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June 2015


    Mobile money, a term used to refer to payments made for a wide range of products or services through a mobile device is revolutionizing financial access, especially for the unbanked.

    As per World Bank estimates, 2.5 billion people across the world, lack access to formal financial services. The primary reasons for this include:


    Mobile money important for the unbanked


    In the absence of banking services, people have to rely on cash transactions, which are both inconvenient and unsafe. These are the exact reasons why mobile money finds favor. With its growing penetration, the mobile phone provides a low cost and highly accessible platform that formal banking systems are unable to provide.

    From offering person-to-person transfers, bill payments and point –of-sale purchase options, mobile money clearly shifts the balance of power in favor of customers.Some of the areas where mobile money can particularly benefit unbanked people include:

    • Quicker recovery from economic shocks
    • Efficient receipts of money transfers post any disasters
    • Access to savings, credit and insurance opportunities

    Little surprise then that the number of registered mobile money accounts worldwide, reached 299 million in 2014. However, in terms of percentage, they still represent a low 8 per cent of the mobile connections in markets where mobile money services are available.

    To achieve scale, mobile money providers will need to circumvent the following challenges, especially in rural areas:

    • Logistics and delivery: Lack of infrastructure in rural areas can create logistical challenges. Local partnerships along with flexible agent financing are some of the aspects that providers are leveraging to address these challenges.
    • Clearly communicating benefits: A compelling value proposition that will be different for rural and urban consumers, aided by a thorough understanding of their saving and buying patterns, can go a long way in optimizing usage.
    • User-friendly service: A user-friendly interface is one of the primary factors that will help in customer on-boarding. This is especially significant for customers with low literacy levels
    • Substitution of formal identification documents: The lack of formal identification documents is a major stumbling block as far as traditional banking is concerned. Substitution of these documents with acceptable KYC documentation within the regulatory frameworkcan go a long way in customer adaptation.

    Other than mobile money, providers are now expanding the mobile financial services, to include:

    • Mobile insurance
    • Mobile savings
    • Mobile credit to customers.

    Clearly, mobile financial services are set to impact a customer’s social and economic lives, especially the base of pyramid community where literacy levels are low and income is often sporadic.As of October 2014, there were a total of 251 live mobile money services across 88 countries. As mobile phones become more functional and less expensive, mobile money will clearly continue to emerge as the banking solution for the unbanked.







    June 30, 2015 0 comment
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    A Mobile point of sale (mPOS) is a smartphone, tablet or a wireless device which performs the same functions as that of an electronic point of sale terminal .

    With the aim of enhancing user experience and keeping pace with the rapid of smartphones, retailers are increasingly adopting mobile POS solutions. For the same, a merchant account, the mobile application and the card reader are required. In fact, any smartphone can be converted into an mPOS with an application that needs to be downloaded. When the owner registers the application, the vendor provides a card readerthat plugs in to the mobile device. Some software vendors also provide optional docking stationscalled sleds that allow the mobile device to read barcodes as also to print receipts.

    Depending on the software used, a mPOS can operate as a stand-alone device or an integrated component of a larger POS system. To protect consumer interests, customer data is stored in the cloud and not on the device.

    Features of mPOS system

    • Acceptance of payments
    • Issuance of invoice
    • Managing inventory
    • Multi location support
    • Creating customer data base
    • Scan bar codes
    • Integration with ERP systems
    • E mail marketing
    • Analytics

    The foremost advantage that accrues from a mPOS system is that it improves customer satisfaction in more ways than one. From speed of billing to doing sales in any part of your physical store or even in any outdoor location, it powers it all. Additionally, if the sales staff is equipped with mobile devices connected to mPOS inventory management systems, answering any customer query related to an article being in stock can be easily answered. Generating digital receipts and building a robust customer data base are some of the other advantages of a mPOS system.

