Consultant, IBM Center for Applied Insights
In my previous blog post on How Leading Marketers Outperform, I discussed how Leading Marketers develop a system of engagement
that drives customer value at every touch.
Today, I’m going to focus on the other side of that equation and dig a
bit deeper into what prevents many marketing organizations from becoming Leading
The first question you might ask is “why doesn’t everybody
just establish a system of engagement?”
The short answer is because it’s not easy. A look at the barriers both Leading Marketers
and others face in implementing marketing technology is very telling.
To begin with there are a set of barriers we found that are
common to virtually any technology decision: cost, ROI, and organizational structure.
If we continue looking, the additional barriers for leading marketers are ease of
use and lack of appropriate user skills.
Alternatively, we found that some others are more concerned with
alignment/collaboration within the organization – particularly with IT. In many cases, marketers may not even have
ownership of marketing technology decisions.
In short leading marketers are collaborating with IT to implement the technology framework that supports a system of engagement and are focused on issues that enable them to improve
the effectiveness and scale of their activities. The others are
struggling to coordinate effectively with IT and other functional areas within
the enterprise. They aren't at a point yet where ease of use or a lack of user skills could be a barrier.
This leads to the second question, “okay, how do
you collaborate more effectively with other functional areas (especially IT)?” This is complicated, but our data
suggests that Leading Marketers are able to collaborate effectively at least in
part because they’ve established credibility within the organization.
There are lots of ways to establish credibility, but a part
of it is being able to demonstrate the value that you bring to the table. To that end, our study found that 88% of
leading marketers attribute business results to marketing activities. They use a variety of different systems,
ranging from spreadsheets to complex software suites, but the common thread is
that they attribute results regardless of methodology.
And of that 88%, 93% of those leading marketers have a set
process in place for determining which marketing activity receives credit for
the business results. Again, the
specific methodology varies – first touch, last touch, results distributed
across multiple touches – but they have a set process in place.
This measurement allows leading marketers to invest resources intelligently.
They know what works and what doesn’t, and this allows them to maximize
the impact they have on the business and focus only on the most effective
activities. This in turn builds credibility with the rest of the enterprise. Marketers can finally speak in the same financial language as the rest of the business.
So in summary, it’s very difficult
to become a leading marketer without measuring the results of marketing
activities. Measurement not only informs
operational spending decisions, but also impacts the role of marketing within
the organization. Leading marketers’ ability to attribute results helps them
not only invest intelligently but also build credibility and the financial justification needed to construct an
enterprise-wide system of engagement.
I'll be back next time with a discussion of the overall characteristics of leading marketers and how they illustrate a road-map forward for marketing organizations. In the meantime, if you have any questions, please feel free to leave a comment!
IBM Center for Applied Insights
What is driving these shifts? In a January 28, 2012 New York Times Op-Ed piece Made
in the World
, Thomas Friedman argues, “Many CEOs, …increasingly see the world as a place where their products can be made anywhere through global supply chains (often assembled with nonunion-protected labor) and sold everywhere.” Globally integrated supply chains are transforming traditional business models and shifting yesterday’s outsourcing choices and trade-offs.
Mr. Friedman provides a provocative perspective. But, is this really happening?
The transfer of control of a process, product, or service to an external provider can take a variety of forms. The value in strategic outsourcing can include an organization’s ability to:
- Reduce costs
- Improve services delivery
- Engage in strategic partnerships that enable innovation, growth, and desired business outcomes
Traditional strategic outsourcing has often centered on transferring services to an external services provider with a focus on cost reduction. Outsourcing models are changing in new ways - why? What is driving these shifts and what can an organization do to capitalize on these changes?
Our team at the IBM Center for Applied Insights set out earlier this year to investigate market changes, identify emerging trends, and develop evidence-based research that explores how forward-thinking companies are responding to these trends.
