[Paul Makin] This is one of the most common areas of discussion in the world of mobile money: should financial regulators allow mobile money to be offered by new market entrants, typically mobile operators – or should they restrict it only to those established financial service operators, the banks? And then there are markets such as Nigeria, where anyone BUT a mobile operator can apply for a licence.

At Consult Hyperion, we do not have firm views on this question. Each operator type has its advantages and disadvantages:

Scheme Type



Mobile Operator-Led


Proven ability to develop and manage agent networks

Limited financial service discipline (processes, security, etc)

Tendency to pursue customer numbers at the expense of service quality or security


Financial service discipline: adherence to process, attention to security, etc.

Poor understanding of mobile phone infrastructure and process, leading to security issues

Poor understanding of agent acquisition and management

Limited understanding of the mobile money market and the typical customer’s needs



Potentially all of the above!


So, which is the best? Well, as the table suggests, ‘none of the above’ would appear to be the answer. Mobile operators are often refreshingly keen to deploy the new service as quickly as possible, and embrace the challenges with gusto, which can be a very effective approach when developing a new business. They also have a proven ability to develop networks of agents, and to manage them effectively once they’re in place, which is a key element of a successful mobile money service. But they often also have a culture that allows them to cut corners, particularly in following processes, which can lead to the undermining of elements of security.

In contrast, banks are naturally risk-averse, and will only launch a new service once it has been proven to be secure. This can be a strength, as it leads to a robust service, but it also has the potential to lead to a service that meets the bank’s needs, and not the customer’s. The unfamiliarity in dealing with networks of agents can lead to poor availability of agents and liquidity problems. And we are aware of a number of occasions when a bank’s lack of understanding of the normal operating procedures of mobile operators has resulted in apparently impossible (to the bank) frauds being perpetrated without any attack against the bank’s systems being necessary.

But conversely we would suggest that ANY of these can operate a mobile money network successfully, if they are prepared to take a dispassionate look at their weaknesses and address the issues that are uncovered.


  1. It’s a good summary, but I think you miss out on some of the disadvantages of both telco-led and bank-led models. Telco-led models are almost always closed-loop services, and bank-led models are no better if the bank is operating on a separate platform from their normal service and provides no interconnection to other banks. A third-party model can address these. And while a third-party model can be agile, they can also be hamstrung by having insufficient market power and footprint compared to either a bank or telco.
    The final conclusion is a good one – work out the weaknesses and then try to identify the best partner or strategy for addressing them.

  2. Very nice, short and to the points. Agrees the views on the strategy part. The hard part is that neither the Operator nor the Bank are team player when it come to controlling the ‘float’.

    I would just like to add one additional thought. The policy maker of who to give the full license for Mobile Money Operation should think of the long term growth and sustainability of the country’s economy and financial health than the speed at which the operation can be done. Bank clearly can’t start to issue SIM card and do communication business, which means banks can only be user of Operator’s services. Operator however, can start collection deposits (via Cahs In), and hands out loans (Micro finance), and certainly doing Banking business. What will happen to a country’s economy and society when both communication and financial control are in one entity’s hand then? Somehow, managing it separately is tough yet a must.

    I have heard that the boss of Operator may choose to open a bank, or the boss of the bank may choose to invest in an Operator. Either way, still is an attempt to gain total control over Communication and Finance. Regulators, if doing the job of what they are suppose to do, may need to carefully guard against such things happening to keep a check on power balance, yet allow certain level of cooperation, so that Citizens, Banks, and Operators can all win-win-win and country will have full financial inclusion…

    Just my personal opinion, a food for thought.

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