This first story sets the stage…I mean, the tension.

The Standard: Why Central Bank Position on Mobile Banking Attracts Wrath, June 2

Saturday Nation: Is This the End of the Banking Hall?, June 13

Saturday Nation: Kenya’s Central Bank to Push for New Banking Rules, May 4

Daily Nation: New Law to Make Banking Easier, May 25

Reuters: Kenya to Enact Laws Regulating Mobile Banking, May 25

One of the big raps against mobile banking is that it will unleash a wave of cross-border terrorism funding and criminal money laundering, because the practice is so unregulated.  It’s a major concern that regulators are beinning to come to grips with.

But what if mobile banking might actually reduce AML and terrorism funding. How m-banking can reduce money laundering (Business Daily, May 27), by Matt Herbert of The Fletcher School, suggests that might be possible:

Following on the heels of the spirited M-Banking 2009 conference in Nairobi in late May, the Minister of Finance just introduced three bills into Parliament to resolve some of the key issues that generated debate. The bills include:

* an anti-money laundering (AML) provision
* an anti-Ponzi scheme provision
* a provision to allow banks to engage in “branchless banking”

The branchless banking provision was a bone of contention for the banks, which claimed that Safaricom’s M-PESA had an unfair advantage in being allowed to set up agents far and wide without government approval, while banks needed to jump through a number of regulatory hoops to open even a bricks-and-mortar branch. The anti money laundering and anti-Ponzi provisions were in response to cries for enhanced consumer protection in what is fast becoming a Wild West new banking frontier.

If the bills become law, it will be interesting to see if the banks take advantage of their new freedom, and whether they can move fast enough to keep up with a dynamic technology company such as Safaricom, whose CEO Michael Joseph is best-known and most admired CEO in the land.

In the epicenter of global m-banking today(Kenya), the M-Banking 2009: Balancing Regulation and Innovation conference in Nairobi was a landmark event–bringing together bankers, telecoms and Central Bankers to hash out the issues and resolve the tensions between them. The protagonist was/is Safaricom’s  M-PESA money-transfer-by-mobile phone, which has caught bankers flat-footed.

From hotel porters to members of Parliament, everyone is using M-PESA, to send money home to villages, pay bills and tuition–and store money in their phone.  Even in Kibera, the largest slum in Africa with 1 million people living without electicity or sewage, M-PESA is being used by local savings groups to mobilize money.  Some groups have used their meager savings to invest on the stock market–in M-PESA.

Organized largely by students at The Fletcher School (Center for Emerging Markets Enterprises) and co-sponsored by the Kenya School of Monetary Studies, with lead support from Kenya’s Equity Bank, the conference provided a forum for the Central Bank of Kenya to address simmering tensions between the banking community and Safaricom, whose M PESA mobile-money transfer system is spreading like wildfire. With more than 6 million M-PESA accounts, more people in Kenya are transferring money by mobile phone than have bank accounts.

High-level Kenyan dignitaries included the Governnor of the National Bank, the Vice President of Kenya, and the Ministers of Finance and Communications. Attendees included the Central Banks of Uganda, Tanzania, and Rwanda, numerous commerical banks, Safaricom,  and interested parties primarily from Africa and Europe, butalso including World Bank’s CGAP and Bankable Frontiers from the U.S. The presentations and debate were high-level and high-spirited.

The week of the conference,  Business Daily Africa ran a 12-page spread representing numerous points of view; during and after the conference, local TV and print media ran multiple stories.

More updates to follow…I’m going to predict, there’s something happening here.