Telecom industry can be considered as the starting point in any nation’s digital transformation. A country’s digital readiness and advancement can be determined by the state of its telecommunications sector.

As stated in a previous blog, there are more mobile connections than people on the planet, and more people have access to a mobile phone than to a toilet. This situation lends itself to the emergence and use of mobile money transactions.

Mobile money is predicted to grow rapidly in low- and middle-income countries, especially in Sub-Saharan Africa which has established itself as the epicentre of mobile money. In several African countries including Kenya, Uganda, Zimbabwe, Gabon and Namibia, more than 40 per cent of the adult population have a mobile money account.

Mobile money also promotes financial inclusion. According to a report published by World Bank Group, Due to the convenience, and affordability of transacting via mobile money over traditional financial institutions, the industry will continue to play a key role in bringing the 1.7 billion people who remain financially excluded into the formal financial sector

Like any other financial institution, these mobile money providers also have the responsibility to identify, verify and perform customer due diligence process in order to assess the validity of the customer.

Mobile money providers have a provision to use SIM card registration information to perform due diligence of the customer in some countries. In Ghana, mobile money providers may rely on the information provided during SIM card registration, as long as they validate that information with the National Communications Authority within 48 hours of account opening.

The other approach to performing the process of customer due diligence is through eKYC. eKYC typically needs a valid eID/ digital id in order to be completed.

Barriers to effective KYC for mobile money

The lack of a clear regulatory framework
Inflexible KYC requirements
Failure to keep pace with innovation
Lack of automation and digitisation
Overlapping regulations
Lack of a strong national ID system
Though telecom industry is on the forefront of digitally transforming the financial environment; without the backing of legal and data security framework, proper digital id systems moving forward may be difficult.