Interoperability: The key to unlocking real value in mobile money services

The word “interoperability” in the mobile money sector generates different reactions from stakeholders. Some view it in a positive light in that it has the potential to create efficient services and lower prices for consumers, as well as more revenue for operators. Others frown upon it, saying that it creates costs and increases competition. In this blog, we define interoperability and highlight its significance in the mobile money ecosystem and why your organisation should prioritise it.

What does interoperability mean for mobile money?

According to GSMA, interoperability, in its most complete form, refers to the interconnection across an array of use cases, including transfers between mobile money accounts or mobile money and bank accounts, both domestically and internationally. It is predicted that these interoperable systems will accelerate financial inclusion by enabling customers to use the infrastructure of multiple service providers to access their accounts or mobile money wallets. But, the abovementioned misconceptions around interoperability have resulted in a slow uptake in the mobile money sector, specifically in developing markets. While there has been some development in the flow between mobile money services and the banking sector, it should be expected that this trend will continue. Especially as interoperability between mobile money services will become crucial as the mobile money industry grows as it helps achieve broader strategic and financial inclusion goals. It will enable the interconnection of an a variety of services, including transfers between mobile money accounts or mobile money and bank accounts, both locally and abroad.

Value for your customers

Many operators have created closed systems to establish a monopoly, but it is proving to be counter-productive as this decreases convenience for customers. Today, a customer of one mobile money service cannot send money from his account to an account held by someone else on another network. By connecting with multiple mobile money services at a low cost, customers can enjoy greater value by getting the use of multiple services. Interoperability gives customers the ability to engage in a range of services outside of the traditional P2P transaction At the moment in developing markets consumers are opening multiple pre-paid mobile accounts as it is cheap and the cost is tied to consumption, this is known as “multi-SIMing”. This gives customers more access to promotions offered by various mobile operators and they can select the account that provides the best rates or coverage. It also reduces the demand for cross-net transfers, since a customer who wants to transact with a customer of another network can affiliate with a second network cheaply and quickly.

Value for you, the operator

Interoperability will give your organisation access to new customers and a wider network infrastructure, not to mention new sources of revenue. Because you are providing, through interoperability, more choice and a higher level of efficiency and reliability when it comes to services, usage will increase. People are more likely to trust a financial system that provides convenience and reliability. Of course, usage will, in turn, generate more behavioural data for your organisation, providing you with a deeper insight into your customers’ needs, giving your organisation the tools to develop new customer propositions, such as savings accounts, loans and insurance. The bottom line is that services that make life difficult for customers will eventually come short. In a digital economy, in which competitors are only a few clicks away, the quality of the user experience is paramount. For mobile money, that quality can be significantly enhanced by interoperability. For the potential of mobile money ecosystems to be fully realised by all participants, interoperability should be considered a key priority by your organisation.

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