4 Nov 2015

“Africa is now at the inflection point of Mobile Money 2.0” Interview of Srinivas Nidugondi, Mahindra Comviva for AfricaCom

Srinivas Nidugondi is Senior Vice President at Mahindra Comviva. He will lead a workshop in the Mobile Money conference at AfricaCom on Wednesday 18th November. He shares his thoughts on the subject ahead of the event.

What is Mahindra Comviva’s position in Africa’s market?
We are the global leaders in mobility solutions with an expansive footprint in the emerging markets of Africa, Latin America, South Asia and the Middle East. We were one of the first to enter the African mobile money market with the first deployment of our solution mobiquity® Money in 2008. Since then, we’ve grown exponentially, and now mobiquity® Money is the single largest mobile money solution with over 40 deployments and a 28% market share in Africa. Most of the major operators in the region have chosen to go with our solution. Our leadership in the market is evident from the fact that we are powering 3 of the top 10 deployments.  
  
How did the company become a mobile money specialist for Africa?
We have formed a strong and emotional connect with Africa dating back to our first ever solution in the region. PreTUPSTM , our flagship electronic recharge platform was received very well in the market, creating a strong base of future users in the region. Today, PreTUPSTM is deployed by 57 operators in over 40 countries, with Africa alone accounting for 39 of the deployments.  The success of our flagship electronic recharge system provided us with a strong base for launching mobile money solution.  
Yes, we’ve always championed mobile money as a means to increasing financial inclusion in Africa, Latin America, South Asia and the Middle East. Thanks to our expertise in tailoring solutions in emerging markets, we have always made a big difference in solving local issues transforming the lives of the local people on the ground.  For example, we were able to anticipate early that mobile money could play a big role in boosting financial inclusion within the unbanked and under-banked segment in Africa. Not only this, we provided solutions that were truly device agnostic and customized to needs of each country, increasing our reach across a wider demographic area.                  
We have always believed in investing in new and innovative solutions and technologies that help our clients to provide the best in customer experience to their end customers in Africa.  We have been a pioneer in mobile money in Africa and have many firsts to our name:
·         First to provide MasterCard companion Card in Africa
·         First to facilitate domestic interoperability between mobile financial services in Africa
·         First to offer closed-loop NFC merchant payments in Africa
·         First to enable mobile based international remittance service in North Africa

What do you think will be this year’s most game-changing development in Africa’s mobile money market?
Africa is now at the inflection point of Mobile Money 2.0 with higher user adoption on the cards as many fresh and innovative initiatives are gradually taking shape. We think the big game changer is going to be the move from a siloed “closed approach” to collaborative “open approach”. A number of mobile money providers have already embraced the ‘open approach’ with great results. Tanzania which has embraced domestic interoperability is a shining example. I think the “open approach” is not just one initiative, but a group on initiatives. We define “open approach” as an initiative where the mobile money service integrates with an external financial system. There are a number of ways by which mobile money providers are adopting an open approach
o   Domestic interoperability – Two or more mobile money providers facilitating direct account to account money transfer. Examples are Tanzania and Rwanda.
o   International interoperability – Directly transferring money from mobile money account in one country to another. E.g. Direct Money transfers between Airtel Burkina Faso and OrangeIvory Coast
o   Open-loop payments – Mobile money provider collaborating with open systems like MasterCard and Visa to offer companion cards which are accepted at MasterCard and Visa licensed POS and ATM worldwide eg EcoCash MasterCard Companion Card in Zimbabwe
o   Integration with MTOs – Mobile money provider integration with MTOs like Western Union, Moneygram and WorldRemit to facilitate inward remittances
o   Integration with bank account – Mobile money providers interconnecting with banks to facilitate direct money transfer between bank account and  mobile money account transfer
o   Open APIs – Exposing the APIs to enable merchants and businesses to offer mobile money as a payment channel
  
What topics will you expect to dominate the debate this year?
A lot of water has flowed under the bridge since Kenya struck gold with its single operator led mobile money service. Neighboring countries like Tanzania and Rwanda have also shown significant uptake in mobile money in recent years. It is important to note that Tanzania and Rwanda have taken mobile money in a direction completely different to that of Kenya by banking on interoperability. It is early days yet, but as the market matures, it would be interesting to watch the benefits of interoperability.      
Another hot topic of the day is improving the activity rate needed for sustaining long term growth. One of the troubling details lies in the number of users who are aware about mobile money services, but who are inactive due to some reason or the other. I think the challenge lies in converting inactive users to active users and even product evangelists.    

