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MOBILE MONEY FOR THE UNBANKED SMARTPHONES & MOBILE MONEY: THE NEXT GENERATION OF DIGITAL FINANCIAL INCLUSION
Greater competition
It is undeniable that the internet can disrupt industries, enable new business models and drastically lower barriers to entry for non-
traditional players. Already we are witnessing interesting developments with regards to over-the-top (OTT) players entering the mobile
financial services space. Facebook recently announced that it is preparing itself to provide remittance and e-money services, potentially
turning parts of its site into a mobile payments platform. 12
As such, an important consideration for mobile financial services relates to the role of the mobile operator. Most mobile money services
today rely on telco assets for authenticating customers and transmitting data, providing secure communications channels for customers
to interact with their service (USSD or SIM toolkit). As more target customers have access to data-enabled smartphones, will telcos risk
dis-intermediation, or capture a greater slice of an expanding pie? Who will be the winners and losers?
Multiple factors affect the risk potential for operators and other existing mobile money providers. One way to explore the dynamics at
play is to evaluate different parts of the mobile money value chain and the essential assets necessary for mobile money at scale. For
instance, a distribution network for cash-in and out, or the agent network, is critical for the unbanked to convert cash to electronic value
and vice versa. A strong, trusted brand is also necessary since customers need to know their hard-earned money is safe. Moreover, an
enabling or non-prohibitive regulatory environment is necessary for mobile money to flourish. Regulation provides restrictions on who
can issue e-money and affects the business models that can be employed in a given market.
The distribution network for cash-in and out is particularly difficult and costly to build-out and manage. The shift to a cash-less society
is likely to be more arduous than the transition to smartphones and it is likely that agent networks will continue to be a core pillar for
mobile money for the unbanked, long after smartphones fully penetrate markets.
12. “Facebook targets financial services”, FT.com, 13 April 2014
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Greater competition
It is undeniable that the internet can disrupt industries, enable new business models and drastically lower barriers to entry for non-
traditional players. Already we are witnessing interesting developments with regards to over-the-top (OTT) players entering the mobile
financial services space. Facebook recently announced that it is preparing itself to provide remittance and e-money services, potentially
turning parts of its site into a mobile payments platform. 12
As such, an important consideration for mobile financial services relates to the role of the mobile operator. Most mobile money services
today rely on telco assets for authenticating customers and transmitting data, providing secure communications channels for customers
to interact with their service (USSD or SIM toolkit). As more target customers have access to data-enabled smartphones, will telcos risk
dis-intermediation, or capture a greater slice of an expanding pie? Who will be the winners and losers?
Multiple factors affect the risk potential for operators and other existing mobile money providers. One way to explore the dynamics at
play is to evaluate different parts of the mobile money value chain and the essential assets necessary for mobile money at scale. For
instance, a distribution network for cash-in and out, or the agent network, is critical for the unbanked to convert cash to electronic value
and vice versa. A strong, trusted brand is also necessary since customers need to know their hard-earned money is safe. Moreover, an
enabling or non-prohibitive regulatory environment is necessary for mobile money to flourish. Regulation provides restrictions on who
can issue e-money and affects the business models that can be employed in a given market.
The distribution network for cash-in and out is particularly difficult and costly to build-out and manage. The shift to a cash-less society
is likely to be more arduous than the transition to smartphones and it is likely that agent networks will continue to be a core pillar for
mobile money for the unbanked, long after smartphones fully penetrate markets.
12. “Facebook targets financial services”, FT.com, 13 April 2014
9
