Mobile network operators (MNOs) can benefit in different ways from the huge mobile financial services potential in Africa, where approximately 24 percent of the population have a bank account while 75 percent have a mobile phone, according to a new report from Pyramid Research (PR).
The report, ‘Africa: Mobile Financial Services Business Models Evolve with Regulations, Consumer Needs and Economic Environment’, analyses six business models which operators are adopting when implementing mobile financial services in Africa.
In the study, PR explored the effect of mobile financial services on MNOs as well as the impact of banking and financial regulations.
Case studies of Orange, Safaricom and MTN are presented, examining how these different operators approach the mobile financial services opportunity.
“In most African countries, while mobile adoption is high, access to financial services remains low,” said Ousmane Yatera, analyst at PR. “For the unbanked, mobile financial services can potentially boost access to banking services greatly. MNOs can achieve this by leveraging their wide distribution networks and trusted brands.”
According to Yatera, MNOs can benefit not only from the direct revenue streams generated by their mobile money services but also from leveraging indirect effects.
“The services can raise customer loyalty, reduce operational expenses and boost their voice and non-voice businesses. All these benefits, direct and indirect, create value for the business as a whole,” he noted.
In its monthly Telecom Insider for June 2013, PR observed that the mobile financial services (MFS) market presents a huge opportunity in Africa because “demand for MFS has gradually grown during recent years, and the services are generating significant revenue for mobile network operators.”
In Kenya, for instance, Safaricom’s revenue from M-Pesa exceeded that from SMS in 2012, reaching KSh16.87 billion (equivalent to US$199 million).
“Operators have been developing bank partnerships and networks of distributors (or agents) to address the MFS market. Different models compete with each other: some of them are aimed at customer acquisition, others at customer loyalty,” said the report. Government regulation, however, was a major issue confronting operators in this market.
PR found that MNOs continually have to adjust their business models in order to remain compliant with regulations and add more advanced banking services.