By Hannes van Rensburg
In the decade since the first mobile financial service (MFS) deployment, several high profile successes have ignited the industry’s imagination and confidence. Delivering financial services via the mobile phone is not only possible, but can be a triumph.
While a handful of deployments have enjoyed explosive growth, the number of active users has not grown on the same trajectory in most markets. A recent study by CGAP found that, of the deployments surveyed, only 8 percent of subscribers could be considered active users. Consumer activation, in the main, is poor.
There are numerous reasons why activation is critical, here are the most important:
• MFS providers are agents of fundamental social and economic change for the better – if consumers aren’t active, they aren’t reaping the benefits
• The industry is ten years old but still young. By driving activation we build confidence and deliver a mandate for continued innovation
• Ultimately, if we don’t address this challenge now the MFS market will not achieve its potential
There are a number of ways we can boost activation. The majority of these ‘best practices’ go beyond technology and focus on the business of providing mobile money services:
• Business establishment – Mobile money is a separate business, not a long term project or subset of another business department. Structure, processes and controls need to be defined early with progress reported directly to the CEO/board
• Consumer understanding – Many organisations are not learning the lessons from successful services. Instead, they treat these deployments as blueprints. Each deployment is unique and must be treated as such. Crucially, lead with one “killer” application – any more will confuse the market
• Go to market strategy – This depends on the market but a few things are consistent: orientate marketing communications towards education across the entire value chain: (consumers, businesses and the channel); focus on a single service; widespread distribution is achieved through incentives rooted in local knowledge
There’s one additional challenge that has technology at its heart. To boost activation, mobile money providers need to increase the utility of services for subscribers.
Most MFSs are closed loop systems, where the provider operates as a siloed financial services network. New “open loop” systems will connect MFS deployments to the wider, “traditional”, financial services ecosystem. This open loop approach drives interoperability across varying MFSs to increase the utility of services by enabling both closed-loop functions (P2P, cash-in/out), and open-loop functions (international remittances, ecommerce transactions, ATM withdrawal).
Opening the loop will revolutionise the MFS industry in developed and developing markets by connecting billions of unbanked and under-banked consumers to each other and the global economy.
Accelerating activation is not quick nor is it easy but it is essential for every MFS provider. We need to restructure our businesses to remove barriers to growth. To focus single-mindedly on our customers, we need to build services especially for them. We must also effectively execute go-to-market strategies and expand our deployments by connecting them to the global economy. Finally we must ditch the theory and use a decade of experience to build insights that will accelerate activation.
Hannes van Rensburg is the founder and CEO of Fundamo which is a Visa company.
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.