    Here are some basic steps to follow before purchasing a mPOS system for your retail store:

    1. Undertake a requirement study to ascertain the features needed in a mPOS system. This includes details like whether a stand alone or an integrated system is required.
    2. Check whether any additional hardware is required and whether the budget is available.
    3. Determine the fixed and recurring costs and set a budget accordingly
    4. Research and compare POS systems- reaching out to businesses who are using the systems will be prudent
    5. Set up a demo and witness the speed, accuracy, ease of usage and more yourself
    6. Make a final decision
    7. Once you have the system up and running, ensure there is optimal usage


    With a mPOS system, you can literally run your business from your palm. Clearly it is the single fastest moving trend in retail and will only grow from strength to strength

    June 29, 2015 0 comment
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    Africa’s music industry seems to be hitting all the right notes. A few years ago, this space was considered a minor “blip” on the international music industry’s radar. Today, things have changed significantly and the continent has emerged as a lucrative market, with every artist worth his salt making a beeline towards it.

    So, what changed? This space came into the spotlight, owing to the slow but steady uptake of smartphones and data-enabled services. Sample this- mobile broadband service penetration in Sub-Saharan Africa increased from 2 per cent in 2010 to 11 per cent in 2013. The good news doesn’t end there-global research firm Informa Telecoms & Media estimates that smartphone connections on the continent will increase to 412 million in 2018.

    Interestingly, these impressive numbers have not just supported but facilitated the growth of digital music in Africa. How? Well, digital technology has enabled the recording industry to reach and encompass the mass market across the continent. Essentially, like every new enterprise, the advent of digital music in Africa was slow-as recently as two years ago. In the early days, music-based services were pretty much confined to ringtones and caller ring back-tones (CRBT). Stepping back in time a bit-the digital music industry always existed in Africa, based on lucrative partnerships, with regional and national telecom operators. The list includes MTN, Airtel, etc. These players first successfully built up a business case with the hugely successful CRBT facility.

    Shortly thereafter, not wanting to miss out on the action, bigwig international record labels followed and kept following until, like any other lucrative industry, the African music space became digital, overcrowded and cut-throat competitive.

    Of course, their efforts paid off-to quickly illustrate-as per industry reports, digital music rules the roost in the Big Three markets-Kenya, Nigeria and South Africa. In Kenya, for instance, spending on digital music is expected to increase from $19.8 million in 2012 to $20.7 million in 2015. Likewise, South Africa-the largest formal music market in the continent-registered a 107 per cent increase in digital music in 2013, representing 14 per cent of the total market.

    Having planted their flags, the main item on every record company’s agenda currently is to rollout innovative services and spend big bucks on their artists and repertoire (A&R) division. To bring these ambitious plans to fruition, the market has been flooded with various music streaming services, such as Deezer, rara and Simfy. It worked-as per industry reports, revenue from digital music services in South Africa doubled last year and accounted for over 14 per cent of the total market.

    An important A&R activity being undertaken by bigwig record companies is investing in and promoting local artists, independent labels and entrepreneurs. But, wait. While these initiatives sound promising, we haven’t as much as touched upon the biggest challenge before every player in this space. Simply put-walking the tightrope between offering local and international content. Even simpler-building a repertoire of local content.

    For a market like Africa, that’s the rule-not the exception. Even today, as per Informa, a staggering 70 per cent (yes, you read that correctly) of the music business in Africa comprises of local content. This is indeed in stark difference to the rest of the world, where international artists are sought after. So, essentially, a bigwig record company or operator could boast of the biggest names as a part of their music portfolio. However, in Africa, content (read: local) matters, not how impressive the catalogue is! To illustrate-66 per cent of subscribers in Nigeria opt for local music, compared to 16 per cent opting for international and 18 per cent opting for regional tracks.

    The message to international players is clear-African subscribers demand a mix of music from across the world and within the continent itself.