Our premise is that the changing global dynamic, combined with technology-driven market shifts, is creating an opportunity for organizations to move beyond sourcing primarily for cost advantage to partnering for competitive advantage and desired business outcomes. Some of the technology-fueled market shifts reshaping the outsourcing landscape include:
- New and disruptive business models are changing how business is done
- Empowered consumers are driving companies to deliver customized client experiences to build enduring loyalty
- Big data generated from multiple sources is changing how organizations make decisions and leverage predictive insights for competitive advantage
Recently, IBM conducted a survey of 97 C-Suite Sourcing executives and found that seven out of ten plan to outsource for strategic reasons like driving growth and innovation. Based on their chief motivation, we categorized these organizations as:
- Cost-cutters–27 percent outsource their IT infrastructure to reduce operations costs
- Growth-seekers–37 percent outsource IT infrastructure, application management or business processes to achieve operational efficiencies and revenue growth
- Innovators–36 percent outsource multiple parts of the business to enable transformation and innovation
What we found most interesting was the progression of objectives across these three groups. Cost-cutters indicate they want one primary outcome from their sourcing relationships: cost savings. The majority of growth-seekers want to reduce costs, but also faster time to market for new products and services, and increased efficiency and effectiveness across the entire value chain. Innovators expect all of the above–and more. In addition to cost reduction, speed-to-market, and value chain efficiency, the majority of innovators want providers to help them:
- Drive front-office effectiveness (not just back-office)
- Better anticipate and respond to disruptive technological changes or market forces
- Proactively manage risk, compliance and security via technologies like predictive analytics
- Share risks and rewards based on business outcomes
I look forward to your comments and feedback!
Client Insights, Senior Consultant
Center for Applied Insights
Platform as a service (PaaS) is at a critical stage in its life cycle – with promising business benefits offset by lingering reservations. PaaS promises increased flexibility, lower costs and higher quality IT services, while maintaining control over data and applications. It sits squarely between infrastructure as a service and software as a service, and could prove to be the most transformational of the three main types of cloud computing.
The IBM Center for Applied Insights wanted to explore attitudes around PaaS in order to identify leading practices in PaaS adoption and provide recommendations on how to exploit its potential. We interviewed over 1,500 IT decision makers in 18 countries and a wide range of industries so we could better understand their motivations, experiences and concerns relating to PaaS. This week, we released the results of our exploration in our latest paper “Exploring the frontiers of cloud computing – Insights from platform as a service pioneers”.
The report goes into more detail on the benefits and challenges surrounding PaaS, how to overcome the challenges and what an enterprise can do to start, or continue, their PaaS journey. For a view from cloud pioneers CLD Partners, check out their post on IBM’s Thoughts on Cloud
blog. For more information about IBM’s SmartCloud Application Services launch and the study check out a recent article by ZDNet.
Consultant, IBM Center for Applied Insights
A couple of weeks ago I wrote a blog post discussing our
recent paper that links Leading Marketers with financial outperformance. In our study, these Leading Marketers had 40%
higher revenue growth and twice the
gross profit growth. Naturally, the next
question you’d ask is “how do I become a leading marketer?” And that’s exactly what I’m going to talk
about over my next few posts.
To kick things off, we found that Leading Marketers engage
with their customers across a variety of channels. These leading marketers are more likely to
have integrated inbound, outbound and offline marketing programs in some or all
channels. They are more likely to use
interaction optimization technology in all of their channels. And they are also more likely to adjust
offers in real-time across all channels.
In short, they create a “System of Engagement” that allows them to
engage each customer as an individual, across multiple channels.
So if leading marketers are creating a system of engagement
to deliver targeted messaging across channels, what specific tactics are they
using? To answer that, we looked closer
at mobile and social channels.
Essentially, a number of tactics within these channels can
be considered “table stakes.” Everybody
has a mobile version of their website and delivers mobile e-mails. Everybody has a social networking page on a
site like Facebook and most engage in micro-blogging (Twitter). But there are some specific, innovative
tactics where we saw differences between leading marketers and others.
