independent

Wednesday 16 April 2014

Vodafone looked at turning to banking after success of money transfer services

VODAFONE, the most commonly owned share in Ireland, has looked at turning itself into a bank.

The mobile phone operator is already investing heavily in technology to enable people to make payments with their mobile phones, but at one point looked at going considerably further than that.

Chief executive Vittorio Colao told 'The Daily Telegraph': "We looked into [becoming a bank] for the last 15 years – very seriously. I even got a banking licence in Italy."

However, the mobile phone company has now abandoned the idea because "at the end of the day, they require different skills", Mr Colao said.

"I see that transferring money is an act of communication, and therefore we facilitate it but the more sophisticated these services become, the more it needs full banking [facilities] and full insurance.

"In the early stages [of mobile payments], the issue is 'Take money, give money'. That is our job.

"Then it becomes take money, give money and get a little bit of insurance and have a current account. That's a joint job [between mobile operators and banks]. But then, it becomes a full banking job," he added.

Vodafone has had great success with mobile payments services in developing countries such as Kenya, Tanzania and India, where many customers do not have bank accounts and use the scheme as a secure alternative to cash.

The M-Pesa service, which allows people to send and receive money as simply as a text message, has helped to reduce theft and fraud by eliminating the potential for people to send counterfeit notes or steal money entrusted to them for delivery to another party.

Around a quarter of Tanzania's GDP now goes through the M-Pesa system.

Its success has raised fears amongst traditional retail banks that mobile operators could end up cutting them out of the system.

Many customers also use the M-Pesa scheme as a savings account to hold small quantities of cash securely, and Vodafone recently expanded the service to offer international money transfers, mounting a challenge to the likes of Western Union.

It is now seeking to make mobile payments widespread in Britain, in a joint venture with its rivals, EE and O2's parent company, Telefonica.

However, the scheme is not expected to have the same impact as in developing markets because English customers are already heavily reliant on bank accounts. (© Daily Telegraph, London)

Also in this Section

Classifieds

CarsIreland

Independent Shopping.ie

Meet, chat and connect with
singles in your area

Independent Shopping.ie

Meet Singles Now

Findajob

Apps

Now available on

Top Stories

Most Read

Independent Gallery

Your photos

Send us your weather photos promo

Celebrity News