Mobile money industry state of play – GSMA report

Friday 7 March 2014 | 09:33 CET | Background

GSMA published its latest mobile financial services for the unbanked State of the Industry report 2013 at the MWC in February 2014. The report shows a growing industry, not only in the number of countries where a mobile money service is available but also in the increased level of competition between mobile money providers in some of the more advanced mobile money countries. Agents remain the most often used type of distribution network, while the product offering is expanding to include related financial products such as insurance and savings.

The GSMA unit MMU (Mobile Money for the Unbanked) presented its latest state of the industry report at the yearly Mobile World Congress in Barcelona. This year the report not only looked at mobile money but also included mobile insurance as well as mobile credit and savings.  The main focus remained on mobile money initiatives however.

Competition in mobile money is increasing

The MMU estimates that around 2.5 billion people remain unbanked, of which more than 1 billion already have access to a mobile phone. At the end of 213 the MMU counted 219 mobile money deployments in 84 countries, and competition has been increasing as 52 countries saw two or more mobile money services being offered at the end of 2013, up from 40 a year earlier. Furthermore, the MMU Deployment Tracker has identified another 113 mobile money initiatives planning to launch. The majority (52%) of live services were situated in Africa but that percentage has slowly been decreasing over the last few years. Latin America saw the largest increase in number of deployments during 2013 (by 56%) and has the second largest number of planned launches (after Africa). The increased number of mobile money schemes also means that MNOs offering mobile money will need to add other services to remain competitive.

Inactivity remains a stumbling block

In June 2013 the GSMA counted 203 million mobile money accounts, but only 61 million of those had been used in the previous 3 months. This low level of activity remains a large stumbling block for many mobile money service providers. Despite this some services are doing very well and thirteen schemes have managed to attract over 1 million active users.

Around the globe the use of agents remained the most popular type of distribution network, and the MMU noted that the average size of agent networks has been increasing with the majority having more than 2,000 agents in 2013, although mobile money providers also have to deal with a high level of inactivity amongst agents. More significantly, in 81 percent of countries with respondents to the MMU survey there were more mobile money outlets than bank branches, leading to agents becoming the face of the financial industry for consumers, and not banks. This means it is important for MNOs to deal with inactive agents as not only do they represent a cost to the provider (recruitment, management), they can also give the mobile money service a bad image (agent not available, not having enough cash).

Bulk payments are growing faster than traditional airtime top-ups or personal transfers

Regarding the types of products offered, the MMU identified three types: mainstream, widely available and marginal. Mainstream products include airtime top-up, bill payment and P2P transfers, and these are usually the first products to be offered by a mobile money programme.  Widely available products include bulk payments and merchant payments. Bulk payments examples are salary payments and government-to-person transfers. Marginal products are for example international remittances, which are offered by only a handful of mobile money providers. However, transactions involving external companies (such as in bulk payments or international remittances) were growing faster in 2013 than the mainstream products of airtime top-up and P2P transfers.

Adding extra services such as insurance or savings can help MNOs to increase appeal of mobile financial services

Another way for MNOs to widen their mobile financial opportunities includes offering related financial products such as credit, savings and insurance. Mobile insurance does not necessarily need a mobile payment infrastructure to be in place, but mobile credit and savings do. It is therefore not surprising that the more successful launches of mobile credit/savings to date are in countries where mobile money has been a great success such as Kenya and Pakistan. As these type of products are often more or less unknown to the unbanked population, successfully offering these products requires more effort, for example in customer education. 

At the end of 2013 the MMU recorded 84 live mobile insurance schemes, of which 16 were launched during 2013, the vast majority offering life insurance. There were 17 live mobile credit services, with two launched during 2013. Not all of these were offered by MNOs but even those offered by other parties required the customer to have a mobile wallet for delivery and management of the mobile credit. With regards to mobile savings the MMU recorded 22 live schemes, nine of which started in 2013. Not all the schemes paid interest, but that shows the customer need for a place to keep their money safe, be it from theft or simply not to spend it immediately but to have a buffer for e.g. medical expenses.

The MMU predicts that in the near future there will be more interoperability, both amongst mobile wallet schemes but also with banks, that the ecosystem will grow with more external companies becoming part of it and that more types of financial services will be offered, such as insurance of savings.

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