Last week Orange Madagascar and MFS Africa announced the launch of their joint remittance service Orange Money Transfert International (OMTI), which enables online customers from just about any country to send money to a mobile phone in Madagascar. Senders register on the portal and effect transfers using traditional bank cards such as Visa or MasterCard. Funds are credited to Orange Money accounts and receivers can withdraw cash, all or in part, at any Orange Money agent in Madagascar.
The service is accessed online through www.orange.mg/transfertinternational. The launch of OMTI is an example of the pioneering role that MFS Africa is playing in using mobile technology to reshape the retail financial industry in Africa and potentially beyond.
Traditionally, remittances to Madagascar, primarily from Europe, are charged at price levels that make small-value transfers difficult to justify for many of the Madagascar diaspora. In our pre-design market analysis together with Orange Madagascar, we found prices ranging from 10-15% of the remittance value, with inconvenient delivery means, delays, and sparse cash-out locations. The new service is offered without transfer fee until the end of 2012 and thereafter announced at 5 EUR per transfer. This is a significant paradigm shift on remittance pricing while the new service offers greater convenience to both senders and receivers.
MFS Africa was founded in 2009 with the idea to provide simple and relevant financial services for all mobile users. We focus on few financial services for which we know demand is proven, re-engineer the services to optimize for cost-effective distribution and administration through mobile phones. We then partner with Mobile Network Operators and/or Financial Institutions to make the services available to their mobile (money) clients. Beside international money transfer, our portfolio currently includes insurance products (notably the world-first miLife in Ghana in partnership with MTN, Microensure, UT Life and Hollard Insurance) and credit products (KwikAdvance, a mobile-based short term loan product available in Cameroon and Ghana).
We have been asked many times by partners, industry practitioners and our clients a like: Why are you doing this? Why do you care? Our answer has invariably been – because we MFS Africa care about under-privileged people in Africa and beyond.
When we say we care, we don’t mean feeling sorry for the under-privileged or writing cheques to charity. No. We care in the sense that we believe it is up to us to do something about it; some lasting change to improve people’s lives for good, not just for today, next week or a couple of months ahead. It is that common sense of ‘Doing Something About It’ that brought the team together from more than 10 different countries including (and expanding): Benin, Brazil, Cameroon, Cote d’Ivoire, DRC, France, Ghana, India, Nigeria, Malawi, South Africa, The Netherlands and Sweden.
Our ‘Do Something About It’ at MFS Africa is to make financial services easier to access, simpler to use and more affordable for ordinary folks. Financial services have a multiplier effect – a good insurance product shields people from life’s storms; improved money transfer services makes it easier for diaspora members to support their relatives at home; using a mobile phone to pay for things online unlocks trade potential within and across borders, not to mention that it stimulates the growth of local web companies to employ people; easier to access and simpler-functioning credit services are oil in the complex machinery of the millions salaried and ‘survival entrepreneurs’ across Africa.
To achieve this we combine our cutting-edge technology with smarter process engineering – basically re-arranging a set of actions to optimize the outcome for a particular situation – and in so doing we solve two of the most important problems that financial services providers face in Africa: expand reach and lower cost.
Our typical design process involve picking a service (say a hospital protection plan), unpack it to understand the key building blocks, identifies what we can take out, add, re-mold, reduce or augment to lower its delivery cost and expand its reach. We then repackage the service and optimize for distribution through mobile phones. In pretty much all cases, mobile technology is at heart of our answer. We actually start with the mobile in mind – let the trend be your friend as we like to say – The result: an ‘old’ financial services (such as remittances) “innovated” into a new and improved version.
We love mobile phones. Unashamedly.
The same way the internet has put the power in the hands of ordinary people and given them access to all kinds of services in the developed world, mobile phones put power in the hands of emerging market consumers and give them access to all sorts of things. After Safaricom launched their M-Pesa in 2007, the mobile money revolution has swept over Africa. Now more than 60 mobile money platforms have been deployed in Africa giving millions of mobile phones users access to a basic bank account and associated services on their phone. Where the internet has driven down costs for many businesses in the developing world, mobile money deployments can do and is doing the same for financial services in Africa. For us at MFS Africa we draw the parallel between these two revolutions and borrow lot of lessons from the internet age. A key one being that open standards tend to always prevail.
