In a recent newsletter to its subscribers, Mondato, the leading US-based consultancy and advisory service in mobile financial services (MFS) explored the question whether regulations were undermining the potential of mobile money solutions to accelerate economic development in many countries.
With his extensive experience of regulation of digital payment solutions, Mr. Davies argued that intelligent regulation was all too necessary and that regulated entities need to participate to unlock the full potential of MFS as follows:
‘According to Lars Davies, e-money regulatory specialist and CEO of e-payment technology provider Kalypton, in a recent interview, “Operating outside of the formal financial system, non-bank actors are unable to offer a full range of financial services, in contrast to formal financial institutions.” While mobile operator-led platforms can provide the “rails” to offer alternative financial services, such as insurance or savings products, regulatory frameworks in many contexts limit the extent that this can be accomplished without partnering with licensed banks.’
Mr Davies went on to argue that while the contribution of MNOs needed to be acknowledged, partnerships were the best way to unlock the full potential of MFS while meeting those intelligent regulatory requirements:
‘Davies of Kalypton agrees that MNOs have played a key role in kick starting the development of m-money because they have the advantage of extensive reach within rural and underbanked communities. However, he notes that the potential impact of m-money has thus far been limited, given MNO inability to offer robust financial services, suggesting that by working together within a prudential, bank-led environment, m-money schemes would be able to achieve much more.’