When it comes to mobile, we found that leading marketers
were more likely to use mobile messaging campaigns, location based targeting,
and mobile-specific ads. For social,
leading marketers were more likely to develop apps for 3rd party
networking sites (Facebook), leverage social/local group buying (Groupon), and
participate in location-based games (Foursquare). All of this means that leading marketers are
faster to begin leveraging emerging/trending technologies to see if they can
enhance the system of engagement. Some
of these tactics may or may not prove to be effective in the long run, but the
leading marketers get there first… not unlike the adage “fail fast, fail
often”. By being at the forefront with
these tactics, they stand to benefit when they come across something that’s
It’s also interesting to note that location-based tactics
saw greater use by leading marketers in both mobile and social. When you think about a system of engagement
that strives to deliver targeted, personalized, relevant offers in real-time,
it makes perfect sense that location-data is a key component to enhancing that
There are a number of ideas you can take away from our data,
but there’s one over-riding principle that I think is worth taking to
heart: Innovation. Leading marketers aren’t afraid of trying out
new channel engagement technologies or tactics.
They get there first and they find out what works. They don’t worry about whether a channel is completely
mature… they jump in and get their hands dirty.
This enables them to be proactive with their customers, rather than
I’ll be back next time to talk about the barriers that
prevent many organizations from becoming Leading Marketers. As always, please feel free to reach out to
me with any questions. And, if you haven’t read it yet, take a look at our
executive report, How Leading Marketers Outperform: Effective Engagement and Intelligent Investment.
Client Insights, Senior Consultant
Center for Applied Insights
There has been a great deal of recent press stating that Platform-as-a-Service (PaaS) is “the future” of cloud. With a PaaS model, the user retains control of the application data, capabilities and updates, while the provider manages the software and infrastructure beneath that application. A lot has been made of the potential value of the technology – making the entire application lifecycle more efficient and less risky, while opening the doors for new organizational constructs and increased innovation and differentiation.
In its latest cloud hype cycle, Gartner placed PaaS at the summit, stating that it will be a transformational technology in the next two to five years. However, Gartner also said that PaaS is one of the most misunderstood aspects of cloud platforms. Adam Wiggins, one of the founders of cloud application platform provider Heroku, thinks that the PaaS market is just getting started. Finally Frost & Sullivan recently reported that “the platform-as-a-service market will be the next area of keen competition for cloud innovators, as the infrastructure- and software-as-a-service spaces have been commoditized.”
All of this may be true. A lot of enterprises are just getting started experimenting with and testing PaaS implementations, and it may take a number of years for widespread adoption. Technology adoption rates are always difficult to predict, but I think we can say with certainty that PaaS is a hot topic, with great potential, and much more will be written about it.
Consultant, IBM Center for Applied Insights
As a former marketer myself, I know that marketing is often marginalized within enterprises, particularly those with strong scientific or development organizations. Marketing is often viewed as being responsible for the “soft stuff” that looks pretty but doesn’t have any real impact on the business. I’m here to tell you that this view is wrong, and if you don’t realize it quickly, your competitors will.
We recently surveyed 362 marketers from around the world, across more than 15 industries, and found that Leading Marketers’ enterprises had 40% greater Revenue growth and twice the Gross Profit growth over the past 3 years when compared to the rest.
What exactly is a Leading Marketer? I’m glad you asked. We identified 2 essential traits of effective marketers: “Effective Engagement” and “Intelligent Investment”. Essentially we defined Leading Marketers as those who had a high level of responsibility for engaging with customers across channels as well as a sophisticated approach to investing marketing resources.
We then looked at publicly available financial data and found that when we correlated that to our segmentation of leading marketers, a clear trend emerged: Leading Marketers’ enterprises performed better financially.
So how, exactly, do you develop a Leading Marketing organization within your enterprise? Like most things in today’s world the answer is complex but grounded in the principles of Marketing 101. It can be as simple as the 4P’s or as complicated as developing a collaborative relationship with other functional areas within the enterprise. I’ll be blogging more about this topic and other insights from our study over the coming weeks, but get a sneak preview by reading our executive report, How Leading Marketers Outperform: Effective Engagement and Intelligent Investment.
If there is a particular topic you’d like me to talk about, please login and leave me a comment, below.
Special thanks to Geert Van De Putte and Tim Appleby from IBM Software Group for their help with this post.
Like other industries, retail has its own set of unique security challenges. Loss prevention is a significant component of that challenge. The latest National Retail Security Survey
stated that in 2011, U.S. retailers lost $34.5 billion to retail theft – combining employee theft, shoplifting, paperwork errors and supplier fraud. That accounted for approximately 1.4 percent of total retail sales last year.
