With more than 270 live mobile money services in 93 countries, the global expansion of the mobile money industry is showing no signs of slowing down. However, to maintain this level of growth and ensure its sustainability, mobile money payment providers have to look beyond just payments and into other financial services. To achieve full financial inclusion, the entire financial industry needs to work hand in hand to provide end users with the financial products they need not just to survive, but to thrive. In this blog, we explain how a fully functioning mobile financial services (MFS) ecosystem can create opportunities and value for everyone from mobile network operators (MNOs), financial institutions, merchants and their the most important stakeholders, the customers.
The greater ecosystem
To capitalise on the mobile money opportunity, it’s important to think in terms of building mobile ecosystems which include networks of organisations and individuals. MFS ecosystems involve different players including MNOs airtime sales agents, retailers, utility companies, employers, regulators, and financial institutions, amongst others. They all have their own assets, roles, capabilities, goals and challenges which impact on the ecosystem as a whole. However, because of their access to customers across all income segments including those who are unbanked and their infrastructure, many MNOs are expected to take a leading role in the ecosystems. It can even position them in an advisory role when they help other role players like banks, insurers and utilities develop new mobile services. A great example is in Sri Lanka where Dialog Telekom helped insurers explore their options for providing micro-insurance through Dialog’s mobile infrastructure and network of agents. MNO’s networks of sales agents and retail outlets form the backbone of any mobile money ecosystem because this is what gives MNOs greater access to a range of income segments. Their ‘on the ground’ insight into customer needs and spending habits can also help expand the overall ecosystem. There are undoubtedly many roles that can complement each other, thereby creating a stronger mobile money ecosystem. Once these are recognised and integrated, a more extensive range of mobile money services will take root and go to scale.
Creating value for everyone
By embracing the mobile financial payments as a holistic ecosystem, mobile money providers gain a better understanding of how to better serve the needs of their customers. It can even help providers recognise gaps in the market, opening doors to new customer segments with different needs and expectations. This exposure to a more significant ecosystem will eventually force suppliers to move beyond the two current dominant use cases of mobile money: person-to-person (P2P) transfers and airtime top-ups, to new models and services like microfinance, international remittances, micro insurance, credit scoring based on mobile usage and government-to-person (G2P) transfers for welfare payments. This will not only improve customer service levels, it will also increase the profits of mobile money providers. In fact, according to the GSMA, deployments that build a mature ecosystem can expect healthy profit margins of more than 20% and cash flow margins in excess of 15%. There is no limit to the range of transactions and services for which mobile money can eventually be used but only through a greater and more robust ecosystem will mobile money availability expedite uptake and value for both end users and operators.