Expect new MobileMoney innovations in 2013 - Peter Ollikainen
SVP - MistralMobile, Finland.
Peter will present ' Efficient mobilization of financial services - overcoming challenges in reaching the maximum userbase' at the MobileMoneyExpo in Lagos - Nigeria on Feb 6th - 7th.
What are the barriers to adoption faced by the consumers in the mobile money space in Africa?
As we’re talking about money, the biggest barrier is probably the consumer understanding and trust on the services provided. We’re talking largely about transitioning from cash to an electronic form of money; and this sense they need reassurances their money will be safe even they cannot feel and touch it anymore. Establishing trust is a basic requirement for any mobile financial service.
Next in line is to have a meaningful value proposition for the consumers – does the service provide them better, cheaper, faster, or more reliable way of managing their money matters? Are the services something they are already using in some current form? Trying to sell money transfer service to a consumer who has no need to transfer money makes little sense; but the consumer may have a desire and need to save money. Which can be well supported through a mobile financial service? Point being the value propositions offered to the consumers need to be relevant for them.
Thirdly, the agent networks need to be operated well. Agents are the face of the service towards the consumer and hence the wide agent machinery needs to run smoothly, with good quality of services and trust. But on the agents it’s also about what they are incentivized to do – they may get consumers to register but their incentives should be more aligned in driving the consumer behaviour, therefore putting and keeping money in the accounts.
Then finally one of the big remaining barriers is the ability to serve and reach all the consumers in the market. Limiting consumers in silos (e.g. Service availability is dependent on the operator which customer they are) will prevent serious scaling of any service and cause market fragmentation. Unless of course the service provider has a dominating market share which solves this problem?
How are these barriers affecting the growth of mobile financial services?
Any financial service is fundamentally a business of scale – consumer adoption will fetch more consumer adoption as there will be more word-of-mouth, more trust built in to drive the people interest and willingness to adopt the service. So slower adoption will naturally mean slower scaling and longer route to any profitability from the service.
Especially services which work in silos limit the longer-term adoption as they create separate non-interoperable consumer groups. The interest of the merchants will remain low as long as they cannot accept mobile payments from any service - and merchant enablement can be the major driving factor for consumer transaction volumes.
The Mobile Network operators are the drivers of MMT services. Are there other ways to reach consumers without locking them into a Network?
They are as they have the relationship to a large number of consumers through the mobile subscription, and have wide reach in the marketplace through their topup and service networks. Hence operators can naturally more easily provide the mobile financial service reach to their customers through SIM toolkit applications or USSD.
However there are equally good and cost efficient independent means to provide the mobile financial services access, inclusive of using SMS/IVR based solution, installable applications (Java, Android) which do not require data connections but can run over SMS communication channel, as well as new technologies enabling SIM applications operator-independently.
These are relevant to be able to service all the customers in the market with the mobile financial service, and even more relevant to enable the merchants to have operator-independent means of accepting mobile payments.
But even when reaching and serving the consumers and merchants without locking into the network, the role of the mobile operators as part of driving the success of mobile financial services should not be dismissed. Furthermore, allowing independent access to consumers provides an interesting opportunity to operators as it allows providing their mobile financial service to everyone, not only for their own subscribers.
Maybe the future will show interesting scenarios where operators reach beyond their own subscriber base, and banks or other financial service providers having independent access work with operators to co-market, co-promote services and use the operator reach for the benefit of building highly scalable agent networks.
Your personal experiences so far in the African mobile money space?
There is a lot of going on with diverse range of successes. The one key learning is that there is no one size fits all formula for success, as the context defines the rules. Value propositions must be relevant for the consumers to drive adoption and usage.
As the sector has been strongly dominated by the operators, there seems to be less focus on simply mobilizing basic banking services, such as savings. But this seems to be now changing a bit. Also mostly all of the mobile financial services access to the consumers is provided through SIM toolkit application or USSD, which in many cases may be limiting factors for the service when the service is provided by a bank or other financial services company.
Finally, mobilizing the merchants to accept mobile payments is very much in infancy, but once there is reasonable number of consumers that can be scaled up with good solutions.
What should the industry expect in 2013.
New innovation for sure. With more new players there is bound to be more new things being tried and tested. Probably there will be some disappointments as well since building a mobile financial service is not the most simple business to build. There will be more focus on building merchant acceptance for mobile money. And hopefully banks would focus more on basic financial products, and extending the products to cover other related products such as insurance.
More about the Mistral Mobile and Management?
Mistral Mobile was founded from the ashes of Nokia Mobile Financial Services business. When Nokia decided to end the business, we decided to establish our own company since we felt the mobile financial services industry offers vast potential to do good for the people in general as well as create commercial success. Mistral Mobile provides technology solutions to mobilize any financial service, enabling the financial service to reach everyone in the market. Additionally we provide consulting to help our customers succeed in the mobile financial services business. Our management has a very long hands-on experience in the industry, inclusive of building a mobile financial service business from scratch and running it, so we understand what our customers are dealing with. Our mentality is to have a mutually beneficial relationship with our customers – when they succeed, we succeed.
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