Interoperability means speed, lower fees and more value: Hard for Tanzania is to do the later two.

Think of a better future: Use your imagination:

Imagine a world where competition isn't just about access to your money, but the value a provider brings to your mobile wallet or bank account. Africa's shift from having multiple mobile wallets and/or bank accounts to having access to enriching value promises a revolution. Providers must rise with unique propositions, enhancing experiences, and tailored solutions as opposed to locking in customers --- by avoiding meaningful interoperability.

I broadly define Interoperability as the ability of different systems to seamlessly exchange information, interpret data or perform specific functions in a standardized manner. It signifies the compatibility and connectivity between various components, ensuring they can work together efficiently without complications, friction or barriers to other players or more importantly customers.

In payments and banking, interoperability covers customer channels such as apps, QR, POS, ATM (open banking), value added services (VISA, MC) and data sharing (open data) which would eventually lead to open finance then open economy (That's the advanced level).

In this future, providers vie to outdo each other with value, consumers win – better services, lower fees, and innovation become the norm.

Back to reality; How did we get here?

Tanzania's journey toward achieving interoperability in its mobile money and banking landscape has been driven by direct integrations between mobile money players, the establishment of links between mobile money players and banks, and the intermediary role of aggregators in facilitating indirect connections.

Beyond technicalities, Tanzania's journey towards interoperability is about catalysing collaboration and innovation for inclusive, affordable, and efficient finance. From bilateral pacts to TIPS and beyond, we're shaping a future where seamless transactions aren't just a possibility – they're our shared reality.

Centralisation: TIPS and the Government's Role to push interoperability:

Enter the Central Bank of Tanzania's pioneering initiative known as the Centralised Instant Payment System (TIPS). This innovative undertaking serves as a pivotal bridge, bringing together mobile money operators and banks within a single hub. In doing so, TIPS reshapes settlement procedures and inter-institutional payments. Although the adoption of TIPS has demonstrated promising momentum, its full potential awaits broader participation to deliver tangible and far-reaching advantages to the Tanzanian population. The government's role in fostering an enabling environment for such initiatives remains crucial for their ultimate success.

But why do we need interoperability ?: Speed, Low fees and Value:

Interoperability in the Tanzanian mobile money and banking sector holds the promise of realtime payments and lower fees for customers. While commendable progress has been achieved in enhancing transaction speed, there remains a notable opportunity for improvement in addressing affordability. The initial emphasis on optimizing operational efficiency has at times overshadowed the essential need for making transactions more cost-effective for end-users.

Fintechs are well-positioned to use on the foundation of interoperability and innovate in the financial landscape. Leveraging this interoperability, fintechs can expand their service offerings by introducing a diverse range of customised financial products and solutions for businesses and individuals faster than any other player --- presumably.

Fintech Frontier: Unleashing the Potential with people who build everyday:

The true potential of interoperability lies in the hands of fintech innovators. With open APIs from TIPS, a plethora of opportunities awaits. Envision a landscape where fintechs bridge the gap between customers, banks and telcos, offering an array of solutions from payments and loans to data sharing and credit scoring.

Among these innovations, the Third-Party Payment Initiation module (TPPI) stands out as a transformative force, IMHO. Enabling users to authenticate payments with a one-time password or through USSD/SDK protocols for third-party transactions opens new avenues for secure and convenient transactions.

One of the primary applications of TPPIs is in payment services. They enable seamless transactions between users and merchants, enhancing the convenience of online purchases. By acting as intermediaries, TPPIs reduce the direct involvement of the account holder in the payment process, making transactions smoother and more efficient.

TPPIs are also instrumental in account aggregation. They collect financial information from multiple accounts and present it through a unified interface. This consolidated view allows users to manage their finances comprehensively, even when dealing with accounts across different institutions.

In addition to payments and account aggregation, TPPIs facilitate fund transfers. Users can initiate transfers between various bank accounts or payment systems without the need for direct engagement with each account. This capability is particularly beneficial for moving funds between personal accounts or making payments to friends and family.

Furthermore, TPPIs find application in automating bill payments. Users can authorise TPPIs to handle recurring payments for bills like utilities, rent, or subscriptions. This automation not only saves time but also ensures that payments are made reliably.

TPPIs are at the heart of the open banking movement, allowing third-party developers to access account information and initiate payments with user consent. This opens up opportunities for innovation by enabling the creation of new services and applications that build on existing banking infrastructure.

From Competing on Access to Competing on Value to customers:

Imagine a world where competition isn't just about access, but the value a provider brings. Tanzania's shift from multifold access to enriching value promises a revolution. Providers must rise with unique propositions, enhancing experiences, and tailored solutions.

This virtuous cycle stimulates innovation, refining offerings while fostering creativity, efficiency, and user focus. Success no longer hinges on access, but on value. Users can select providers competing to enrich lives through value-added services.