Friday, November 27, 2015

CBS 60 Minutes - The Future of Money

Readers of this blog will recall articles we have written about new technology that companies like KlickEx have been developing for quite some time. Mobile money using an ordinary cell phone is not a future world technology. CBC 60 Minutes ran this segment last Sunday talking about it as "the future of money." Below I have embedded the 60 Minutes video and further below are some added comments. 


My added comments: The 60 Minutes segment did a great job of showing how this technology can be disruptive in improving lives, especially for those without any kind of banking arrangement like an account or debit/credit card.

KlickEx has taken this kind of technology even further by making it possible to do real time foreign currency exchange for very low fees. This makes is possible for migrants and others who need to send funds to family members in other countries to do so without having to pay exorbitant fees or even have a bank account. This is a topic we have also covered here on the blog.

Interestingly, the 60 Minutes segment points out that not everyone in the current banking system is in love with this idea and the technology can be viewed as disruptive to the existing business model by some banks. Below is the transcript of the discussion about this from the 60 Minutes segment. I will just add that this technology allows for global real time funds transfers across all currencies in the future so that is something to watch for some day.

"For decades, development advocates implored banks to open branches in remote places, but it made little business sense: nearly half of Kenyans live on just $2 a day or less. Their financial transactions were just too small.
Bob Collymore: People don't buy a packet of cigarettes. They'll buy a cigarette. And so we need to be operating at that level. People don't buy a tube of toothpaste. If you go into the slums, you will see people buy a squeeze of toothpaste. And so you have to operate at that micro level.
Lesley Stahl: Now, how can that be viable for you as a company? It's like they have no money.
Bob Collymore: Because we believe that if we have now 19 million people transacting small amounts, making small amounts, it will add up. For each transaction, there is a small fee.
Lesley Stahl: How much money annually does Safaricom make from M-PESA in Kenya?
Bob Collymore: A quarter of a billion dollars.
Lesley Stahl: A quarter of a billion dollars?
Bob Collymore: Yeah. You don't have to be greedy to be successful.
And you can be successful if you don't have to build thousands of branches, and pay thousands of tellers. Actually, when M-PESA started, Kenya's commercial banks implored the government to impose regulations to impede its development, but the government decided to take a hands-off approach, which is pretty unusual.
Bob Collymore: The most effective barrier for the success of mobile money around the world is the banking lobby. The banking lobby in most parts of the world is a very strong lobby. And banks have looked at what's happened in Kenya and have decided that they don't want to see that happening in their own countries.
Lesley Stahl: "Not in my backyard,"
Bob Collymore: Exactly. The banking regulators have been persuaded that this is a threat to the banking industry.
Lesley Stahl: And it is, isn't it?
Bob Collymore: Well, you know, it's-- we live in a disruptive world. Uber came along and completely disrupted a number of things. Not just the taxi industry. Airbnb has come along and has disrupted. And so we are in a disruptive world. And we just need to--
Lesley Stahl: This is another one like that.
Bob Collymore: Yes, it is.
Lesley Stahl: It is."
Added note: A Thank You to Jim Rickards for a mention of this article on his twitter feed.

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