Mobile Money doesn’t grow on trees, but maybe you should treat it like it does. Fruit crops take time to harvest and no amount of impatience makes them grow faster. Mobile Money is a hot topic but the pioneers have been doing it for a decade.
It’s been said “We aren’t getting the uptake on mobile money services that we expected, we don’t know why but think it’s because having a bank account is too abstract an idea to be appealing. Instead we must concentrate on peer to peer services”. More succinctly “Why can’t other places be more like Kenya”.
The Kenya experience is worth examining, Safaricom saw an income of over $90m from mpesa last year. While 60% of Kenyans with a mobile phone use Mobile Money, in other places with newer implementations the uptake is nearer 20%.
I’m a great fan of Remembering the Future, or looking back to look forward. And this is what the Mobile Money people need to do. Mobile services have a long history of taking five years to become a surprise hit. SMS came to market with the first GSM phones in the mid 1990s. It was at the turn of the millennium that the world went text crazy. The elephant in the room is “Was Kenya just a special case”. Well, yes and no. Yes there was the pent up demand for transfers from Nairobi to the Rift Valley, yes Safaricom had an unusually high market share and yes legislation was less of a hurdle than in most of the world, but the counter for all these things in other places is time.
Just as with text messaging people need time to get used to a new service. Email on their phone? Mobile internet browsing? It all has an acceptance curve. It’s not unique to mobile services either. Financial acceptance takes a lot longer. Credit cards took closer to twenty years to go from something that sat in a wallet for major purchases and emergencies only, to something you bought petrol with and then to something you might buy a newspaper with. The cards didn’t change: the consumer mindset did.
Kenya’s three years to 60% may be exceptionally fast but another lesson from a number of technologies, is that the following countries generally take less time to cotton on. Metcalfe’s Law which looks at network effect doesn’t give a tipping point but with SMS it was about 30% of the population using the technology in the early adopter countries and this dropped to 20% with later countries. It’s an acceleration we are already seeing with Mobile Money.
The Mobile Money tree will bear fruit but it needs time. It also needs to learn another lesson from SMS. One of the themes of the Mobile Money Summit was co-operations. Specifically co-operation between operators and banks. The SMS lesson is that we need interworking between operators. The ability to send money as easily as a text, between networks nationally and internationally. If a network only has 30% market share it won’t, alone be able to reach that tipping point.
Those that do it have to make major investments. Indeed the emphasis is being changed from sowing lots of seeds and hoping they will grow to sowing fewer and nurturing them.
But with time, money and patience there is a bumper crop waiting.
Simon Rockman, Head of Mobile Money Exchange