    The idea behind this blog is to present an objective picture of the music industry in Africa. So, while there is little doubt that it is on the fast track, several issues remain. Broadly, these include unfettered piracy, no representation for local artists and lack of transparency.

    Another important, lingering concern is the existing value chain in the industry itself. At the recently held Value Added Services (VAS) Summit in Johannesburg, panelists scrutinizing distribution channels and revenues of the African digital music industry opined that the value chain currently in play in the largely download-based market is ineffectual, as it does not provide fair income to artists and does not incentivise consumers to pay for music.

    Without tooting my own horn (or indeed, my company’s), we at Mahindra Comviva aim to be the piece of the jigsaw puzzle that ensures the music reaches the customer. We are an established music content aggregator in Africa, with over 400,000 tracks. Another significant milestone was collaborating with Africa-based TRACE TV, wherein we play the role of an end-to-end solution provider, offering innovative music applications such as karaoke and content aggregation services to TRACE. The idea behind the partnership is to permit TRACE to reinforce its position as a “first movers” and an iconic youth brand.

    Moreover, we keep ourselves busy in the continent by promoting local artists and ensuring that 75 per cent of our content is localized. We understand the importance of keeping it simple and have thus ensured that accessing and opting for a service is quick and easy-while offering a wide gamut of services at flexible price points. Our CRBT offering, for example, comprises of sports CRBT, CRBT album, Facebook CRBT, reverse CRBT, gift CRBT, corporate CRBT, festive CRBT and promotional CRBT.

    I am also delighted to state that our efforts in Africa (though far from finished) have paid off. We have registered an eight-fold growth in our African business over the past three years. Broadly, this includes a 10-fold growth in content consumption and a 50 per cent increase in content consumption per subscriber.

    In a nutshell, Africa isn’t an easy market to crack. However, with the right mix of music tracks, an effective distribution mechanism and moving from the physical to the digital will help-in part. Are you tuned into Africa?

    June 24, 2015 0 comment
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    With customers looking for integrated and seamless purchase journeys, irrespective of the mode, the lines between different forms of commerce namely in store purchase, e-commerce and mobile commerce are fast closing in. With data stacking heavily in favor of it, there is a strong case emerging for mobile commerce. As per industry estimates, globally, there are 5 billion active mobile phone accounts as against a mere 1.3 million active credit and debit card accounts. With financial services fast leveraging the explosive mobile growth, here is a handy guide to everything that you always wanted to know about Mobile Wallet Solutions and their benefits to customers and merchants alike

    What is a mobile wallet?

    Simply put, a mobile wallet is the digital equivalent of the physical wallet. Like a physical wallet, it stores valuables, only in a digitized form. What it needs though is effective security and permissions to access this material. These may take the form of a password, a QR code, an image or some such authentication code linked to the owner’s specific and sensitive personal information.

    For customers, mobile wallets refer to technologies that enable the customers to use their smartphones to do the following:Picture1

    How a mobile wallet works: The technology

    • A Near Field Communication controller and antennae to enable mobile devices to send out account information to payment readers at points of sale
    • A secure smart card chip in the phone to store and access account information
    • An electronic wallet application that allows users to manage accounts
    • A trusted service manager that connects payment cards into mobile wallets securely

    How a typical Mobile Wallet transaction works:


    Advantages of a mobile wallet

    For customers

    • The biggest advantage to customers is its convenience, with no need to carry cash or plastic money
    • The convenience also stems from the fact that it is a common payment method for both on line and offline payments
    • With a tap to pay method it makes purchases extremely easy
    • It allows for automatic redemption of offers
    • With the remotely lockable wallet feature, it gives a new meaning to security of transactions

    For merchants

    • It gives way to an additional communication channel to merchants to interact with consumers.
    • With hassle free payment options, it enhances sales
    • It enables implementation of personalized loyalty programs. Businesses can create their own branded applications for customers.

