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Should MVNOs Leverage From Mobile Financial Services?

There is not much information available to answer the pressing questions MVNOs may have if they are interested in leveraging mobile financial services.

This article should provide a starting point as to what would be required to take advantage of and succeed in offering it as an additional service.

emerging market

MVNOs: A case for mobile money in emerging markets

Most small businesses and people in emerging markets lack access to traditional banking methods. As things stand today, the majority have no way to save safely or invest.

If people in developing countries want credit, they rely on informal creditors, family, and friends, and deal primarily in cash. Some travel long distances to get the money they earned from loved ones.

In this scenario, there is a huge opportunity for MVNOs to provide mobile financial services, and at the same time, improve the lives of many.

McKinsey reports that, “digital finance has the potential to reach over 1.6 billion new retail customers in emerging economies and to increase the volume of loans extended to individuals and businesses by $2.1 trillion. The providers of these products stand to gain by having access to potential new revenue streams, and to increase their balance sheets by as much as $4.2 trillion, in aggregate.”

In their state of the nation report on mobile money, GSMA, says, “Globally, around 1.7 billion people still lack access to safe, reliable and convenient financial services. However, 31 emerging markets have seen an impressive increase in financial inclusion rates, which can be attributed to the simultaneous growth in active mobile money use”.

In 2018, 54% of the adult population in Ghana, Côte d’Ivoire, Benin, and Senegal used mobile money regularly, and in Asia, there was a 31% increase from 2017 to 2018 in mobile money registrations. In 13 African countries, more than ⅓ of adults regularly use mobile money. (Source)

GSMA reports that there is a 20% year-on-year increase in mobile money registrations.

Growth in the mobile money area is significant, especially in emerging markets.

Impact of Mobile Financial Services

Impact of Mobile Financial Services on mobile operators

Operators and MVNOs wanting to regain revenue through value-added services should look to. technology powered by the financial industry, like micropayments, loans, and banking services.

MVNOs have and can look at addressing specific needs of communities in certain locations to deliver services. Ideas mention a study that found that there are still many market segments available to MVNOs that would cater to the un-served. 

Orange Bank entered the FinTech space in 2017, and by the end of 2017, it had already subscribed 50,000 users. (Source) In so doing, the telecom adds a new area to it’s portfolio.

Not only are telecoms jumping on the bandwagon by becoming virtual banks, but banks are taking the leap to become MVNOs; in South Africa for example, FNB entered the market in 2015, and Standard Bank launched its MVNO in 2018.

It’s a good time to be a bank or an MVNO.

What MVNOs need to know about FinTech as a service

Although there has been significant growth in the mobile money market, presenting tremendous opportunities for MVNOs to increase revenue, going into emerging markets requires careful thought.

McKinsey used the data from six organizations plus public data, including banks, MNOs and other third parties who provide mobile money services, to perform an analysis of what makes new mobile money providers succeed. They came up with three main findings: 

#1: Mindset shift

Providers will need a shift in mindset; doing things the old way won’t work.

#2: Long term investment & large upfront spend

Providers will need to focus on long-term investment and face a significant upfront spend. The greatest spend is the IT backbone for the processing of transactions, plus software licensing fees.

The first clients will bring in others by word of mouth, and those wanting to transact with people already subscribed to your services.

#3: Do business differently

Providers will need to do business in new ways, like partnering with other companies who act as regulators, because regulation can negatively impact a mobile money provider.

Typically, the five roles needed in collaboration partnerships are:

  1. Deposit holder
  2. E-money issuer
  3. Payments service provider
  4. Agent network manager
  5. Telecommunications channel provider

Image Credit: McKinsey

Example of a mobile money collaboration

Mobile money endeavours in emerging markets demand broad marketing and distribution, managing an agent sales force, systems like Adapt IT|Telecoms Mobile Wallet solution and analytics, fast product development, and financial intermediation.


We conclude with this answer: yes, MVNOs should leverage Mobile Financial Services. 

However, to succeed requires new ways of doing things, long-term thinking, and heavy upfront investment. 

One of the key findings of the McKinsey analysis was that the biggest initial layout would be technology; Adapt IT | Telecoms FinTech solutions offer the necessary tools for MVNOs to succeed in MFS and emerging markets. 

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