Our recent research on the future of agent networks explored how the composition, structure, ownership and business models of agent distribution networks are changing. Even with these changes, mostly driven by technology, we did not see any evidence that the importance of agent distribution networks for mobile money providers’ business will diminish any time soon. On the contrary, agent distribution networks will continue to support the infrastructure in order to build trust and increase usage of mobile money services.
In Mobile money profitability: A digital ecosystem to drive healthy margins, we determined that mobile money can be profitable, but requires significant ongoing investment in operational expenditures to achieve this. At the same time, we found that users need to embrace more digital transactions over cash, and to regularly use a variety of mobile money services in order to guarantee profitability for the provider. That said, the development of digital ecosystems reduces the need for agents to perform activities such as customer registration, education, support and cash/e-value transactions.
Bringing a mobile money digital ecosystem to maturity requires patience, money and tact. Until there is a critical mass of opportunities for customers to use digital value, they are unlikely to hold it on an ongoing basis. And, until a sufficient number of customers choose to hold digital value, players in the ecosystem are unlikely to accept digital payment. In addition, many consumers still prefer human touch – particularly those who are illiterate and/or innumerate. More users in the developing world continue to depend on agent assistance to complete their transactions, enabling them to verify legitimacy, to learn about the product and to get assistance in resolving service issues. As a result, providers will need to retain, enhance and refine their agent networks to provide a reliable and trustworthy service to their customers.
Furthermore, providers will need to ensure their business models and technology innovations also address the growing importance of agent loyalty. There is need to cushion the pressures that agents face – from licensing, taxation, and the need to continuously grow margins – while remaining focused on the providers’ core business and external pressures from competition. Agents therefore need to feel that their providers are committed to keeping them profitable and relevant in the future. Otherwise, they quickly seek out new transaction mixes that can guarantee this. Agent loyalty thus remains a critical ingredient to driving activity and ensuring superior services for customers.
Our research also reveals that the growing range of innovations around business models and technology can help providers to manage more cost-effective agent distribution networks, not only meeting their customers’ needs, but also growing the providers’ brand visibility. Providers in different countries are beginning to empower agent networks for a wider range of functions including product sales, e-commerce and customer service.
Providers can take advantage of the opportunities at their disposal to transform their agent networks, thus reducing costs and increasing agents’ margins and overall business revenue. This will guarantee increased efficiency in operations, as well as customer stickiness. As agent network managers in some markets are improving the key functions of agent on-boarding, agent training, liquidity management and agent monitoring, these innovations will re-shape agent network management across the globe to stay ahead of the rapidly emerging competition.