Wednesday, March 11, 2009

Mobile Services May Act as “Customer Glue”

In the two weeks since the Mobile World Congress, there has been surprisingly little coverage of an important research initiative by GSMA and CGAP (the World Bank’s independent policy and research center) on “Mobile Money for the Unbanked.” Some accounts focused on the Gates Foundation’s promise of $12.5 million to promote mobile banking among the world’s poor. But Vital Wave Consulting attendees wonder whether the writers of these accounts missed the Mobile World session in which GSMA, McKinsey and CGAP representatives discussed the preliminary results of their research on the nascent mMoney industry. According to their study, mBanking will grow to a $5 billion industry within 3 years – a noteworthy figure that got some attention. But one of the most intriguing findings was that mMoney services may increase “stickiness” among mobile customers.

Mobile carriers in all markets are concerned with churn (i.e., customers who leave their service for another). “Stickiness” is that elusive quality – part pricing, part quality of service, and part brand loyalty – that all carriers desire. The idea that a particular service may convince consumers to stick with a particular operator is not new, but evidence that this is true for mBanking customers in emerging markets is particularly important. After all, there are around 1 billion people in the world (nearly all in developing countries) who own a mobile phone but do not have a bank account. Among these consumers, churn is a major problem, exacerbated by a liberalizing mobile industry with new carriers and lower prices, as well as the introduction of new, multi-functional handsets and stronger networks. According to CGAP, when a subscriber is also a user of mMoney services provided by the operator, client stickiness goes up considerably and churn goes down.

Though the GSMA research focused on mobile financial services, it may be safe to assume that stickiness will result from other mobile services as well. This presents a critical opportunity (or perhaps an imperative) for carriers, service providers and application developers. As new subscribers become harder to find and emerging markets reach saturation points on par with mature-market countries, client retention will be the name of the game. Distinct mobile services and unique functionality will be the glue that binds customers with a particular operator (and/or handset). Telecommunications companies that invest now in the relationships and technology required to expand the utility of the common handset will attract and retain more customers as the market around them grows to maturity.


Jim Rosenberg said...
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Jim Rosenberg - CGAP said...

Hi there,
Thanks for flagging this! We have more at and there will be more details and a further report at the Mobile Money Summit ( in June. -Jim Rosenberg/CGAP