Even in relatively cosmopolitan corners of Africa such as Kenya, financial inclusion is by no means a given. Basic financial services such as access to bank accounts are often considered a luxury, with few, if any, options for many.
However, a digital transformation has been reshaping the Kenyan financial sector in recent years. We’re talking about mobile money. Thanks to the rise of digital money, a lack of a bank account is no barrier to financial freedom.
However, mobile money does more than enable everyday transactions. In fact, it’s dramatically changing the economic landscape in Kenya.
The advent of online trading platforms certainly owes a lot to the emergence of mobile money, making it easier than ever before to invest in the stock market, as financial experts claim. In fact, the democratisation of Kenya’s trading and investing ecosystem, bolstered by digital money, is an example to countries across the world.
The origin of mobile money
Mobile money has been around since the late 2000s, coming into existence with the arrival of the Mpesa service from Safaricom. The service enjoyed considerable uptake in Kenya, where many people still struggled to access basic banking services. Today, Mpesa has more than 51 million customers across Africa, with 30 million of them concentrated in Kenya. Millions more use rival services, but it’s Mpesa that laid the framework for mobile money’s meteoric rise in Africa, providing a novel way to manage and transact financial assets.
It’s little wonder that mobile money became such a success story in Africa. Across the continent, mobile device usage is high. In several countries on the continent, mobile phone ownership is almost 100 percent. Kenya has around 52 active smartphone connections, with only South Africa and Nigeria boasting more. With an increasingly robust communications infrastructure and reliable network connectivity, every one of these smartphone owners can theoretically use mobile money financial services.
Mobile money applications
Mobile money is a great leveller. It’s a backbone for small to medium-sized businesses, freeing up business owners from a reliance on banks and financial institutions. As well as facilitating effortless customer transactions, many mobile money providers are now offering services typically associated with regular banks. These include lines of credit like overdraft functions and business loans. In other words, the line between mobile money providers and the traditional banking system is becoming blurrier by the day. However, it’s likely that mobile money providers will outpace banks in the years ahead. There’s been a boom in the financial technology sector, with many mobile money companies partnering with start-ups to create dynamic new financial products not found elsewhere.
Online trading platforms
Digital money is also enabling the everyman to speculate on financial assets previously locked out to them. With mobile money, even those without formal banking can now participate in trading various markets, leveraging online trading platforms to trade stocks, commodities, forex and more.
Many countries in Africa, for instance, have their own stock exchanges, but they tend to be designed for traditional investing rather than online trading. One of the most noteworthy consequences of the mobile money era is the arrival and dominance of online trading platforms.
Unlike traditional stock exchanges, online platforms offer liquidity on a wider array of financial assets. Traders can use their mobile phones to conveniently speculate and trade on financial assets round the clock, every weekday. What’s more, some brokers, such as Kenyan regulated multi-asset broker Exness, provide mobile-friendly online trading platforms with trading apps specifically designed for mobile devices.
These platforms are intuitive, with a minimal learning curve. In fact, platforms even offer automation, meaning users can simply fill in a few presets to start trading. With the user-friendly platform and understanding of the investment to make, a trader can quite easily start trading within a short time.
No other innovation has democratised trading and investment like these online platforms. What’s more, it’s not just the solitary individual who is set to potentially gain. As online platforms come with relatively few barriers to entering the market, they are a lucrative tool for business investors. Without having to contend with throttling bureaucracy, these big-time investors have the potential to earn serious capital, which in turn drives economic movements elsewhere. Financial experts agree that this could lead to a more dynamic and inclusive economic environment.
Are mobile money providers a second-rate alternative?
Senior stakeholders of conventional financial and banking services would have you believe that mobile money providers are offering a threadbare product. This simply isn’t true. Beyond Africa, many traditional banks are now switching to an online-only model, with apps and banking platforms replacing high street branches. Factor in a move to a cashless society, and it’s easy to see why digital money is becoming an accepted alternative. For all intents and purposes, many banks are gradually metamorphosing into something that doesn’t look all that different from a typical mobile money provider, including offering services to trade stocks and other assets.
The future of mobile money
It’s becoming increasingly obvious that there’s little room for traditional banking systems in Africa’s future, especially when it comes to managing and growing financial assets. With a few rare exceptions like South Africa, a traditional banking and financial services infrastructure is simply non-existent.
Mobile money providers have stepped into the breach, allowing the individual to access everyday services and small to medium-sized businesses an opportunity to grow. This includes unprecedented access to financial markets, further underscoring the role of mobile money in democratising trading and investing in Kenya.
According to financial experts, the influence of mobile money on financial inclusion and economic development will only continue to grow.
Source link : https://nation.africa/kenya/brand-book/how-mobile-money-is-democratising-trading-and-investing-in-kenya-4646218
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Publish date : 2024-06-04 00:14:58
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