Africa is ripe for Mobile remittance Hub – Bruno Akpaka
BRUNO AKPAKA
MFS, Head Business Development, BICS
He will be presenting at the MobileMoney West Africa summit on March 5th & 6th in Lagos.
Download full summit brochure here:MobileMoney West Africa summit 2012 (24)
We have seen the tradition cash hand over improve into Bank branch remittance over a century. Is Africa ripe for mobile remittance services?
Yes it is. The increasing mobile penetration in Africa and investments in mobile technology have created the right climate and the opportunity to execute money transfers in a fast, convenient and secure way. There are enough success stories of mobile wallet deployments the last years showcasing the readiness of Africa for mobile remittance services.
How is the remittance Hub centric direction different from what had been existing in Africa before now?
A remittance hub saves time and resources for both the sender entity and the receiver entity and therefore improvesthe efficiency and reduces the fees for the end user. Before remittances were small in scope and the channels lacked the efficiency to deliver quality service.
Our remittance hub, HomeSend, enables cross-border transfers to or from and between mobile wallets, deployed by service providers in different countries. It was created a few years ago in response to the numerous mobile financial service deployments in emerging markets. This is important given that 80 percent of the world population does not have a bank account. Enriching these domestic services with an international money transfer feature stands to reason as most of these markets are important remittance receiving countries.
HomeSend offers the advantages typically associated with a hubbing service and a managed service. It offers immediate reach to the whole world through a single technical and commercial interface with the hub as well as requiring limited opex and capex from the member operators.
Additionally, as already experienced with other mobile data services (such as SMS and MMS), once the market develops, mobile operators will have to manage multiple remittance relations and will therefore increasingly rely on a multilateral solution, such as HomeSend.
What does the future hold for remittance services in Africa?
The future is very promising: let’s look at what the trend is in terms of remittances in and towards Africa today and, on the other hand, let’s also look at the growth of the mobile penetration in Africa today. In addition, in partnership with duly licensed financial institutions, the MNO’s have shown sufficient commitment towards mobile remittances in terms of investments and allocation of resources towards its development.
BICS is connecting all the existing mobile wallet deployments to its hub and has already signed up several money transfer organisations to the hub. Our business strategy is not only to service mobile operators, but also to enable the provision of banks and cash-to-mobile services to harvest the sending power. The main challenge in launching HomeSend was defining a business model that successfully bridges the mobile and financial worlds and is sufficiently flexible to accommodate different systems, settlement models and regulatory requirements.
How does this add to the bottom line of ecosystem players like the MNO’s?
In terms of the following;
1. Reducing churn so that more customers stay on the network
2. Cost saving on airtime distribution and efficiency
3. Customer loyalty due to tailor-made solutions which means assured future revenue
4. Revenue from transactions
5. Diversification of business through partnerships to ensure sustainability of MNO business especially as voice revenue continue to decline. MNO’s can diversify into banking/financial sector.
As a remittance hub, HomeSend creates value at two levels: processing the individual transaction and routing it from the sending system to the receiving system and settling with each of the hub members. The charging model is quite straightforward, the end user fee, including foreign exchange spread, is shared between the sending and the receiving entity and the hub. Providing a mobile money service not only offers additional revenue for banks or mobile operators, which can be quite substantial, but on top of that it is a good way to reduce churn and boost both the customer base and customer loyalty. It is also an opportunity to cross-sell other services.
Shield more light on the GSMA endorsement?
It provides support in terms of interest and investment from International Organisation working towards the financial inclusion of the unbanked.
Standardisation is why we created HomeSend. With the GSMA association we have created a platform that solves two major issues: connectivity – as we are a worldwide network that is connected to almost every single telco in the entire world – and interoperability. There are currently more than 150 different mobile wallet standards in the world and none of them are standardised. The GSMA has already endorsed a solution, which involves a strategic alliance partnership with BICS. Regulation depends on local issues and there are examples in different countries where they really understand the advantage of interoperability between the different parties, but there are still too many hurdles and we are currently trying to bridge them. Complete standardisation is probably many years away. When interacting with the banking world, HomeSend will of course comply with the standards developed by the industry.
P2P Remittance without the need for a middle man is quite an innovation. Please explain further?
Of course, coming from the era where remittances between two people required at least a third person or in some instances a fourth one, P2P remittances can only be a huge leap.But being a leading hub provider for voice, SMS, Signalling and other data products, one can say that’s in our DNA to provide such services. With HomeSend, which is part of BICS’ Mobile Financial Services, we try to offer and innovative solution to service our customers even better.
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Nice article, during my search for sending money to Ghana I came across a remittance site https://www.prepaidunion.com . Although they don’t send money but only offer a recharge service for mobile phones I was a little bit scary about the quality and safety of the service. But after trying it out I’m very optimistic about this innovative technology and service. I think in the near future it will be a convenient way of supporting family abroad.