Today, the checkout/point of sale is the nexus for retail security. Here, the four most important flows for a retailer converge – cash, inventory, electronic payments and customer data. All sorts of different security incidents and fraud can happen at this point – self-checkout fraud, shoplifting, counterfeit coupons, employee theft and compliance in theft, and the theft of customer data through compromised equipment.
As the boundaries of retailers extend beyond the traditional brick and mortar of their stores, additional security concerns come into play. There is fraud around online ordering and home shipment, portal security issues for retailer websites, supply chain security associated with contamination, theft and low quality, and even stealing intellectual property (if retailers have their own private labels).
On top of all of this, retailers are also transforming their business with emerging technologies that all have their own unique security challenges. These include new payment technologies like mobile point-of-sale and in-aisle purchasing, e-receipts, RFID and near-field communications, video and social analytics, mobility and multi-channel access and social networking.
All of these are increasing the number of contact points between the customer and the retailer – pushing out the security boundary further and further. Retailers are struggling to create a better, deeper customer experience and, at the same time, mitigate the potential risks to the organization.
The threat landscape and new technologies are creating a need for an integrated security environment. Are retailers up to the task? Are they approaching physical and information security in new, united ways? Is loss prevention being included in more and more technology conversations? Are retailers moving away from being purely reactive?
We gained a bit of insight into this as part of the IBM 2012 CISO Assessment.
There were eleven retail respondents from four different countries (France, Germany, Japan and the U.S.). Their answers compared to the overall statistics from the survey shed some light on the issues:
- Retailers realize that information security needs more attention – 8 of 11 see increased leadership attention from two years ago, and 9 of 11 expect increased budgets over the next two years.
- They are making progress – all of the retail respondents indicated a slight (7 of 11) or a dramatic (4 of 11) improvement in their information security position from two years ago.
- However, they currently don’t have the information security organizational structure to address the changing landscape – only 2 of 11 have a CISO, 2 of 11 have a budget line item, 4 of the 11 have a security or risk committee and 5 of 11 use a standard set of metrics.
- Internal threats and mobility are top concerns – 6 of 11 respondents indicated mobility as their top technology concern. Internal threats were ranked the highest overall security threat with 5 of 11 ranking it #1.
- Retailers will be focused on employee education and using managed services to improve their security situation over the next two years.
Another statistic that highlights the fact that retailers know the importance of information security but are struggling to address the changing technology environment comes from IBM’s Global Workforce Study
. Overall, 49% of respondents stated that they have “completely addressed” their mobile security concern. For retail it was only 22%. However, 73% of retail respondents expect to make significant investments in their mobile environment in the next 1-2 years, signaling they know it is an issue.
Retailers are not only responsible for protecting their own information, but they are under considerable regulatory pressure to make sure they protect customer information as well. They are faced with a diverse array of threats and technologies that are creating new potential vulnerabilities. They need to have the right security organization and capabilities that unites information and physical security, risk, loss prevention and others into a holistic approach. Retailers realize this, but they still have a way to go before they’ll be confident in their capabilities.
Feel free to contribute to the conversation. Are these the right security challenges for retailers? Will it take more than just technology to address them? How do you think they are addressing this important issue today? Do retailers have a harder go at it than other industries because of the nature of their business? Let us know what you think.
Today, I’m going to take a different approach to, hopefully, give you a glimpse into how mobile money can change users’ experiences. This is an imaginative piece (all characters are fictitious) where I’ll try to highlight the concerns, joys and satisfaction of a mobile money user from the hinterlands of India in the year 2015. It highlights the importance of an effective and trained agent network, importance of sufficient face-time for new customers, interoperability issues, and benefits of mobile money for a typical user.
Today, I woke up late at 5 am, startled to already be a half hour behind schedule. My mobile phone in hand, I kept checking the time and rushed to get ready. I can’t afford to lose half a day’s wage, US$6, if I report late to work even by half an hour.
At work, Sultan, one of my best friends, asked me for a loan of US$15 which he needed to pay the school fees of his daughter. I checked my Airtel mobile money wallet balance and instantly transferred the amount to his mobile money wallet. For a nominal fee of 10 cents, it was worthwhile to help a friend.