Besides considerably lowering the cost of remittances, a service like OMTI (and a similar one MTNMMO.COM that we operate in partnership with the MTN Group) represents our attempt to connect the old and establish world of card/bank payments to the new and emerging world of mobile money. What effectively OMTI does is allowing a payment from a bank card to a mobile money account. This alone opens up a world of possibilities. And we intend to explore them all, one by one. So stay tuned for more…
UK’s Co-op Bank cuts losses despite pandemic hit
LONDON (Reuters) – Britain’s Co-op Bank cut its annual losses in 2020 despite a 22 million pound hit from expected loan defaults due to the coronavirus pandemic.
The bank on Thursday reported pretax losses of 103.7 million pounds, down from 152.1 million pounds the previous year.
Co-op Bank has been labouring to turn around its finances since its near-collapse and rescue by a group of U.S. hedge funds in 2017.
Talks between the bank’s backers and potential buyer investment firm Cerberus collapsed in December without agreement.
“We will have (takeover) interest coming into our shareholders… I think it’s a fact for this bank with the shareholders we have,” Co-op Bank chief executive Nick Slape said.
“I’m just focused on running the bank and getting us profitable. These are distractions that happen every now and again.”
The lender expects to return to “sustainable profitability” from 2021 onwards, despite underlying losses tripling to 64 million pounds last year as the pandemic crunched the lender’s income.
Slape said growth in mortgage lending to take advantage of a housebuying boom and lower costs would help the bank to achieve its target.
Co-op Bank cut around 350 jobs and closed 18 branches last year to reduce costs.
The bank’s core capital buffer – a key measure of financial resilience – was 19.2%.
The lender also said it would link part of executive pay to environmental and social targets from 2022 onwards.
(Reporting by Iain Withers; Editing by Rachel Armstrong and Jane Merriman)
StanChart profit falls 57% as COVID-19 inflates bad loans
By Alun John and Lawrence White
HONG KONG/LONDON (Reuters) – Standard Chartered PLC (StanChart) on Thursday posted a 57% fall in annual profit, missing analyst estimates, on higher credit impairments due to the COVID-19 pandemic.
StanChart, which earns the bulk of its revenue in Asia, posted a pretax profit of $1.61 billion. That compared with $3.71 billion in 2019 and the $1.85 billion average of analyst forecasts compiled by the bank.
Credit impairments last year more than doubled compared with a year earlier to $2.3 billion because of the pandemic, the bank said, but noted the majority of these took place in the first half of the year.
The London-headquartered lender said it would return capital to investors via a 9 cents per share dividend and $254 million buyback, with the total payout being the maximum permitted under temporary ‘guardrails’ set by the Bank of England.
The central bank last year told Britain’s largest lenders to suspend dividend payments and share buybacks for 2020 to help them maintain capital buffers against an expected hit to loan books from the pandemic.
“Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10% return on tangible equity,” Jose Vinals, Standard Chartered’s chairman, said in the exchange filing.
The bank said its return on tangible equity, a key profit metric, would climb from 3% to 7% by 2023.
It also said overall income in 2021 is likely to be similar to 2020’s because of the impact of global interest rate cuts.
(Reporting by Lawrence White and Alun John; Editing by Christopher Cushing)
Reasons Why You Should Be Opening an Offshore Savings Account Today
No one has to convince you that savings accounts are a bad idea. As a safe investment, this approach is hard to beat. It also has the benefit of allowing you to set aside funds for all sorts of purposes while you earn a little interest.
While this can be done with a domestic account, there are compelling reasons to consider opening an offshore savings account. How can you eventually use those funds, and why would it be better to house them in an offshore setting? Here are some ideas to consider.
1. Setting Aside Funding for a Short-Term Goal
You have a specific financial goal that you want to reach in five or ten years. It could be saving the money for a down payment on a home or possibly buying real estate. Any such goal requires dedicating a part of your income to reach it. Placing funds in an interest-bearing account in the interim is a good option. That’s where an offshore savings account comes in handy.
The temptation to withdraw money from an offshore account is less likely. While doing so would be easy, it’s not unusual for people to turn toward the balances in their domestic accounts before pulling money from offshore ones. The result is that you’re more likely to consistently make progress toward building the funds needed to reach your goals successfully.
