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Why Telcos Shouldn’t Be Complacent About Mobile Financial Services

Have you ever thought…?“Financial services are for banks, not telcos.”“Our market will never adopt mobile money at scale. It’s not worth it for us”“How could we possibly profit off of mobile money? It’s a race to zero.”I’ve heard all of these statements and more from telco leaders across Africa and Latin America. I’m here to say,You’re wrong.And not only are you wrong, you’re missing a huge opportunity to diversify your product offerings, reduce customer churn and replace lost revenue in an evolving market landscape.In developing markets worldwide, mobile money has quickly become the standard. In Somalia, for example, 73% of the population rely on mobile money for daily transactions, bills and salaries, and even remittance payments. Alternatively, only 15% of the population have accounts with formal banks.

Portfolio Diversification is Key to Survival

With the drastic drop in revenue from voice and SMS at the hands of new technologies (Whatsapp, Skype, etc.), telcos are scrambling to diversify their product offerings and establish new revenue opportunities.Telcos need to diversify portfolios and replace lost revenues. Financial inclusion for a largely unbanked population is the ideal opportunity to achieve these goals. In a 2016 report of the Mobile Economy in Africa, GSMA posited that, by 2020, there will be 725 million unique mobile money subscribers across the continent. The biggest risk to telcos in this growing market? Complacency.

The Mobile Money Revolution is Here

The mobile money revolution is already well underway. With a little bit of education, markets will quickly catch up. The fact is if your telco doesn’t jump on the market opportunity, another will. If the biggest threat to any telco is a subscriber swapping out their sim card for a competitor’s, why not create stickiness with mobile financial services. Research indicates that “active usage of mobile money was also confirmed as a mediator in the relationship between satisfaction and trust, on customer continuance.” There is a correlation between mobile money usage and reduced customer churn. Once a customer places their financial dealings with a telco, the chances of them jumping ship are greatly reduced.So if your telco is looking to diversify product offerings, reduce churn, and replace lost revenue, consider mobile financial services. Send me a message to discuss the steps you, as a key stakeholder, can take to accelerate the mobile economy and establish your telco as a trustworthy provider of mobile financial services.