2015 Trends

Kalba International: Kas Kalba's 2015 Trends

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Category: 2015 Trends
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Notwithstanding the success that mobile money (MM) services have had in Kenya and a handful of other countries, most MM providers in Africa are still trying to figure out how to monetise their businesses.

In a dozen or more countries millions have signed up for the service but few have used it. Providers check their customer files and find that less than 10% —at times much less—record one or more transactions in the last 90 days.

The problem is three-fold. Most MM registrants, banked or unbanked, receive income irregularly. Secondly, many have difficulties using the service in one or more ways—due, for example, to unavailability of cash or e-float at the MM agent location they use, limited digital literacy, or loosing their PIN. Finally, those that don’t have such difficulties learn how to game the service; for example, they deposit money directly into the account of a relative rather than transferring it, thereby avoiding a service fee—and an indication that they have used the service in their file.

But these impediments are beginning to be understood. (We have identified about 15 of them through survey research, focus groups and “mystery shopping.”) The challenge is how to overcome them and to monetise the services in a way that MM customers, MM providers and MM merchants and other third parties all benefit. Besides the patient process of increasing the number of agents (only Kenya is anywhere close to the 100,000 mark) and training them to help users overcome the impediments, new service and monetising approaches are called for.

New services could include automated or operator-based oral prompting in how to execute a transaction and automats for withdrawing money without long lines and the risk of agents running out of cash. The new pricing methods may entail bucket plans (covering all transactions over the course of 30 or 90 days), free transactions (every third one, for example) and bonus airtime for initial or subsequent deposits. These kinds of innovations have been receiving favorable responses from different MM customer segments we have been talking with in both urban and rural areas. Other MM users are looking for better integration with traditional bank and microfinance services.

 

Expecting mobile money services to generate quick returns to the bottom line, as some mobile operators and other MM providers have in recent years, has been unrealistic given the seven years of diligent build-up that were required to make a success of M-Pesa in Kenya. This seven-year process can be shortened but only if MM providers offer the right services to the right customer segments using the right approaches and service prices. In the process they must be mindful of the users’ security concerns, their irregular cash flows, and their use of multiple MM services (along with multiple SIMs), especially where the MM platform lacks interoperability.

 

Revenue-challenged MM providers who do their homework will start to monetise mobile money services in 2015.

 

Kas Kalba is the CEO of Kalba International.



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