Mobile World Congress Puts the Spotlight on Maturing mServices

The 2010 Mobile World Congress, held last month in Barcelona, featured the usual array of cutting-edge devices and new service offerings from handset makers and operators from around the globe. While Microsoft's launch of its new mobile operating system got the biggest headlines, some of the most intriguing discussions that took place centered on the increasing maturity of mobile services aimed at emerging market consumers. Gavin Krugel, the GSM Association's director of mobile banking strategy, noted at the event that one billion people in the world have access to a mobile phone but not a bank account. And Krugel said that there are now 40 million people worldwide using mobile money, a number that is growing daily. In Uganda alone, 18,000 people join the ranks of mobile money users each day.

The development of mServices has long held great promise, but the lack of a clear business case has hampered their growth - until now. Mobile money, despite regulatory hurdles, is leading the way. And the plethora of mHealth applications on display at the Congress demonstrates that it too is beginning to take off. The case has been furthered by reports such as Women & Mobile: A Global Opportunity, authored by Vital Wave Consulting and sponsored by the GSMA Development Fund and the Cherie Blair Foundation for Women. The study, which included surveys of over 2,000 women in developing countries, found that nearly half of women (and two-thirds of women business owners), are interested in services such as money transfers via their mobile phones, a number that is even higher in countries such as Kenya where knowledge of these services is widespread.

Mobile services are positioned to become highly strategic for scaling business and programs in emerging markets. This will likely be the case for technology companies and a range of vertical markets (such as financial institutions, agricultural firms, and even governments). Yet mServices are still a nascent arena. Successful scale requires careful planning up front and an understanding of the conditions in each individual market. For example, where banks hold significant political and economic power it may be necessary to include those institutions in any mFinance services offering. Otherwise, those banks may view mobile banking as a threat. Taking a hard look at the market dynamics - including industry, regulatory or competitive barriers - can make the development of a successful mServices strategy that much more likely.

The Economist highlights the promise of mobile money

by Brendan Smith

The growing buzz over the use of mobile phones to bring access to financial services to the world's poor got a boost this week when The Economist featured the trend on its cover. The issue's survey on telecoms in emerging markets puts a spotlight on the well-known success of ventures such as Safaricom's mPesa, as well as the efforts by MTN to extend a mobile money service it has launched in Uganda to other markets in Africa. The efforts of organizations such as the Grameen Foundation, FrontlineSMS and Google are also discussed, while the mHealth for Development report authored by Vital Wave Consulting is cited as proof of innovation in the health space.

While mobile money and other mobile services (in areas like health, education and agriculture) show tremendous potential to transform the lives of the world's poor, serious obstacles remain. Regulatory concerns, particularly for trans-border transactions, have to be overcome, while the objections of banks and other traditional providers of financial services may slow the momentum for mobile money in many countries. Each successful demonstration of mobiles' power to transform lives, however, increases the likelihood that mobiles will be the tool to lift millions out of poverty.

From 'E' to 'M': Banking Goes Mobile

International high finance may still be down in the dumps, but the market for mobile banking is starting to look up in a very big way. A recent KPMG survey in India found that 64% of Indians are "at least somewhat likely" to conduct banking over a mobile device in the next 12 months. Growth in the Indian market is reflected globally, with a Gartner report predicting that the number of people using a mobile phone to make payments would rise from 43 million in 2008 to over 73 million in 2009, with the total reaching nearly 200 million by 2012. More affluent customers who want to access their bank accounts using their mobile device may represent the most immediate market, but the billions of unbanked consumers in emerging markets around the world are the ultimate prize, as mobile banking allows people who have not previously had bank accounts to join the formal financial sector.

The pervasive use of electronic ("e") transfer systems for financial transactions has essentially obviated the term eBanking. The use of digital computing equipment in financial services is so firmly ingrained that eBanking is now simply banking. However, the concept of banking through one's mobile phone, or mBanking, is still in development and warrants a separate label. Other verticals ripe for digital forms of delivery – health, government services, and commerce – may also manifest initially through stationary electronic IT systems. But in many countries where mobiles are leapfrogging computers as an access point, the "m" version of the service – mHealth, mGovernance, mCommerce - will lead. This will impact the development of the services themselves as well as the computer infrastructure that supports them.

The influence of mobile devices, especially in emerging markets, will reach across industries. Traditional IT companies, as well as health and commerce-related corporations will do well to consider the ways in which the pervasiveness of mobile phones will affect their marketing and delivery channels. Firms that tailor their products and services to the mobile channel might end up ahead of the curve.

Mobile Banking Lacks a Global High-Tech Leader

Using mobile phones for financial transactions, or m-banking, has seen rapid adoption in countries like the Philippines and Japan. Though the service remains fragmented and country-specific, this week’s CIO magazine points out the growing opportunity for m-banking in Africa.

CIO bases their assertion on survey results from South Africa, where local bank subsidiaries are already processing thousands of mobile transactions each month, and the biggest barrier to wider adoption seems to be a lack of consumer awareness.

Finding signs of m-banking success in South Africa is not surprising. Vital Wave Consulting research reveals that the mobile phone saturation rate among South Africans living at or above subsistence is comparable to the level in European markets. Saturation in South Africa (and Nigeria), together with rapidly increasing mobile penetration rates in other African countries, create a fertile user base. And mobile phone-based financial services are particularly attractive when poor roads and public transportation systems make a trip to the bank an expensive, all-day journey.

There are ample, quantifiable business opportunities in the m-banking value chain for multiple players, including banks, international credit companies, carriers, and software designers. While financial service providers are moving quickly to realize these opportunities, no global technology leader has stepped forward. A multinational high-technology company capable of providing such mobile solutions has much to gain by enabling comprehensive m-banking across emerging markets.

Also in the news:
• Microsoft is putting their money on smart phones as the next computer
• GSM and CDMA search for the best foothold in developing countries
• Vodafone unveils handsets designed for emerging markets