Thinking back, I remember the last time I loaned Sultan US$10. I had to walk down 2 Kms to the nearest branch of State Bank of India to transfer money to his account. That was when we met Harpreet, the sales agent of BharatiAirtel mobile money services at the bank. He introduced us to the new mobile money services. Until then, I had a basic feature phone and could not understand much of technology or features of mobile money in the first go. Harpreet was patient; he explained the service, its features, its tie up with banks, charges and benefits for us for about 30 minutes. I was particularly wary of the notion of holding money in mobile – how secure could it be? What if I lose my phone/SIM or someone else makes use of PIN delivered to me? Harpreet demonstrated everything and explained it in detail to clear our apprehensions. This convinced both of us, me and Sultan, to subscribe to the service on our Airtel SIMs. He even gave us the contact details of two local agents in our locality who can help us cash-in and cash-out, as required.
The first few days in using this service were difficult. I forgot some of the steps of using various services; user interface of the application was not so convenient, etc. I remember approaching the local agent and was so relieved to see that he could help. He was very well trained and he helped me from time to time in using the services more efficiently. One challenge I faced in the beginning was that the agent used to run out of cash. This was a major let down for me and I had to walk a Km to get cash from another agent. Over the last two months, though, I feel the service has improved a lot.
Since then, I have been using this service quite frequently. I have used it to make recharges on my cell phone, make and receive money transfers to/from my friends, send money to my family, check bank account balance, withdraw and deposit cash at the agent and even pay my electricity bill. The list keeps on getting longer! Here again, the agent is proactive enough to let me know of the new services and discounts offered by the service providers.
For me, it’s a hand to mouth situation, given my meagre salary. I work in New Delhi but my family lives in a distant village in Orissa, more than 1000Kms from my place. With this service, I can transfer money to them on a real time basis and with minimal charges. Earlier, I used to transfer money through post office or hand it over to someone who would be travelling to my place. It took a few days for the money to arrive and I was charged about thrice as much. I am quite happy that this service enables me to send money to my family as and when they need it.
One challenge I faced initially, while transferring money to my family, was that my family was using the mobile services of Vodafone and Airtel was not allowing money transfers to non-Airtel subscribers. Sending remittance to my family constitutes 80% of my transactions and this was a major handicap for me. Either, I had to take the services of Vodafone or my family had to take the services of Airtel. Due to this, I was not able to transfer money to them for a couple of weeks. I consulted some of my friends and they advised a workaround solution they had been using. However, I was not convinced and instead, asked my family to take Airtel connection.
I have genuinely recommended this service to my fellow workers at the construction site and taken four of them to Harpreet to sign up for the services. For this, Harpreet gave me bonus talktime on my cell phone. It is a nice incentive for sharing my experience.
I finally got free from my work at 7 pm this evening and received my daily salary. I transferred the entire amount to my family since the monthly rent was due on their house.
Though it is tough for me to survive in this salary and work condition, mobile money has surely made the journey a bit simpler and convenient.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Consultant, IBM Center for Applied Insights
In this post, I shall try to have a closer look at some of the important questions pertaining to interoperability: what do we mean by mobile money interoperability, what are the arguments for and against interoperability, and what practical steps can be taken to achieve it?
The mobile money industry has witnessed a remarkable activity in the recent years. There are more than 165 pilots in the mobile money segment in emerging economies, mostly being run by MNOs, banks and other financial institutions. It is now possible to find two or more deployments in many Sub-Saharan African and South Asian countries. Yet, only a very few of these deployments have been able to achieve significant scale. In a recent survey of 52 mobile money service providers, the GSM (Groupe Spéciale Mobile) Association identified 11 service providers that have more than 1 million registered customers. This has led many to make a case for implementation of interoperability in mobile money ecosystems so that customers are more inclined to use mobile money and the deployments can achieve scale by increased customer adoption. Let’s try to explore this important concept further.
Defining mobile money interoperability: Interoperability occurs if different systems are technically able to work together. For mobile money, interoperability can happen between handsets, networks, financial processes and retail processes etc. The Consultative Group to Assist the Poor. (CGAP) has proposed a framework that categorizes interoperability in three levels: platform, customer, and agent levels.
