clothing store, where I was met with open arms by merchants who readily accepted digital payments. The convenience and efficiency of these transactions left me astounded.
Buoyed by my earlier accomplishments, I decided to indulge in a leisurely macchiato at a local café. Once again, the absence of cash proved inconsequential as the establishment embraced digital payment methods.
This single-day experiment unequivocally proved that Ethiopia’s transition towards a digital economy is not only viable but also flourishing.
As the day progressed, my culinary desires were also satisfied without the need for physical currency. This single-day experiment unequivocally proved that Ethiopia’s transition towards a digital economy is not only viable but also flourishing.
While the pace of Ethiopia’s digital transformation may appear miraculous, it is important to acknowledge the remarkable measures implemented by the government.
Over the past four years, the nation has witnessed a series of reforms, with the digitization of the economy standing out as the most triumphant. From the strategic vision to fully digitalize the economy by 2025 to the introduction of mandatory regulations compelling consumers and traders to embrace digital transactions, the steps taken have been undeniably commendable.
Reflecting on these reforms, it is worth highlighting some noteworthy milestones.
Firstly, the government granted telecom companies the permission to provide mobile banking services, a decision that paved the way for the liberalization of the sector. This move gave rise to the groundbreaking Telebirr and witnessed the entry of the highly successful Kenyan company, MPesa, into the Ethiopian market. Furthermore, the recent decision by the central bank to raise the daily electronic account balance limit to 75,000 birr, more than doubling the previous ceiling of 30,000 birr, exemplifies a progressive step in the right direction.
Yet while celebrating the government’s bold reforms and visionary strategies, it is imperative to recognize that the journey towards a fully digital economy is an ongoing one, requiring continuous efforts to overcome obstacles.
Too much focus on figures!
In the midst of the digital revolution, it has become increasingly common to hear market players boasting about the astronomical number of transactions they have facilitated. While these figures are undoubtedly impressive, they have also led to confusion among researchers, policymakers, and industry players.
The rapid surge in mobile banking users over the past two years, exemplified by the remarkable success of Telebirr, is a testament to this phenomenon. Within just one year of its launch, Telebirr amassed a staggering 34.3 million users, prompting commercial banks to take notice of its undeniable impact.
However, despite Telebirr’s triumph in terms of customer acquisition, it has not adequately addressed the needs of traders. The mobile money operator’s focus on government-related transactions, such as utilities and fuel trade, should not overshadow the importance of expanding its services to other sectors. A prime example of this gap can be observed in stores displaying the Telebirr sign on their gates.
Upon inquiring about the possibility of making payments through Telebirr, customers are often met with a resounding: “No.” This is particularly disheartening considering that these stores are registered agents of Telebirr. It is crucial for the executives of the mobile money operator to pay attention to this issue and bridge the gap between customer demand and trader acceptance.
Rising Fraud Trends
Another pressing concern in the realm of digital transactions is the alarming rise in fraud attempts. As the number of mobile money operators increases, so does the prevalence of fraudulent activities.
Fraudsters employ various tactics, including posing as bankers or call operators to deceive users into sharing their passwords, as well as generating fake bills during transactions with merchants. Despite sporadic attempts by mobile banking service providers and some banks to raise awareness about these fraudulent practices, it is evident that insufficient attention is being given to combat this growing problem.
In order to safeguard the integrity and trustworthiness of digital transactions, it is imperative for industry stakeholders to prioritize the prevention and mitigation of fraud.
This entails implementing robust security measures, educating users about common fraud schemes, and fostering collaboration between mobile money operators, banks, and regulatory bodies. By addressing this worrisome trend head-on, the industry can instill confidence in users and ensure the long-term sustainability of the digital economy.
Flawed Mobile Banking Systems
The advent of mobile banking applications has undoubtedly revolutionized the way we conduct financial transactions. However, alongside the success stories, there exists a disheartening reality in the form of broken banking systems, leaving customers frustrated and disillusioned. While Telebirr stands out as a shining example of a reliable platform, the same cannot be said for most commercial banks’ mobile banking applications.
One of the most glaring issues plaguing these applications is their tendency to abruptly stop functioning during transactions. Imagine being in the midst of a crucial payment, only to have the app crash unexpectedly, leaving you stranded and uncertain about the status of your transaction. Such incidents not only cause inconvenience but also erode trust in digital payment methods among consumers.
Furthermore, there are instances where these applications seemingly perform well until the completion of a transaction, only to fail in generating a proper bill. This lack of documentation can lead to disputes and misunderstandings between customers and merchants, further exacerbating the mistrust surrounding digital means of payment. It is imperative for banks to address these shortcomings and prioritize the seamless generation of accurate transaction records to instill confidence in their customers.
In light of these challenges, there is much that traditional banks can learn from Telebirr. A simple comparison between Telebirr and the mobile banking platform of the state giant, Commercial Bank of Ethiopia, reveals a stark contrast in reliability. While dealing with the latter, I personally encountered at least five failed transaction attempts, a scenario unheard of with Telebirr. Even private bank giants such as Bank of Abyssinia, once trailblazers in the digital banking sector, have fallen behind, experiencing system failures that tarnish their reputation.
To regain customer trust and uphold their reputation, commercial banks must prioritize the enhancement of their mobile banking systems. This entails investing in robust infrastructure, rigorous testing, and continuous improvement to ensure seamless and reliable transactions. Learning from the success of Telebirr, banks should strive to provide a user-friendly experience, bolstered by efficient customer support and airtight security measures.
In conclusion, the prevalence of broken banking systems within the realm of mobile banking applications is a pressing issue that demands immediate attention. The disappointments faced by customers during transactions, including sudden app failures and missing transaction records, cannot be overlooked.
It is high time for banks to take a page from Telebirr’s playbook, harnessing its reliability and customer-centric approach to improve their own digital platforms. By rectifying these flaws, banks can restore faith in digital payment systems and contribute to the seamless transition to a truly digital economy.
Samson Berhane is an economics graduate with expertise in business and economic reporting and communications. He can be reached at [email protected]. The views expressed in this article are his own and do not represent the opinions of the institutions he is affiliated with nor that of the magazine.