2. Creating a Contingency Fund
No matter what your life circumstances happen to be, it’s a safe bet that you’ll need emergency funds at some point. Think of what it would mean to have six months to a year’s worth of cash to carry you over if your company went out of business or if you lost your job. Even if it took some time to find another full-time position, the money in a contingency fund allows you to maintain a reasonable standard of living while you’re in search of opportunities.
Using an offshore account to house your contingency fund works well because you are less likely to withdraw funds until the need is significant. By opting to set up recurring funds transfers from a domestic account to your offshore account, you can add to those emergency funds without having to give the process much thought. When the day comes when you need the money, it will be easy to transfer the funds back to a domestic account or use the debit card supplied by your offshore bank.
3. Building Assets for Retirement
As many people learned during the last recession, employer-provided pension funds may or may not be around by the time you retire. If the investments made with the retirement contributions tank, there goes all or at least most of the money you planned on using to live after leaving the workforce. Establishing your resources for retirement, and diversifying them, protect your financial future.
An offshore savings account can be one of those solutions. A time deposit account lets you build more reserves for retirement. Since the account is not tied to your employment status or to the investments used to shore up your pension fund, it will be there when you need it.
4. Growing an Education Fund for the Kids
Perhaps the plan is not so much about investing in your financial future. Education for your children may be what’s driving you right now. Knowing how much a college education costs these days, you realize that now is the time to start saving. Even if the kids can secure scholarships that cover much of the expense, there will still be costs that need attention.
An offshore savings account provides an excellent means of setting aside funds for education. Let the balances roll over from year to year and earn more interest. Take advantage of offshore accounts that provide higher rates of interest when the balances exceed specific amounts. This strategy will make funding college a lot simpler.
5. Building Reserves for Purchasing a Vacation Property
You’re reaching a point in your life when having a second property to use for vacations sounds appealing. Now is the time to start setting aside funds that will aid in the purchase. An offshore account can be the means of growing the balance a little faster. The result is that when you’re ready to buy that second property, there will be considerably less that needs financing.
This solution also makes the process of transferring funds for purchasing international real estate easier. For example, you decide to buy a vacation home in the same country where your offshore account is based. Your bank can make withdrawing the funds and remitting the money to the seller much simpler.
6. Protecting Some Assets Just in Case
You don’t have to work in a high-profile field to be sued. What would you do if things didn’t go your way? The court could order most of your domestic assets seized to settle the judgment. How would you get by then?
Here’s something that you may not know about the money in offshore accounts – domestic courts can’t order a seizure of the account balances. Even if a lawsuit means every asset you have at home is taken away, there is still the money in your offshore savings account to help you rebuild. It may also be the way that you keep a roof over your head and food on the table while you decide how to go about rebuilding.
7. Taking Advantage of Higher Interest Rates
If you compare the interest rates offered in many international settings with what you can command at home, the difference is immediately evident. It’s possible to open an offshore savings account with a relatively low balance and gradually add to the balance. Over time, you reach a balance level that allows you to earn some of the best rates found around the globe.
When the plan is to place money in an account to accrue interest for over many years, an offshore savings account is the way to go. Once the day arrives when you want to use those funds, the balance will be noticeably more than if you had invested the same proportion in a domestic account. Think of how good you’ll feel knowing that your money was able to grow simply because you chose the right offshore location for the account.
8. Enjoying Peace of Mind
At times, it seems increasingly difficult to find peace of mind in today’s tumultuous world. With money placed in an offshore savings account, it’s possible to secure a little bit of tranquility even when everything else is upside down.
By establishing an account in a politically stable country, offers excellent returns in the form of interest, and is protected from any domestic court action, you know there will be assets to draw on no matter what. That’s a good feeling.
Get Help Setting Up an Offshore Savings Account
These are just a few reasons why opening an offshore savings account is a smart financial move. There is no better time to start than now, and an excellent offshore location to choose is Belize.
Caye International Bank, located on Ambergris Caye island in Belize, Central America has helped thousands of people establish offshore financial accounts. We can help you, too, in determining which offshore accounts work best based on your goals. You’ll find that setting up an account is a lot simpler than you anticipated.
This is a Sponsored Feature.
Luigi Wewege is the Senior Vice President, and Head of Private Banking of Belize based Caye International Bank, a FinTech School Instructor and the published author of The Digital Banking Revolution – now in its third edition.
You can follow his posts on trends shaping the banking and financial services industry on Twitter: @luigiwewege
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