    With credible solution providers and wide spread access, Mobile Wallet Solutions are set to become an extremely popular and convenient way to transact business. The mobile wallet is clearly well perched to take over your traditional wallet in times to come!

    June 19, 2015 0 comment
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    With lifestyles becoming busier today, the benefits of banking-on-the- go cannot be overemphasized. This is why mobile banking is fast emerging as a favorite with consumers and in turn is evolving as an effective tool for customer retention, especially with regard to banking providers.

    Mobile banking refers to a solution that takes banking beyond the internet to fully harness the potential of mobile phones that are growing exponentially. Today Mobile Banking services are known to span a number of areas such as:


    Mobile banking is typically available in the following formats:

    • SMS messaging– This is where mobile banking emanated from. It allows the user to transfer funds or access account information through a text message.
    • Mobile web- This allows the user to check the status of their account, transfer funds, etc by logging into the account througha mobile web browser.
    • Applications developed for iPhone, Android or Blackberry devices that are one touch, user friendly and interactive have emerged as well.

    The future of Mobile banking though extends beyond these formats.  Services such as remote deposit capture are already beginning to make an appearance, whereby users are allowed to scan cheques and forward them for clearing. Such services clearly take the convenience of mobile banking to a whole new level.

    Classification of Mobile banking

    Mobile banking can also be classified on following basis:

    a) Push vs Pull Banking

    As the name suggests, push mobile banking refers to the bank sending out information on a pre-agreed basis. Mobile alerts, in case of a transaction is a good example. Pull banking, on the other hand, is triggered by a customer by asking for a specific detail for example.

    b) Transaction vs Enquiry based Banking

    Access to a bank statement is an example of an enquiry based service while transfer of funds through your mobile device is a transaction based service.

    Advantages of Mobile Banking

    The advantages of using these mobile banking services include:

    • Anytime, anywhere access
    • Accurate and timely information even on the go
    • Precious saving of time instead of spending time in administrative jobs
    • No dependence on availability of an internet connection, as is the case with internet banking
    • Cost efficiency
    • Improved user experience
    • Secure transactions fortified by services such as receipt of SMS alerts on making transactions, thereby further reducing the risk of fraud

    Advantages for banking service providers:

    • Lower operational costs
    • Meeting the demands of consumers in real time
    • Ensuring customer stickiness
    • Targeted marketing
    • Cross selling other banking products
    • Leveraging customer analytics

    With smartphone penetration on the rise, mobile banking is clearly set to become the new norm. A situation that is clearly a win-win both for the customer in terms of convenience and for financial institutions in terms of growing their customer base and also exploring new revenue streams with robust customer analytics on their side.

    June 19, 2015 0 comment
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    The telecom industry is, by and large, fiercely divided on whether Over-the-Top (OTT) players have sounded the death knell for SMS or not. One faction of experts has already written off SMS as a “has-been” technology. In all fairness (allow me to play the Devil’s advocate here), reports released by several noted research firms substantiate their stand.

    RIP: SMS?

    Sample this-according to a survey conducted by mobilesquared between July-September 2014, four of five (81 per cent) mobile network operators cited decreasing revenues on traditional telecom offerings such as Person-to-Person (P2P) SMS as their most pressing concern. The survey of more than 50 international MNOs showed that one in three (32 per cent) respondents witnessed a reduction in P2P traffic over the last 12 months. The reason for this decline is simple enough-mobile operators are losing their locus standi as customers are switching to OTT messaging platforms. In a purely numbers-centric game, why wouldn’t a customer opt for a free service, as opposed to a complicated bundled offering with (more often than not) several hidden charges?

    Bundling services and beyond

    Of course, operators haven’t let the grass grow under their feet in this scenario. Instead, they have taken to aggressively bundling their messaging services into cheaper deals for customers. The catch, though, is that the average revenue per user from messaging has been severely and adversely impacted and, subsequently, so has total revenues.

    Analysts do think differently!

