By Prateek Shrivastava
Savings, insurance and pensions may not be the most riveting of subject matter, but you’d be amazed how many people want to have them. And that does not just mean people in the developed world who are familiar with banking established as a part of their everyday life. A young man in rural Nigeria may never have seen a bank branch but that does not mean he doesn’t want to save for his retirement.
Only 30 percent of the world’s population has a bank account. To say, as a result, that 70 percent of the planet needs financial services is an oversimplification but it is a good starting point from which to build global financial management infrastructure. And we are rapidly discovering that the unbanked, who are located predominantly in emerging markets, are demanding services which go beyond simply making payments. They want to access everything from savings to loan payments.
So there is a services gap to fill but cost is a major barrier to the adoption of mobile financial services provision in emerging markets. The platform that Monitise has developed and deployed, most recently in Nigeria, provides shared mobile financial services for both technology and agent networks and aims to reduce the cost to providers of successfully launching in emerging markets.
In these markets, apart from helping banks and mobile network operators reach out to the unbanked with targeted products, we are also helping authorised companies become ‘mobile money scheme’ providers. These in turn can enable local banks and other financial service providers to offer mobile money services to their customers.
Wherever we operate, and that extends to India and Indonesia, we have to keep the domestic financial services and telecommunications regulators informed of our work, of course. Generally we are fortunate in that obtaining a licence to operate, where that’s required, tends to be the responsibility of our operating partner in that country. Nigeria proved to be an exception to that. There, because of regulatory requirements, Monitise Nigeria needs its own licence to provide mobile services.
There’s no set template for entering a market, but in our experience what works best is bringing a managed service and a best-of-class technology platform into a country and then customising it for local deployment.
We also find, particularly in emerging markets, that providing the toolkit to build an agent network and the knowhow of business processes to operating the service, permits a smoother start up and operation.
And we always help our partners establish their mobile money presence through a structured approach. The starting point for this is to establish an understanding of existing distribution networks (for example those of FMCG companies or petrol station chains) to help seed an agent network.
In general agents are not difficult to find but we have to satisfy ourselves that they are trustworthy. The challenge we find lies in ensuring their liquidity; making sure they have sufficient cash in the till and e-money on the mobile to meet demand.
We also advise partners on marketing strategies to build trust in their scheme. In many cultures that’s best achieved through word-of-mouth, passed on as a result of positive experiences among customers. We would combine that with radio advertising and roadshows (which can be as simple as buses going from town to town presenting short plays to inform people of the new services being offered).
It is very much the job of the financial regulators in each market to provide a safe financial services environment for its citizens. And in an environment of global crises, more regulators are becoming wary of innovations that could destabilise their economy.
Banks are also waking up to the potential of customers who do not use many bank services, and are moving to target this segment with new products.
The combination of these factors is making it increasingly difficult for financial regulators to accept a mobile money service that is offered by a non-financial service provider. And we are seeing regulators around the world only allowing entities that they have previously authorised to offer mobile money services. At Monitise we have no problem with that.
It’s clear that mobile operators understand the mass distribution of products at very low price points, which provides the perfect model for mass mobile money deployment. So mobile payment services can be easily led by operators. However, when it comes to mobile financial services beyond basic payments (savings for example) a close collaboration with the banks is required. At that point mobile operators may well have to allow banks to take the lead.
Prateek Shrivastava is the Managing Director of Monitise Africa.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.