- Platform level interoperability – It permits customers of provider A to make payments to customers of provider B. They may also transact via any mobile network operator channel and switch operators without having to switch banks. For example, M-PESA allows consumers to send money to any phone. In South Africa, MTN offers subscribers not only MTN Banking’s application but also access to their First National Bank, ABSA, Standard Bank and NedBank accounts. WIZZIT works across all mobile networks in South Africa.
- Agent level interoperability - It permits agents of one mobile money service to also serve customers of another service, in other words, agents having non-exclusive partnership with operators.
- Customer level interoperability - It permits the customers to access different mobile money operators from one SIM. Also, it permits the customers to access mobile money account from same handset, regardless of SIM
The debate around interoperability: Market participants and regulators have not reached a consensus about the need and benefits of interoperability. Some regulators believe that interoperability is the way to go as the market matures and operators try to scale up. For example, governments of Ghana and India have mandated interoperability in their countries. Some regulators have taken a neutral position and have allowed market forces to decide the course. The Bank of Zambia prefers, but has not mandated, that mobile money solutions be interoperable. It is encouraging interoperability through the development of a national switch. Others feel that interoperability will erode the competitive advantage of market leaders and its implementation may not result in sufficient addition in subscribers to justify the investment required. For example, a report by GSM (Groupe Spéciale Mobile) Association suggests that the business case for implementing interoperability is unlikely to justify the initial investments of implementing it.
How to achieve interoperability: Though industry leaders seem to agree that interoperability is a key issue, they have different views on how it can be achieved. There are two broad approaches to achieving interoperability:
- Standards – In global mobile telecommunications industry, Global System for Mobile Communications (GSM) has played a key role in setting up the standards and allowing the users to roam freely across various markets. Another example of common standards aiding the development of industry relates to SMS, where standard development in Europe led to a huge growth in SMS usage. Mobile money industry is still in its early stages and has not agreed to a set of common standards across all the elements described above. I believe it is unrealistic to take an entirely standards-based approach to interoperability. Standards are consensus based and take a long time to develop. Since a number of standards exist, it is unclear whether common standards can also impede the fast growth of mobile money industry; some of the players would have to wait before launching their services and many might have to migrate to common standards with significant costs and time. As the industry develops, a flexible approach based on experimentation would be needed. It will take time but governments & industry players should do what they can to monitor & promote standards,without holding back growth.
- Bilateral Agreements – Bilateral agreements, both commercial and technical, have become quite common. To develop compelling product offerings and to scale up, the market participants are experimenting with various business models and forging partnerships with other MNOs and financial institutions. For example, MasterCard and Telefonica announced a joint venture using the MasterCard Mobile Payments Gateway to lead the development of mobile financial solutions in 12 countries within Latin America where Telefonica’s Movistar® brand is present.
With respect to the timing and extent of interoperability, maybe the real answer lies somewhere in between. The timing and extent of interoperability needs to be specific to the state of market and needs to be continuously assessed. A report by Mobile Money for the Unbanked (MMU), suggests some valuable recommendations:
- Regulators should carefully consider the costs and benefits of implementing interoperability at an early stage of market development.
- Even when the enabling regulatory framework is in place, market should be monitored on a continuous basis to assess the need of further intervention.
- In the absence of interoperability regulations, monopolies and competition should be assessed periodically.
- Regulations should focus on ensuring that interoperability remains feasible at low cost to provide appropriate incentive to service providers and benefit users.
Have you ever been blocked by interoperability issues? What steps are your companies taking? I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Client Insights, Consultant, IBM Center for Applied Insights
In this post, I will explore some interesting facets of the mobile money market in India such as market opportunity, regulatory environment, market participants, and the way ahead for the market.
Market Opportunity: The Indian economy has shown strong growth in the recent years, making it a USD 1.3 trillion economy. It is predominantly a cash economy with more than 65% of all retail transactions (total transactions are estimated as USD 410 billion per year) being conducted in cash. According to Reserve Bank of India(RBI), the central bank of India, more than 57% of the electronic transactions happen through credit and debit cards and the rest through Electronic Clearing Service (ECS) and Funds Transfer.
