Orange’s recent announcement of their Iko Pesa service in Kenya is interesting on three accounts:

  • It demonstrates how mobile money service providers can differentiate their service in a crowded market with a dominant player.
  • It highlights the most profitable market sector for mobile money services, namely the employed rather than poor, and the main benefit of such service to retail banks, namely a low cost channel for servicing existing customers.
  • It negates the argument about who is the dominant partner in the delivery of such services, the bank or the MNO. As the “Sixpack” consortium in the Netherlands has already recognised, the future of mobile payment services lies within joint ventures between one or more MNOs, Retail Banks and possibly the organisation operating the mobile money or TSM platform. Each party brings its own strengths and relationships to the business. Few services launched by only of these parties will succeed; anecdotal evidence suggests that lots of the mobile money platforms purchased by mobile operators are under-utilised and in some cases dormant.

So does this mean that there is an opportunity for banks to provide white label mobile banking and payment services to a number of local mobile operators? Equity Bank obviously think so as they are currently supporting competitive mobile banking solutions offered by Orange Kenya and Safaricom.

Thus the really interesting story behind Orange’s announcement is how long will it take retail banks to realise, and leverage, their strength in the mobile payment value chain, rather than focus on extending their brand into markets where they are not trusted or valued by the target consumer. This I believe is an argument between the Financial Director and Brand Marketing and will move the industry on from “top of wallet” to “behind the wallet” .

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers

 

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