    Before we begin writing an obituary for SMS, though, (yes, I’ve switched sides), let’s flip the argument and take a closer look. Batting for this space are Deloitte and Ovum, who have stated that the SMS industry will remain healthy in most markets, at least for the next few years. In fact, Deloitte recently predicted that globally, revenue from SMS will continue on the upswing until at least 2017, generating far more money than instant messaging applications. Ovum echoes that prediction by claiming that text messaging revenues will grow at 4 per cent through 2016 before beginning to decline.

    The last part of that sentence sounded tricky and let me explain why. In a nutshell, there is little doubt that OTT players and their plethora of social messaging applications have dealt a blow to the world of P2P SMS. Here’s the catch, though, these research firms didn’t have P2P SMS in mind while predicting that all is well with SMS. Enter Application-to-Person (A2P) messaging. Simply put, these are messages sent between users and applications.

    Without making it sound like A2P messaging is a panacea for the SMS industry, let’s look at a few facts and figures. To quote Ovum, the next few years “will mark a golden age for A2P SMS,” with the number of global A2P messages increasing from 1.4 trillion in 2013 to 2.19 trillion by 2018. Likewise, Juniper Research’s crystal ball estimates that A2P revenues will grow from $55 billion in 2013 to $60 million by 2018, while instant messaging traffic will generate only $3 billion by 2018 despite increased usage. No small numbers, these!

    A2P messaging has already hogged the limelight

    Think about it-flight booking confirmations from the travel portal you made reservations on, real-time route updates from the taxi you just booked, promotional offers from your favourite offline store and a discount code from your favourite online one. Password resets and service activations from your bank and feedback and quality ratings for your car’s last service check. All examples of A2P messaging! In short, major enterprise verticals such as banking, financial services and insurance (BFSI), entertainment, tourism, retail, marketing, healthcare and media are pulling out all the stops to squeeze A2P SMS to the last drop.

    Let’s break it down further. According to a report published by Transparency Market Research, customer relationship management (CRM) services are the largest revenue contributing application segment of the A2P SMS market. What will further boost this space is the fact that the trinity of application developers, marketers, and brands are together utilizing A2P SMS to strengthen their customer base. This entails all the routine tasks of updating their users with breaking news, campaign perks, location-based opportunities, and other important information.

    OTTs and the A2P question

    The point is that A2P isn’t a new phenomenon. All eyes are on it because every enterprise worth its salt has realized that it enables them to easily reach large, targeted audiences of every age, demography and type of handset in an economical manner. In fact, SMS itself is so easy and convenient to access that this simple fact betters the chances of an A2P SMS being read more often that many other forms of communication. To illustrate, mBlox states that 95 per cent of SMS-based messages are opened, in comparison with just 11 per cent of emails. The bigger picture is this-A2P SMS has tremendous potential to boost the SMS industry as a whole.

    But, wait, what makes A2P SMS invulnerable to OTT players? Now, this is an interesting bit. Drum roll, please, the common opinion is that betting the farm on OTT, on the basis of its impact on A2P is a step too far. Why, because OTT messaging services are severely restricted in terms of interoperability. For example, an OTT service can only deliver a message to another device that has the same application. So, you can’t deliver a WhatsApp message to another phone unless your friend has WhatsApp enabled, too. Similarly, you can only use Apple’s IM if you are using an iPhone. Another minus is that OTT messaging can’t be used to solicit or spam commercial services. If you are a business wanting to market to consumers using OTT, there’s a bright red flag right there! And, perhaps the most ironic- OTT players themselves are using A2P messaging extensively for services like two-factor authentication for account verification or security!

