Mobile-Financial.com interviewed Hannes Van Rensburg, Founder and CEO of Fundamo. Hannes is one of the founders of the mobile banking industry and leads one of the most successful mobile financial services platform providers worldwide. In our interview with Hannes, he describes what it took to launch and grow Fundamo, what it takes to make mobile banking work in emerging markets, and how both mobile operators and traditional banks can harness the power of the mobile money channel for end customers.
Mobile-Financial.com recently interviewed Hannes Van Rensburg, Founder and CEO of Fundamo. Hannes is one of the most important and most experienced leaders working within the mobile financial industry today. Hannes has spent the past decade working with banks and mobile operators within emerging markets to launch and operate mobile financial services, including mobile banking, mobile payments, and mobile money transfers. Hannes also is one of the most visible leaders within the mobile financial sector, as he is called upon frequently to present at industry conferences and writes a popular mobile banking blog.
The following are excerpts from our interview with Hannes. To listen to the interview in its entirety, please access the Mobile Financial Services Podcast by Mobile-Financial.com available in iTunes. To access the podcast, please click here
Mobile-Financial.com: Would you please just give us a little background about yourself, Fundamo, and how the company got started in the mobile banking space?
Fundamo was established ten years ago. We built the first prototype of our solution in 1999 – in May to be exact. That gives us ten years of experience. What we built then is pretty much the same architecture that we still deploy. I think we can lay some claim to being visionary, in the sense that what we thought of then and what we built, and how we thought of deploying and distributing it, that’s still what we do today. It was quite a mad idea then, though it looks quite reasonable or obvious today. You know the phones that we deployed the technology on, the majority of those could not even send text messages, yet we managed to build applications that ran on SIM cards to demonstrate that we can actually do mobile payments. We managed to raise some funds, we started this company, and we’re still around.
Mobile-Financial.com: As an early pioneer in this space, how has the industry evolved since you launched Fundamo almost a decade ago?
I mean it went through its hype cycles. There was a time when it was very big and a lot of money was being invested in it. Then it went through the trough of disillusionment and nothing happened and we were questioning whether we should be doing this in about the 2003 timeframe. Then we started getting traction. I would say that the industry is really a very mature focused industry, where mainstream brands are involved, and we see very serious solutions that are being deployed. So from our perspective we’ve lived through the early years and we are one of the major players now, when the industry is becoming mainstream.
The advantage that we have I believe over the other entrants into the market is that we have this experience. There’s nothing that you can do for experience. You can’t read about it. You can’t manufacture it quickly. It’s something that you’ve got to do and you’ve got to go through the hard work of gaining that experience. I believe that that’s one of the biggest advantages that we have over a lot of people in the industry, that we have more than seven years of experience and having the product and knowledge of many times.
Mobile-Financial.com: And with that experience, what would you say are the most popular services that you enable for your retail mobile banking financial customers, as well as the banks that you’re delivering products and services to?
There’s no real answer to that because it differs from one country to another and also even in-country the services that are important to say one bank is different to another bank. That’s why it’s critical we believe for our customers to deploy a platform rather than to deploy a service, because as they are starting to expose their customers to mobile banking, they will find new opportunities, new services, new functionality, that need to be deployed. If they have invested in a niche solution they’ve basically been constrained by what they can do. But however if they have a platform which is highly configurable and that they can adapt, then they are in a much better position to serve their customers as the market changes. And so you know there’s nothing that I can say is the killer app - the selling of air time, money remittances, some business to business applications, bill payments, all kind of prepaid purchases, and in some places gambling. All those are applications that we see and that our platform is being used to deploy.
Mobile-Financial.com: So the platform that Fundamo provide allows a financial institution to select the right service to begin with for their specific market and demographic and then add on or optimize those services over time?
Yes and what we’ve done also from the start, for the past ten years, is we’ve been very clear in our minds and we’ve executed on that, is that Fundamo is not a consumer brand. It is an enterprise brand. I believe that’s quite important because you have to establish the product, the organization, the way that you distribute it, the way that you support it, the way that you expend your offering and your growth by being very clear whether you’re an enterprise product or a consumer product. A lot of our competitors I think still grapple with this problem of whether they’re a consumer brand, whether they’re selling to the man in the street, or whether they’re selling to the mobile operators and the banks. I do think that our approach of being very clear that our clients are banks and mobile operators - we never operate the solution therefore we’ll never compete with them as being part of the recipe of our success.
