Whilst mobile banking is a long way away...

Date: 9/4/2009

There is a huge amount of hype out there about mobile banking - But is that really what potential consumers in the developing World actually want? Its my view that what most people (especially in the developing World) really want is simple and secure access to make and receive payments, and thats a World away from retail banking. In short - Bank accounts are for people who understand banking. PAYMENT's are an inherent part of everyday life for the vast majority of people on the planet and that's what we all need to focus on in the mobile money industry.

M-Pesa, Zap and our own Saraf Mobile along with and other similar services work because it enables people to make and receive PAYMENTS in a simple, secure and efficient manner. However, payments is a volume game and that's largely why any of these services are yet to turn a profit from the core service. Its going to take some time for a large majority of consumers to trust these type of mobile initiated payment services enough to generate the sort of volumes required to create an operating profit, let alone create a return on the original investment. That's why it probably makes sense for mobile operators and others wanting to enter this space to go with service providers such as Mi-Pay and others who are able to build, run and manage an outsourced service using the client's own brand, rather than developing and running it themselves.

 Whilst its not that technically challenging to build a mobile payment service, the technology probably only represents about 5% of the overall effort with business process management representing the vast majority of the overall effort required. We know from our own experience running mobile payment services for almost 5 years that most operators have a huge problem understanding the true cost of managing payments. No wonder most of the successful services in Africa and elsewhere involve a partnership or Joint Venture between an operator and a national bank who do have an inherent understanding of payments. Those banks in these types of partnerships will benefit in the long-term as they will be in a prime position to eventually offer consumers banking services much, much later (probably after micro-finance, insurance and other financial services) once the basic mobile payment services are mature and local consumers trust these companies to hang onto their money over the longer term. Simon

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