    Existing grey areas

    Now, while I’ve painted quite a rosy picture of the virtues of A2P SMS, there are a few grey areas as well. The reasons why operators haven’t been able to leverage the potential of this medium to the fullest deserve a bit of attention. To begin with, the technology itself has been plagued by spam for quite a while now and some operators have, as a result, discouraged or blocked traffic in an effort to reduce call-center costs and other outlays. However, the realization of how useful A2P SMS really is is slowly dawning on operators. The net result is that they are beginning to attempt to forge partnerships with players that specialize in identifying questionable traffic and block spammers as quickly as possible. So, to take advantage of the benefits of A2P SMS, operators are following a three-step plan: consolidating A2P services; handling progressively more wholesale relationships and handling the increasing amount of business traffic that previously bypassed them or was handled by the international aggregators.

    Wait, there’s more. Telecom operators, there is no escaping it. To manage the high volume of cross-platform messages bought on by enterprises extensively utilizing A2P SMS, you must dip deeper into your pockets to invest in infrastructure that supports this tidal wave of messaging.

    Net, net, the bottom-line is clear-analysts are firm on the fact that A2P won’t save revenues from SMS in the long term because the uptake of smartphones will only increase, implying that IP-based messaging systems usage will rise in tandem. For the next few years, though, A2P SMS traffic will surge. Watch this space for more.

    June 19, 2015 0 comment
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    Managing customer experience in Latin America is an interesting proposition-and not merely because each country differs vastly from the other in terms of culture and the law. As a side note to the unwary, this simply means that adopting a “one size fits all” approach won’t help you achieve anything.

    Focus on Customer Experience

    Let’s break it down further. This region has always been a bit of a paradox. The demand for mobile services is on the rise. Nevertheless, the journey towards focusing on and prioritizing customer experience management (CEM) has been markedly more relaxed than the rest of the world. To illustrate-according to a KPMG report, customer satisfaction has enjoyed the spotlight for quite a while in Brazil. However, some time ago, poor customer service and an increasing number of complaints compelled Anatel (Brazil’s telecom watchdog) to order three incumbent mobile operators to stop selling new service plans in some states until they improved their services.

    Customer Experience Management, Now

    Of course, that was then. Today, CEM is slowly but surely emerging as a priority in that extremely volatile telecom market. This is because regulators have been increasing prodding and pushing operators to provide nothing short of excellent services to customers. In fact, stretching the argument a bit, the deployment of 4G in the region is expected to have the same result-increased pressure on service requirements. It’s quite simple, really-4G, or LTE, is data intensive and will lead to higher-value customers accessing more media on their mobile devices. This will result in the need for increased support for various issues ranging from the technical side of things to billing.

    Customer Experience Management- A Vital Component

    But, wait. What ails Latin American operators? Why isn’t it obvious that CEM is a vital component of any operator’s war kit? Well, according to industry analysts, the response to that question is two-fold and gives a fair hearing to customers and operators alike. First, customer expectations have changed dramatically over the past five years. Today’s technology-savvy audience wants, no, demands, reliable and easy-to-use products and services. This includes an easy interaction with the company in question, quick problem resolution and (perhaps most importantly) a pleasant experience overall.

    Sounds simple enough, doesn’t it? Wait, there’s a catch. According to DirecTV Panamerica, on their part, operators in Latin America are concentrating more on providing functional or basic services, with negligible emotional connection with the client. This simply means that the emphasis is on the brand and product and less on the relationship with clients. What worsens the situation is the “silo mentality” prevalent amongst operators in this region.

    Now, operators, pay attention-your clients are willing to increase their business with you in exchange for better customer experiences. Opportunity knocks! Make the most of it by breaking through existing information silos and realizing the importance of deploying a multi-channel CEM strategy!

    Let’s cut to the chase-a unified customer experience makes all the difference in ensuring and improving customer loyalty and minimising churn. The world has turned digital and to differentiate your brand from the clutter, it is imperative that operators cater to the customer’s entire lifecycle, while walking the tightrope of the silos of customer care, finance, sales and marketing and IT departments.

