Juniper: Mobile money moves beyond M-PESA's shadow


Windsor Holden

Windsor Holden

Every so often, the British press occasionally observes in a sneeringly depreciative way, that there are about as many of x, y or z, as there are famous Belgians. As you might guess, we are meant to infer that, whatever x, y or z may be in the context of the article, there are not very many of them. Unfortunately--our wider cultural understanding being what it is--a straw poll of Britons with regard to Belgians and their fame, or otherwise, might not return many positive results; once you'd gone past Hergé, van Damme and Plastic Bertrand, the collective imaginative wells would probably start to run a little dry.

Until recently, if--and here taking as your sample size those in the mobile community--you'd proposed an alternative survey question, in which you inserted 'Successful Mobile Money Services' for 'Famous Belgians' your audience would have sucked the tips of their pencils in ruminative manner, scribbled 'Safaricom: M-PESA' on their piece of paper and then spend the next ten minutes scratching their heads or staring into space.

Now I may be doing other mobile money deployments something of a disservice here, but Safaricom's M-PESA was so successful in relation to its peers, that it was, frankly, almost embarrassing: like Sebastian Vettel in Formula One, or Usain Bolt in the 100 metres sprint, it achieved results far in excess of those of others in its field.

As we observe in our recent report, while Safaricom's iteration of M-PESA is still very much the Gold Standard of mobile money services, the past 18 months or so have seen some fairly spectacular activity elsewhere. Airtel (in Tanzania and Uganda), bkash (Bangladesh), Telenor's easypaisa (Pakistan) and 'good ole' M-PESA again (in Tanzania) have all achieved several million active users.

One reason behind this surge in growth lies in the increased recognition that, to get any kind of traction at all, it is vital--absolutely essential--to have an extensive agent network in place on the ground at, or ideally prior to, launch. As a rule of thumb, service providers need a ratio of one agent per 500 registered customers to maintain high levels of active users. (Several Kenyan and Ugandan providers, with ratios of 1:300 or less, have activity levels well above 50 percent; conversely, players with ratios of 1:700 or less often experience levels below 20 percent.)

Likewise, there has been far greater promotion of nascent services across multiple media, which has achieved the desired result. An Intermedia survey found that between March and October 2012, public awareness of the recently launched Airtel Money service in Tanzania rose from 38 percent to 92 percent; over the same period, the number who recalled watching an Airtel TV advertisement rose from 37 percent to 66 percent.

Critically, mobile network operators, having historically gone down the toe-in-the-water, ad hoc deployment route, are now committing wholeheartedly to multinational deployments. Vodacom, Bharti Airtel, MTN and (most recently) Zain have all introduced services (or are in the process of doing so) across the majority of their markets.

From a mobile money perspective, the beauty of many markets served by these multinationals is that they combine relatively high levels of mobile penetration with high levels of unbanked individuals. Furthermore, these markets often have well-established intra-national migration corridors, from rural to urban areas, as individuals move to the cities to find work; in these cases, cash flow to the families back home--given the lack of any substantive formal financial infrastructure--has historically been facilitated by courier service.

There were a few problems with this arrangement. One being that the courier, making his way from city to rural village with a bag stuffed with readies, was very susceptible to strong-arm tactics from nefarious individuals who were quite keen on acquiring the contents of said bag. A second being that one was reliant on the courier himself not being desirous of becoming too closely acquainted with those contents and disappearing over the hills with them.

Now here's where it gets interesting. In Bangladesh, money transfer via courier declined by 50 percent in the six months to June 2013, overwhelmingly due to the surge in adoption of mobile banking and money transfer services across the country. This has, in part, been fuelled by the increased engagement with mobile by Bangladesh's banks: following in the footsteps of the Dutch-Bangla Bank initiative launched in March 2011, a further 24 banks have received licenses to offer mobile services and (as of July 2013) two-thirds had introduced services, together accounting for around 14 million mobile transactions per month.

While this is bad news for the couriers, for the unbanked of Bangladesh it represents first time financial access: offers them secure cash flow and, potentially, the opportunity to obtain credit. Money transfer itself represents the first step on the mobile money evolutionary ladder: as domestic wallet adoption accelerates, service providers can--and are--introducing more sophisticated services, such as micro-insurance and loan disbursement.

For the first time, the unbanked can be afforded protection against natural disasters, essentially offering a means by which to recoup their losses. It may prevent a farmer who suffers crop failure from losing his livelihood.

Mobile has suddenly become so much more than talk and text.

Dr. Windsor Holden is Research Director with Juniper Research. He has authored more than 50 full length reports for Juniper Research, including four editions of its much heralded Mobile Entertainment series: his recent reports include Mobile Money Transfer & Remittances: Domestic & International Markets, Mobile Commerce Markets: Sector-by-Sector Trend Analysis & Forecasts, Mobile Ticketing Strategies: Air, Rail, Metro, Sports & Entertainment and Mobile Music: Market Prospects. Windsor has a PhD from the University of Leeds and is also a former Research Fellow of the Institute of Communications Studies, University of Leeds.