Are mobile money transfers still the major part of mobile money strategies and how are they developing?
P2P money transfer being the primary use case will remain a major part of mobile money strategy. However, as the mobile money market matures, there will be an increase in the level of complexity of mobile money transactions from P2P transfers to business payment like merchant payments, salary payments, bulk payments, and B2B payments as well as micro-financial banking transactions like savings, loans and insurance.

What other mobile money services are you focusing on for future growth?
In order to increase the reach and scope of our service in Africa, we are constantly exploring new avenues and creating new synergies with our partners and clients to enable mobile money services across the board.  We have identified several key growth opportunity areas for this purpose like NFC merchant payments, companion cards/virtual cards and micro-financial services.
Merchant payments are 10 times bigger than P2P transfers. It is clearly the next big opportunity in mobile payments and we have already taken steps to cash it. We have collaborated with mobile money providers in Tanzania and Rwanda to provide first-of-its-kind NFC based merchant payments. The solution equips merchants with mini-calculator sized portable NFC POS linked to their mobile money account. Similarly, consumers are provided with a NFC card linked to their mobile money account. For low value payments consumers just need to tap the NFC card at any NFC enabled merchant POS.  We are bullish that our NFC enabled payment system will soak up a major share of the low-value high-volume (long tail) merchant transactions in the future replacing the old pin based system with easier “tap & pay” system. High value transactions request users to enter a password providing an additional layer of security for POS payments.
Another step to boost merchant payment is the open loop payments. An open loop payment system expands the merchant acceptance network, increasing adoption of mobile money service. Our partnership with MasterCard enables our clients to offer MasterCard companion cards and virtual cards linked to mobile money accounts. Companion cards can be used at more than 30 million MasterCard merchant locations (POS) in more than 200 countries. Companion cards can also be used at MasterCard licensed ATMs to withdraw cash. Virtual cards can be use to make online payment at large number of e-commerce websites. By matching synergies with the leaders in mobile money (Mahindra Comviva) and the leaders in payment processing (MasterCard) companion cards/virtual cards bring new users on the bedrock of scalable merchant networks, security, cost efficiency and easy integration. 
Micro-financial services are the third prong of our future growth strategy. I think the future of banking lies in leveraging the ubiquity of the mobile for facilitating micro-savings, short-term low-value loans and micro-insurance. This will disrupt banking landscape as we know it today using mobile airtime and mobile money usage for defining loan amount and formulating insurance policies.  In Zimbabwe, Tanzania and Rwanda we are enabling mobile money providers to extend micro-credit to their customers for short-term (1 month). Unlike conventional loans there is no need to attach documents of salaries and address proof or deposit any security. The mobile money providers are using a novel approach, tying loan disbursements with usage of mobile line, mobile money and previous loan payment behavior. In Zimbabwe, we have digitized the traditional savings clubs (known as ‘maround’ or ‘mukando’), facilitating group savings via mobile money.

How can operators create more value for African consumers?
Many service providers make the big mistake of trying to copy & paste examples of successful mobile money deployments from around the globe without even trying to understand the success factors that were driving those deployments.
 Every country is different, with unique market specifications, calling for bespoke solutions rather than a “one shoe fit all” generic solution copied from successful deployment many thousands of miles away.
 We think mobile money providers should focus more on providing services that solve an actual need for that market. A ‘need based service’ model will be beneficial for both the consumers and the mobile money provider. Educating consumers about new services and gaining their confidence is the key here.
Also, mobile money operators could invest more on features that enhance consumer experience, such as confirming the name of recipient before sending money and thus reducing cases of wrong transfers.
With the rising ubiquity of the smart phone, introducing mobile app or web portal could also go a long way in enhancing usability.



For more information on the Mobile Money programme at AfricaCom, click here