    Multi-Channel CEM Strategy

    Meanwhile, what does deploying a multi-channel CEM strategy mean? Well, customers today have several communication channels to choose from. The bottom-line is the same though-a streamlined conversation with the operator of their choice across the various channels I just mentioned. Operators, content isn’t enough, the game is to seamlessly and flawlessly flow between these channels. The result-a unique experience for the customer!

    On this note, allow me to quote Telecoms IQ on the top four customer-centric actions that are a must for telecom operators-focus on an omni channel experience, use data to obtain a holistic picture of the entire customer relationship, invest in first contact resolution and identify high-risk-and-value customers.

    Sounds good? Now, how does one go about achieving this? Quite frankly, my money would be on big data and data analytics. Here’s why-the Cisco® Visual Networking Index™ (VNI) Global Mobile Data Traffic Forecast for 2014 to 2019 states that global mobile data traffic will reach an annual run rate of 292 exabytes by 2019, up from 30 exabytes in 2014. On an interesting side note, Latin America will witness a 59 per cent CAGR and a 10.1-fold growth. With these data volumes, doesn’t it make good business sense to chalk out analytics-centric plans to gain insight?

    Easier said than done, so, to quote Telecoms IQ once again, a few common themes to ensure value is derived from big data and data analytics include selling customer data to third parties (for example geo-spatial data to retailers), working with third parties such as software developers to crunch the data in new ways, gleaning new insights and selling the same, or simply using the data to better target and personalise marketing campaigns to customers. From the perspective of CEM, a few vital questions that ought to enter one’s mind are: can the new information available to us help us to improve our customer experience? The bottom-line is: mine the right data, learn from the insights and implement the right changes to improve customer experience and service. Who knows, it might do wonders to your bottom-line!


    In a nutshell, the business mantra for every operator today is putting the customer first. Today’s customers are informed, they know what they want and they have a voice. Isn’t this reason enough to sharpen your CEM tools? Latin American operators, are you listening?

    June 8, 2015 0 comment
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    The world is getting smaller and financial inclusion is steadily becoming a rule, not an exception. Sample this-according to The little Data Book on Financial Inclusion 2015 (TDB)released by the World Bank’s Development Research Group, 62 per cent of adults across the world now have an account at a financial institution or through a mobile device, compared to 51 per cent in 2011. This increase is being witnessed among the most economically backward populations in most regions, driven by mobile technology, digital payments, reforms that encourage correspondent banking, and relaxed customer identification. Let’s move a step ahead-it is no secret that mobile phone usage has spread far and wide, literally to the far corners of the globe. So, naturally, these devices, through the advent of mobile money, have played a very vital role in extending financial services to the underserved.

    Before we begin applauding though, (and I hate to be a wet blanket), while financial inclusion has indeed progressed remarkably around the globe, there do exist certain regions where the progress has been just a tad bit slower than the rest of the world. Enter TDB yet again-in Europe and Central Asia, 51.4 per cent of adults have an account at a financial institution and 0.3 per cent holds an account via a mobile device. Just a quick side note-TLB has listed the following countries as Europe and Central Asia-Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Georgia, Hungary, Kazakhstan, Kosovo, Kyrgyz Republic, former Yugoslav Republic of Macedonia, Moldova, Montenegro, Romania, Serbia, Tajikistan, Turkey, Turkmenistan, Ukraine and Uzbekistan.

    In short, all banks and other financial institutions, please sit up and take note-there still exist countries that are ripe for financial services-mobile and otherwise. Not just that, countries with a large immigrant population presents an excellent target segment. So, go back to the drawing board and start outlining a viable strategy.

    While we’re on that subject, it would be pertinent to point out that Sub-Saharan Africa and South Asia are two major success stories in this regard. Let’s look at a few hard facts- according to the GSMA’s 2014 State of The Industry Mobile Financial Services for the Unbanked report, of all regions, Sub-Saharan Africa recorded the highest level of mobile money penetration. By December 2014, 23 per cent of mobile connections in this region were linked with a mobile money account, whereas smartphone connections only represented 16.4 per cent of total mobile connections in this region. If that isn’t progress, nothing is! To cut to the chase, it would be worthwhile to examine how these regions leveraged the power of mobile money to see if the same can be adapted to suit the terra firma of the regions in question.

