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.
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