Mobile-Financial.com: What are the reasons that banks work with you, and are those reasons different than why mobile operators companies work with you?
One of the guys, Richard, who runs our product development division, says we are a company with the head of a bank and with the legs of mobile operators. What he means by that is we can think, we can understand the complexities (of banks). Banks have to be careful about risks. If they don’t think of risks and compliance and those kinds of things, they won’t survive as a bank, whereas mobile operators have got to run. They must be able to change very quickly. Get new products out there. Be very flashy in their brands and their marketing strategies.
That’s essentially the problem of mobile banking - you sit in between these two very different industries. If you don’t understand that and can’t adjust to that and build on the strengths of both, then you cannot survive. We understand a lot about banking. First and foremost we’re a banking software company. We come from a very strong banking background. We understand regulations. We understand risks. We understand the important things around banking, but we’ve managed to apply it in a way that mobile operators feel comfortable with it too.
Mobile-Financial.com: Would you have an example of a mobile banking or mobile operator deployment of yours that you find interesting and would like to share?
There’s quite a few that I can think of. A bank that has been doing really well is MCB Banking in Pakistan. They launched our technology some time ago. They have a very clear strategy that’s focused on small to medium sized businesses. They’ve been particularly successful with moulding their product for their specific banking constituency.
One thing that they’ve done very good I think is that they have integrated all the channels very well. So mobile banking works very well with ATMs, with call centres, and so forth. We really like working with them and they’ve done a great job. We’re very excited about their deployment.
Another bank is Standard Bank in South Africa. They’re the biggest bank in the African continent; I think one of the top twenty banks in the world. They’ve deployed a very exciting product which they call community banking where they’re focusing on a market segment which is lower down on the pyramid, not the bottom of the pyramid, and where they’re utilizing the mobile technology to offer banking services at a much lower cost point. We’re very happy with that and they are very successful with deploying the product using our technology.
As far as mobile operators are concerned, we do a lot of work with the MTN Group; the biggest operator on the African continent and is also huge into the Middle East and parts of Asia. I think they’re one of the top ten operator groups in the world and they use our technology for a group wide platform for a product called Mobile Money, which is a product focused on people with mobile phones that do not have a strong banking relationship. It is being deployed in most of the networks that MTN operates. It’s a very successful wallet deployment.
Mobile-Financial.com: What are the challenges that you typically run into in some of the emerging markets that you work in?
There are significant challenges. There are challenges around lack of skill. There are challenges around lack of infrastructure. There are challenges around regulations that are not well developed...Many, many, different challenges. We work literally in war zones. We have customers in Afghanistan, in Iran, in Iraq, in Liberia, in the Democratic Republic of Congo. In all those countries the political dispensation is not always that stable and it’s very difficult to work in those instances. But we have great people that are very committed to our clients. They work sometimes in very difficult situations to ensure that the technology is deployed.
Mobile-Financial.com: How does it feel to be able to drive the growth of this industry, as well as your company, in an area that is benefitting so many in terms of financial inclusion and bringing people into the banking sector?
For us we are driven by a dream. Not only do we want to build a company that’s sound and profitable. If you think about it, the real disenfranchising of individuals is not having access to electronic money. If you’re committed to just using cash then there are a lot of things that you cannot ever do. For instance it’s difficult to be taught how to budget if you don’t have any type of electronic record of what you’ve spent. It is very difficult to save, if you have to save in cash. Things that we take for granted. Things where we can send money electronically from one country to another. We could use a credit card in one country and it actually reflects on or statement back home. All those things enable us to function in a new world where the majority of people actually on the planet are excluded from because they are committed or they are caught up in a cash economy. We feel that what we are doing is creating an infrastructure and an opportunity for those people to break out of a cash constrained environment. That’s probably the best way of empowerment that you could have, is to bring people into an electronic payment domain.
Mobile-Financial.com: What does the future look like for Fundamo as it grows and competes in the market?