    Europe and Central Asia isn’t all that backward, though. The region is catching up, albeit slowly. Last year, in what has been rather cleverly cited as a “trend reversal” by several publications, African technology migrated to Europe, with the launch of Kenya’s “M-Pesa” mobile money transfer system in Romania. The concept is simple: “M-Pesa” customers can receive and send money through their mobile phones using simple text messaging technology. Why Romania, you ask? Well, only about 60 per cent of the population has an account, the rest still mostly depend heavily on cash. In fact, it is believed that even Romanians who have bank accounts mostly use them to withdraw their salaries. They then depend on cash transactions for the rest of the month. Isn’t that enough of a business case right there?

    However, chalking out a strategy for unbanked and under-banked folks in the region under scrutiny (Europe and Central Asia) is just one part of it. Let’s move onto the 51.4 per cent who have an account at a financial institution and the 0.3 per cent of customers who do hold an account via the mobile phone. For them, banks and financial institutions need to remember one golden rule-ensuring convenient and easy service is the name of the game. Seems easy but consider the stiff competition such players have to face from the Apple Pay, Google Wallet and the Samsung Pay’s of the world. To illustrate-as per a press release issued by Apple, since its launch, an increasing number of banks and credit unions have added support for Apple Pay, currently representing about 90 per cent of credit card purchase volume in the US. Leading merchants including Bloomingdale’s, Disney Store, Duane Reade and Walgreens are letting their customers enjoy the ease of use, security and privacy of Apple Pay. Stiff competition, that!

    The stakes are high and to stay in the race, banks and financial institutions ought to offer a mobile payment system that holds appeal for customers and merchants alike. More simply put, the system ought to hold its own with regard to convenience, user experience and security and cost. In all fairness, banks and financial institutions do face certain unique challenges. For instance, typically, such a player would partner with a telecom operator to launch a Near Field Communications (NFC)-based payment system. Therein lies the challenge of making its presence felt in the crowd. But now, the latest kid on the payments block- Host Card Emulation (HCE) has shaken up the status quo. Allow me a bit of jargon- NFC using a secure element (SE) for contactless proximity payments had too many challenges which HCE has resolved. The tokenization service offered by card schemes would enable financial institutions to launch NFC Wallets by simply working with a mobile wallet platform provider. Sorted?

    Last but definitely not the least; let’s talk about the merchants involved in this juggernaut. Now, to quote TDB, only 36.9 per cent of the population in Europe and Central Asia holds a debit card. Clearly, cash is still the king in that region! So, the first task before banks and financial institutions is to improve and enhance uptake and acceptance of cards. How does one do that? Well, for starters, encouraging small and medium merchants to switch from traditional point-of-sale (POS) terminals to a mobile POS (MPOS) may help. The idea is to highlight the advantages of the MPOS. Not only do such devices potentially drive down the price of regular POS terminals by as much as 50 per cent, they offer significant value adds such as EMI payments, mobile top-ups, payment analytics and even cash and check reconciliation via its mobile app.

    Wait, there’s more-the leaning towards cash only strengthens the business case for a MPOS device, as it opens up an affordable channel to accept alternate forms of payment, from cards to the mobile handset. For bigger merchants, MPOS could provide support in managing the workforce, sales force etc. by providing mobile-based inventory management, automatic sales records, etc. A win-win situation?

    The message is straightforward-financial inclusion and payments are evolving rapidly every day. The need of the hour for banks and financial institutions is to chalk out a multi-pronged strategy for all segments (i.e. the banked, the unbanked and merchants) to not only stand up to stiff competition but to remain relevant in this space.

    June 2, 2015 0 comment
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