In Uganda and Kenya, there are services termed as mobile money. Where by business transactions are done by phone by telecommunication companies. They also lend money to public like banks. Is it good for economy?
Lending by bank. Medium of lending provided by telecommunication company. I think that's fine
Economists claim of high inflation. Telecommunications are owned by foreigners so money taken to other countries.
Also might lead to systemic risk... each of the companies have to do their own role... convergence would lead to trouble. As our friend said, if the medium is telecom, it is fine but the telecom companies should not take loan profile to their balance sheet.
Online banking is a normal activity all over the world. However, for IT companies to engage in banking business, i.e. lending money, shows a lack of banking regulation. IT companies provides the tool and technological infrastructure for banking business, not to engage in banking business.
Thanks Paul, banks plays a big role in the economy so transferring their responsibility is catastrophic to the country.
Bruce Robin Nyamweha I worry about this question. Thank you for asking this important question. On one side there are advantages with making payments through telephone cards. I invest (non-profit for me) in smoke free ovens with solar charging capabilities that also can charge a phone. In this combination some people, that are often excluded from banking systems, can get access to payments systems. I worry, of course, about the lack of control and regulations, but at the same time I also worry about many of the undemocratic properties of today's banking systems. "Telephone-money" has the potential for democratic change in money handling and money access. I think there is potential, but I worry that this potential may be squandered away by greedy telecom companies. We must remember though that banks have seldom been representative of not being greedy.
Thank Kjartan, it is concern, though telecoms are more accessible to public than banks. Banks introduced online but few people can afford internet data. telecom system requires not internet so population enjoy telecom mobile money.
Bruce
In my personal view it is not. Telecom companies may facilitate, but a Bank should be the institution to transact.
Very true. Emmanuel.
There would be a systemic risk in the system if there is too much of congruence.
India is experimenting concept of Payment banks that allow telecom and banks to come closer - but to a limited extent only.
The blessing of the questioned role depends on the main conditions of the telecommunication companies and whether it is directed within aplan to serve the society or to maximise their own profits, here economics of happiness and human wellbeing would be the final governor.
Prof. Fouad Beseiso Author of abook ready for internatonal publication on " The role of Islamic Economics in approaching human wellbeing ".
Yes, certainly, these commercial transactions increase tax revenues to the state's economy as well as the granting of transparency in business dealings.