In advance of the 10th Annual Eurasia Com event taking place next week Com World Series benefits from the experience and wisdom of one of the speakers at the event - Vidya Chandy - of Mahindra Comviva - who offers her opinion here on the evolution of this complex and dynamic market...
Q1. How is your company positioned in the regional market and how do you expect it to evolve over the next couple of years?
Mahindra Comviva’s Mobile Financial Services (MFS) business unit is a recognized leader with unrivalled experience in the mobile financial technology space, enabling service providers including Mobile Network Operators (MNOs) and financial institutions, globally, to meet the needs of customers in both developed and emerging markets. Its comprehensive suite of products includes digital wallets, mobile money for the unbanked/under-banked, mobile banking, mPOS, international remittance hub and electronic prepaid recharge solutions. It is among the top 3 mobile financial technology providers, with over 120 deployments of mobiquity® money (mobile money for the unbanked/under-banked) and PreTUPS™ (electronic prepaid recharge ), processing over 20 billion USD in payment flows, handling millions of transactions every day and serving 700+ million consumers globally.
We have currently partnered with telecom operators and banks in some countries in the region including Romania, Kyrgystan and Moldova. Our products power mobile financial services in about 26 African countries and we are targeting to establish market leadership in this region as well. We see tremendous potential and diverse demand for mobile financial services in the region (though that tends to vary between countries), and we expect to grow our presence considerably in the next few years in response to high interest in this domain from service providers.
Q2. What is driving adoption and growth of mobile financial services and what are the remaining challenges?
Adoption and growth drivers depend on the type of mobile financial service being offered. An essential pre-requisite is for each market to be assessed individually to understand its potential and environment - and the service must then be tailored to address that. A service which has been successful in one market may struggle to realize adoption and growth in others unless there is a conducive environment and compelling consumer need in those markets as well. Areas to be evaluated include regulations, social-economic-political factors, partnership possibilities, telecom network capabilities & mobile penetration, banking penetration & accessibility, payment infrastructure and maturity, cash circulation & the shadow economy, and addressable size of the target consumer segment(s).
Mobile money services (for the unbanked and under-banked) which are typically offered by telecom operators require a) significant marketing investment to build trust and awareness amongst consumers, and to address financial and technological literacy b) an engaged and efficient agent network scaling to the last mile. In a nascent market, the service provider must first focus on the core unmet need of consumers before expanding the service: while Kenyans required an affordable, accessible and safe domestic remittance service, the Zimbabwe market required a solution to manage demand for cash balances due to dollarization. Mature markets are seeing success with innovative pricing, expanding the service to more avenues for making and receiving payments, aggressive merchant acquisition and agent incentives, and with opening up the system to partners, especially banks, who can offer savings and deposit products. Challenges remain with lack of inter-operability and creating universal rather than market-specific services.
Mobile or digital wallets for the banked and card-owning segment have generated huge interest levels amongst banks, card schemes, retailers, telecom operators and OTT players amongst others. But the sweet spot for widespread consumer adoption is still elusive barring a few success stories such as Starbucks, Smart Wallet and Moca in South Korea. Studies demonstrate that consumers are willing to migrate towards use of the mobile for payments and commerce transactions. Digital wallets are well placed in breaking down the barriers to card usage online as they address concerns of security and ease of checkout, and solve the problem of shopping cart abandonment.
Wallet providers need to keep the consumer in mind and solve for them rather than the technology. A friction-less and intuitive experience covering the path to purchase is crucial for adoption – microseconds will begin to matter. Merchants need to be engaged with a multi-channel experience, ease of integration, and efficient delivery and redemption of coupons. Digital wallets involve a complex ecosystem and many stakeholders need to work together to agree on data sharing, customer ownership, ROI on technology enablement, POS infrastructure build-out and investments, and a business model that works for everyone. Currently, there are challenges on all these fronts.
Mobile banking is well established as an alternative and low-cost channel for connecting with customers and financial institutions need to differentiate on experience and accessibility to deepen their brand and customer engagement through this channel.
Q3. How do the various stakeholders work together at the moment and how will this need to change in order for mobile money to become mainstream in the region?
Customer retention and churn abatement are key concerns for telecom operators, hence there is very little incentive for them to collaborate over services that are offered to the unbanked and under-banked. They are partnering instead with financial institutions to offer more sophisticated financial products to help move consumers up the economic value chain. Eventually, transaction volume growth will require interoperability in markets where there is no single operator with a majority share, and this will benefit the domain similar to the way SMS interoperability resulted in increased transactions and operator revenue. Some regulators in other regions have already mandated or plan to mandate interoperability. Converting the opportunity of international remittance into the region will also help make this offering mainstream.
In the context of digital wallets, an example from Asia is worth mentioning: Japan, Korea, China, are innovating, collaborating and building scale. All successful deployments for digital wallets specially those utilizing NFC have built out extensive partnerships between telecom operators, banks, merchants, card networks and are driving awareness and economies of scale, with clear roles and responsibilities between all. KT, China Mobile and Docomo are co-operating strongly towards a joint NFC vision.
In this region, Russia provides a great example of collaboration, where multiple MNO’s have come together to offer a transport payment solution in Kazan, refining the early learnings from NFC launches by individual operators. The region needs more such collaboration to help with customer education, merchant enablement, clear business models for all, and support for more value added services.
Q4. What is still needed in terms of infrastructure, technology and interoperability to further drive MFS adoption across Eurasia?
This needs to be looked at individually for each market as there is wide variability in MFS potential and maturity within the region. Turkey, Russia, Kazakhstan, Ukraine, Russia demonstrate the most maturity or potential, with Kyrgyz Republic, Romania and Georgia following them.
The issues are intricate when it comes to digital wallets, though with projected rise in mobile data consumption and smart-phone sales, the conditions are ripe for adoption. Markets like Turkey, which have seen several services being launched, could tend to fragment mind-share and consumer and merchant loyalty. Partnerships are needed in order to simplify and move towards interoperability, standardization, and ubiquitous acceptance. Simplification just got a boost through MasterCard and Visa’s support for HCE, as that will solve the complexities inherent today in secure card data storage for NFC-facilitated payments, but handset support and POS upgrades will still take time to get to tipping point.
Q5. Are there any predictions on the mobile money market you’d like to share with the community?
It is difficult to predict the future accurately in the digital wallet space as it is evolving fast, but I expect that a few players will survive and dominate, there will be significant consolidation, dis-intermediation from non-traditional players, the business model will shift to marketing, data and analytics, technology will continue to evolve at a blazing speed challenging the ecosystem, there will be progress on standardization, open platforms to empower developers, and mass-market adoption will be driven by rising network speeds, wide-spread availability and simplification of consumer experiences.
From the perspective of mobile money (for the unbanked and under-banked), I expect shared agent networks and remittance interoperability (domestic and international) to become a reality in mature markets and also in those where there is no dominant market leader; the agent-assisted model serving to bring a wider population into the self-service fold; opening up of platforms to the developer community through API leading to entrepreneurial ICT innovation that will expand mobile money acceptance to high-potential verticals that are currently un-tapped; continued consolidation and standardization.
Q6. What do you hope to get out of participating in EurasiaCom?
I hope to be able to exchange ideas, learnings and experiences with others, be informed about the current dynamics in the region, and understand how service offerings are faring, what are the major concerns and technology-enablement needs for operators and banks, and where can we provide our expertise and assistance.
Eurasia Com takes place next week in Istanbul, Turkey visit here for further information.