Tuesday, August 25, 2009

Growth Markets Financial services by Mobile Operators

I am a follower of Joe Wilcox's blog on Developing Telecom Watch. He just posted an interesting post on mobile banking services in developing countries and the role of the MNO on those services (or will mobile operators win the financial services game in developiong countries)

It reads
"If you were asked to reach for an example of mobile financial services gaining traction really impressively, perhaps you would think immediately of the M-Pesa service offered by the Kenyan cellco Safaricom, in which Vodafone owns a minority stake.

I daresay most readers are somewhat familiar with the service. For those who are not, Safaricom's TV advertisement provides a concise demonstration of the simplicity and utility of M-Pesa...

Read Joe´s full post

Here is my analysis/comments on his posting

Interesting analysis and certainly a topic that I believe all mobile operators (and many service providers) should be looking at but not only in Africa but for example in the entire MENA region
Why? Well at the end m-banking in all these countries / regions is attractive because 2 overall gaps:
a) Lack of alternative for micro-payments
b) Lack of banking infrastructure in general
c) Lack of development of Internet banking due to the infrastructure (together with lack of quality alternatives)

Obviously mobile operators are in optimal position to cover gap a, as at the end they have the billing and as seeing in the m-pensa case, it not that difficult to crate the right applications and processes for this opportunity
However when micro-payments become a huge chunk of the banking business as it may be in the African continent, and mobile operator starts replacing the banks we are dealing with the second gap. And here I agree with Joe on mobile operators having to fulfill the same regulatory and obligations that banks do, Possible? Yes, but it is a new business (mobile operator should set up different companies or ventures for this and treat them as startups). But heads up as the banks will lobby to avoid this or imposed banking licenses and tenuous processes for mobile operators
This leads me to point/gap 3. Mobile banking will be what Internet banking has been in Europe and North America (and probably many Asian areas although I lack the knowledge to make this statement). When the Internet boom started some independent (non-banks) tried to jump into the opportunity (first-one, e-bank, uno-e) but at the end most of the Internet banking champion have been banks themselves, except maybe for specialized product aggregators? Will the story repeats? I believe mobile operators could have an opportunity, but only those that are fast, can create ventures and have the right lobby capability at local level and the capacity to develop strong relationships as "financial providers" with other mobile operators


  1. like it manager focused in internet, i am completely agree with your post. Banks are powerful and knows how to stop any initiative dangerous for their business.

    "If you want to stop something, create a commission" In Spain, for example, banks create Mobipay with major mobile operators a few years ago to assure mobile payments never could be a hit without them.

  2. E-Banking has reached Pakistan though not many people use it. with a weak purchasing power few individuals have phones with a feasible internet connection otherwise MNC's like GSK have subsidized Blackberry's for its executives. The fact of the matter is that until our infrastructures strengthens and we have less power outages and fluctuating connections, most would rather visit the nearest bank brach to pay their monthly bills.
    A new trend we have seen is Telco Company directly approaching Energy operaters like KESC to allows customers the VAS to pay expenses through prepaid accounts. I should point out that thus far, there are flaws. To get an idea of the customer greivances in Pakistan, go to: BoltaConsumer.com