Consultant, IBM Center for Applied Insights
IBM Center for Applied Insights (CAI) has recently started a new program on building fact-based, market-centric thought leadership assets on various facets of mobile money.
As I dig deeper to understand the current state and evolving trends of this segment, some facts are worth noticing: Consultative Group to Assist the Poor. (CGAP) estimates that around 3.5 billion people worldwide currently lack access to formal financial services. It estimates that there will be 1.7 billion unbanked customers with mobile phones by 2012. There are more than 165 pilots in the mobile money segment in emerging economies being run by a diverse group of organizations.
However, very few mobile money deployments have been able to achieve scale and gain significant customer base. Some deployments which have been able to achieve significant scale include M-Pesa in Kenya, GCASH and Smart Money in Philippines, Vodacom in Tanzania, and MTN Uganda.
Hence, there is definitely a huge potential to achieve scale in this segment, especially in the emerging markets, and firms are investing hard to address this market. However, many of them are still struggling to fully tap into this opportunity. Cracking the code for high customer adoption and usage, in quantity and continuity, appears to be an Achilles’ heel for the Mobile Network Operators (MNOs), financial institutions, and other organizations trying to venture into this segment.
So, what insights can we learn from those who have succeeded in this segment? I researched to determine some common factors which seem to have made some deployments more successful than others. It seems that there are two broad factors which can prove to be very critical for an organization while trying to launch and subsequently scale: the actual product and an effective agent network. Today, we’ll take a look at the impact of the product.
Product – Building a strong, robust and compelling product offering (and later a product portfolio) is a very important factor which is sometimes overlooked as many companies try to emulate successful offerings and solutions from other deployments.
Some of the key points to keep in mind are:
For example, Bank Bradesco and the Post Office in Brazil have partnered to create Banco Brazil. The partnership has been able to effectively attract rural populations boosting the business of both companies. Another interesting partnership is in Japan, a developed economy. Sony partnered with DoCoMo, a MNO, to form a joint venture – FeliCa Networks. They produced both the mobile phone chip and card reader which enable them to manage downloads and applications for consumers and merchants and gain a strong foothold in the mobile payment market.