One thing that we have defended is our independence. We believe that it is important to offer solutions that are not strongly aligned with a specific handset manufacturer or strongly aligned let’s say with a specific bank or something like that. We’ve remained independent and that was done consciously. That also brings a challenge to growth. Our company has grown tremendously in the past few years - by factors. It’s important for us to make sure to put the right structures in place so that we can grow in a controlled way and we can do it in such a way that we can support our clients and that we are sustainable over the years to come - that’s quite a challenge. It’s not a technology challenge. It’s a social human psychological challenge that we’ve been focusing on and I think we’ve been pretty good at that.
Mobile-Financial.com: You said your independence is one of your core strengths. Are there other strengths that you see with Fundamo that distinguish you from other competitors and start-ups that are rushing into this industry?
Well I would say that the companies that are independent are quite small. If you look at a lot of the consolidation in the market, for instance the acquisition of PayBox by Sybase, the big investment that Nokia made in Obopay. So the bigger companies all have some kind of alignment whereas the independent companies are much smaller. So we’re in a unique position that we’re large. That we have critical mass but that we are independent. I think that puts us in a very good position.
Mobile-Financial.com: And that independence means that you are open and not beholden to any specific manufacturer or partner. You can work with who you choose. Is that fair to say?
Exactly. We like to work with everybody and we really have an open approach. We have never done an exclusive deal with anybody. We are open to being friendly with anybody and we want to work with everybody. We believe that the future of mobile payments is about interoperability, a network, and connection to many different nodes. Our customers must know that we actively work towards ensuring that Fundamo will connect to everything and that we are open to working with anybody - even our competitors. And we’ve done that. We’re quite happy and open to connecting to the platforms of our competitors.
Mobile-Financial.com: How do you feel that Fundamo or the mobile domain helps to improve security, versus the physical world or the online world?
You know the mobile phone has been designed from the ground up on the basis of security. It’s got a lot of cryptography built in the firmware of the phone. The SIM card that’s in the phone is a very secure store. It’s not easily accessible by other means. The transmission of information from the phone to the base station and further on is very well secured through cryptography. So the mobile industry has been built on security…And it is correct to say that our technology that we deploy is the most secure way that you can interact with your bank. There’s no other way that you can interact as securely with your bank as through your personal mobile phone if it’s deployed in a great way…The way that we have deployed our technology enables customers to interact with their banks in the most secure way that’s possible today.
Mobile-Financial.com: Would you be able to share an example of the way you mention that Fundamo helps banks securely interact with their customers?
Well it’s our view that if you don’t incorporate the SIM card in the security then you’re making a mistake. The SIM card is at the heart of identity and a very secure store for keys and certificates. So we utilize the SIM card extensively in a lot of our deployments. In many of the deployments that you see, the SIM card is not being used and it’s almost ignored. We believe that that’s not, from a security point of view, the correct way to go about it. Also, if one looks at the future of NFC, I think it’s now widely acknowledged that the SIM card will play a pivotal role in how NFC is going to be deployed. I think everybody agrees that the Single Wire Protocol which is very much dependent on the SIM card, will be the way that devices like mobile phone devices will support NFC. It makes a lot of sense to consider the SIM card when you’re deploying mobile banking. We are particularly good in doing that, therefore I believe that our security solutions are differently probably the most advanced in the industry.
Mobile-Financial.com: Before we wrap up I would like mention that I do really enjoy reading your blog on mobile banking. Would you let our readers know a little bit about your blog, why you do it, and where can they find it if they’d like to follow you?
Thank you for the introduction. Well first of all the blog is a personal blog. Aletha Ling is in charge of our business development and looks after our brand would not always like my positions to be endorsed by Fundamo. I try to be bit controversial so it’s my personal position that I take on the blog. Sometimes I make some statements on the blog that’s a bit tongue in the cheek just to see what’s the reaction that I get out of it - I don’t always believe the things that I write myself sometimes but nevertheless, it’s available under mbanking.blogspot.com. I’ve been writing about mobile banking now for the past three years so it’s also interesting maybe to go into some of the old posts to see what was relevant then.
This article is part of a series of interviews that Mobile-Financial.com conducts with leaders and experts within the mobile financial services industry. To listen to the interview in its entirety, please access the Mobile Financial Services Podcast from Mobile-Financial.com available in iTunes. To access the podcast, please click here.