By now its a well-known fact: strategic alliances in general are complex to structure, and harder to manage. This is especially true when stakeholders are large, powerful, and from different industries with fundamentally distinct business models, as the case is with banks and mobile operators. What, then, are different ways that these two parties can structure a mutually beneficial partnership to offer mobile money?
Its a broad question that the MMU team intends to help answer in the next couple of months. Because a good deal of ambiguity remains on the value that each stakeholder can bring and the roles they each can play in deploying mobile money, we plan to address other core issues, such as:
What are the strengths that each party brings to the table?
What functions and activities can each party own, and which ones can be jointly developed?
What types of regulations must parties consider that influence the nature of the partnership?
What principles guide the sharing of costs and revenues?
Though its still early, we have some ideas, substantiated in part from conversations my colleague Neil Davidson and I recently had with banks and mobile operators in Kenya and Uganda. As expected, parties do best when they focus on their respective core competencies: mobile operators are strongest driving customer-facing activities such as branding and distribution; banks, meanwhile, are understandably well-positioned in dealing with liquidity management and regulatory engagement.
Importantly, both stakeholders must have a genuine commitment to shaping an alliance that brings mutual benefits. If a partner is not fully satisfied with the negotiated agreement, the partnership even if initially agree to will eventually unravel. In launching M-Kesho, for example, senior management at Safaricom and Equity Bank spent many months ironing out a solution which each stakeholder was genuinely content with.
Crucially, what this also shows is that it is possible for banks and mobile operators to compete and cooperate at the same time a phenomenon in academic circles called coopetition. Equity Bank fiercely competes with Safaricom on everything from retail agents to money transfer services to customer loyalty. But it has neither stopped them from having their own branches as M-Pesa agents, using its ATMs for cashless M-Pesa withdrawals, and jointly developing a sophisticated savings product with Safaricom. Their approach has shattered an understandable but misguided belief that many still hold in mobile money: that the relationship between a bank and mobile operator is an either-or proposition between competition and collaboration. The reality is that both are possible.
Ill provide an update in a few weeks as we learn more. In the meantime, if youre a bank, microfinance institution, or mobile operator who has tangible experience in dealing with some of the above issues, we would be keen on hearing your perspectives. Additionally, if you would like to see the report touch on a specific topic that has not been mentioned above, I welcome your ideas at [email protected]