In previous blog posts, we discussed the availability and adoption of mobile money services. This post focuses on how customers access mobile money today and how that will likely change in the next couple of years. Today, customers access the service in two ways: via agents (physical) and via their phone (technical). These channels are critical for providers to maintain a healthy customer relationship—the easier and more reliable the access to a service is, the greater the likelihood for success.
Mobile money agents remain as a core part of the operational infrastructure
Digitising and disbursing cash is enabled by a network of physical access points, or agents. In most cases, the agent is where customers can deposit or withdraw cash from their mobile money account. While there are other mechanisms to digitise cash, such as salary payments and bank-to-wallet transactions, the digitisation of cash still happens largely at the agents. Registered agents represented 90.5% of mobile money’s physical cash-in and cash-out global footprint in 2015, whereas ATMs represented just 7.8% and banks represented 1.7%. Also, cash-in and cash-out represent 35% of all transactions globally, which means until providers can drive more ecosystem transactions, agents will continue to be an important and an expensive component of a mobile money service.
Unlike the physical channel of access, the technical interface is about to be substantially disrupted by the rise of smartphones and greater access to mobile broadband
USSD still dominates as the most common channel for customers to access mobile money on their phones in 2015. However, apps are the second-most offered channel for the second year in a row. Despite continued interest in apps, usage via apps (arguably the more meaningful metric) is very low across the industry. Only eight providers had both more than 1,000 active customer accounts (on a 90-day basis) and more than 15% of total transaction volumes being processed via the app. Nonetheless, by 2020, most people in markets where mobile money is live will have access to a smartphone and many access to mobile broadband. Against this backdrop, app development is clearly an area of opportunity for the industry.
So, what does this mean for the future of the industry?
Smartphone apps can potentially enhance customer experience by offering a rich user interface that can be more user-friendly than the USSD menu. They can also help operators increase their addressable market by offering MNO-agnostic apps. Equally, smartphones will encourage greater competition as they present an opportunity for non-MNOs (internet and e-commerce players) to start offering mobile payments. However, apps bring some new security challenges to the providers and customers. Malware, internet- and OS-based attacks could potentially compromise user data.
Apps also provide an opportunity for developing new products with more user-friendly features and functionalities, in turn accelerating ecosystem transactions. For instance, providers such as Transfer in Mexico and Zuum in Brazil are offering apps for merchant and bill payments. These industry opportunities around smartphone apps have been under our radar since 2014, and going forward, we expect to see greater discussions on how to capture the opportunity and manage the risks.
The overall benefits that smartphone apps bring to the industry overshadow the potential challenges. Also, the future trend suggests that for users, apps are becoming a basic necessity, not just an additional access channel. Therefore, providers must continue to invest in app development with the aim of launching apps that are reliable, secure, and offer a great user experience.
In our next blog post in the series, we’ll look at the usage of mobile money services. Continue to follow us @gsmammu and join the conversation using #mobilemoney and #SOTIR2015.