Finally back after a good week in Singapore at the 3rd annual mobile financial services conference. The conference lasted two days but many attendees stayed four days to attend the pre and post conference workshops.
NFC was the conference’s unofficial theme; I personally think it leaned too heavily towards NFC but all companies that presented did a great job, so it was definitely interesting and worthwhile.
Key themes throughout the week in no particular order….
Despite the abundance of NFC trials the value chain is complex and the revenue sharing model is not established in most markets and/or between key players/providers.
Micro-loans and Micro-credit initiatives are benefiting from Mobile Financial Services (“MFS”)_. Currently, within non-mobile enabled micro financie, the majority of the loan officer’s time is spent tracking down payments through manual and paper based processes. With MFS this time is significantly reduced, as the end to end process, from enrollment to loan collection is electronic.
Regulators must be involved to achieve success. Mpesa has proven that regulators do not want to become a barrier and will work with organizations as long as they are transparent in their operations. It is critical to engage regulators early in the process.
Country specific regulators and regulations are slowing international remittance adoption. There is a vital need to select corridors that work for your particularl business model but it is still a very slow process. The industry needs a ‘swift code’ type of standard but transactions volumes will drive the standards adoption, making it unlikely to be established in the near future.
Security is still paramount. As consumer education continues to improve, it’s becoming clear that the phone is likely to be much more secure than your traditional wallet. Key statistic: when a credit card is lost the average reporting time is 30 hours, when a phone is lost the average reporting time is 8 minutes.
Banks vs. MNOs in delivering financial services to the unbanked and under-banked. Can banks really service this segment? MNO’s have the clear advantage as their existing support systems are established for these types of micro transactions. A key question that has yet to be answered is, will there be a sufficient level of customer adoption to justify large number of banks offering these services directly to consumers.
Deposit issues. Another thing going against a bank’s ability to service the under-banked is the deposit issue. Banks take deposits to be able to loan money. How can banks make loans this way?
Leverage airtime transfers to increase revenue for and differentiate MNO’s in the marketplace. Alternative remittance strategy for MNO’s to focus on migrant workers. MNO’s can take the airtime value ($3 to $30 is key metric) and allow this value to be sent to relatives back home. Implemented properly an MNO’s can not only differentiate their service but also increase revenue in the process.
Anonymous behavior? Can a grocery store notice what you are buying, for example ingredients for dinner, and offer you a related ecoupon? It would be good for the consumer, good for the product and good for the grocery store.
International remittance will be focused on major corridors for the foreseeable future as business models are refined and regulatory hurdles addressed.
Cash is very difficult for the poor. Access to it is a barrier in itself.
Who owns the customers? MNO? Financial Institution? Stored Value Provider? This is still a very open question.
Most important theme of the conference….It’s still very early for MFS and you don’t have to rush into MFS despite the press releases and the never ending hype. Many interesting ideas and concepts exist, but few have been proven in the marketplace and many of the existing offerings, lack the scale to gather any meaningful metrics.
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