In India, 40% of the population remains unbanked. In contrast, it is estimated that more than 70% of the 1.17 billion people in India own a mobile phone. Moreover, this subscriber base has been increasing by 20 million customers per quarter. Hence, with a huge mobile subscriber base and a very small percentage of the transactions taking place over mobile, the potential for mobile money to take off and replace cash is immense.
Regulatory Environment: Government and the Reserve Bank of India are the nodal agencies which formulate regulations pertaining to mobile money. The Indian regulatory system has been gradually allowing the expansion of new products and solutions aimed to take advantage of the vast opportunities in this space.
RBI recognizes that individual banks need to work in conjunction with operators, mobile devices and payment technologies. In 2009, it mandated that a bank account is needed to send money but in 2010, it allowed ‘Other Persons’ (non-banks/NBFCs) to issue m-based semi-closed instruments with certain conditions and caps on transfer amounts. As a result, banks started offering mobile banking services. Further in 2010, it allowed semi-closed instruments to be used for bill payments and ticketing services, also, and permitted issue of co-branded instruments.
In late 2010, an interbank system had been set up in India enabling instant money transfers between bank accounts via mobile phones. NPCI's Interbank Mobile Payment Services (IMPS) is India's first instant fund transfer facility in the retail payment sector. It provides an inter-operable infrastructure for the banks and facilitates real time money transfer facility to their customers through the mobile channel. The unique feature of this system is that banks can choose any mobile banking application of their choice. Interestingly, IMPS can be made available in all forms (SMS, USSD, thin client, thick client) and hence it can support the transactions directly from low end mobiles to high end mobiles.
Market Participants: As compared to mobile money deployments in other emerging economies like Kenya, Philippines and Uganda, the Indian market is at a very nascent stage in terms of market consolidation and volume of transactions. The Indian telecom market is quite fragmented with fifteen different mobile operators providing service to more than 900 million subscribers. Among them, BhartiAirtel, Reliance Communications and Vodafone together hold more than 50% of market share.
BhartiAirtel has recently launched its mobile money services across India, offering services like payment of utility bills, mobile recharges, purchase at retail outlets, person to person money transfer, etc. Only Airtel customers can use this service and transfer money to other customers on Airtel.
My Mobile Payments Ltd (MMPL), a mobile payment service provider, had recently announced the launch of ‘Money-on-Mobile’ (MOM). It is a M-Wallet service which permits a mobile phone subscriber to purchase a wide range of goods and services using the mobile phone instead of paying by cash, cheque, debit or credit cards. It offers services like mobile recharge, utility bill payments, purchase of bus and movie tickets, to name a few. It claims to be India's first operator and bank agnostic mobile payment system.
The way ahead: As outlined in my earlier post, though the opportunity is huge and growing, companies need to address security apprehensions associated with mobile payments and build the awareness of the technology and the product.
India’s unique demography is an important factor to consider while taking strategic and marketing decisions during the ‘launch’ and ‘scale’ phases of mobile money deployments. Some of the notable factors are:
- It is estimated that 60% of the 1.17 billion population lives in rural areas most of which suffer from a lack of basic infrastructure and education. Companies generally face significant challenges in building the infrastructure and consumer awareness in these areas.
- Also, more than 50% of the Indian population is below the age of 25 years. This segment of population embraces new technology more readily but at the same time, it is a lot more value conscious and has little loyalty to a brand.
Besides offering regular services like person to person transfer, utility bill payments, mobile recharge etc. other useful revenue streams can be explored too.
- The internal remittance market – The internal migrant population is estimated to be around 100 million people. This market for internal remittance is estimated to be around USD 8 billion to USD 12 billion.
- Government payments market – Government of India offers a number of subsidy and support programs like Mahatma Gandhi National Rural Employee Guarantee Act (MG-NREGA), fuel subsidy, fertilizer subsidy and public distribution system which is estimated to be around USD 40 billion. A lot of it is wasted due to leakages and fraud in the distribution system. To ensure that the intended recipients do get their payments,mobile payments can play a very crucial role. The Indian government’s ‘Aadhar’ program to provide a unique identification number to every citizen of India would further lend support to the rapid uptake of financial services and transactions over mobile.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.