Mobile Money and Mobile Operators

While Mobile Money has been around for nearly 10 years, the industry is still fairly new. Most business cases I see are exploratory that are adverse to the risks of investing in new lines of business. For this reason I spend great deals of time guiding potential new market entrants on maturing their business case and aligning their vision with the realities of Mobile Money. But over the years the industry has seen several cowboy attempts to enter the market that due to a lack of market understanding or blind arrogance, drive themselves towards poor performance or failed businesses. Such examples are a continual burden on the industry as potential new entrants see these as examples of failures in Mobile Money, creating hesitation and nervousness.

I am not going to finger point at the businesses that have created these burdens, but know that Asia has several. These businesses have two common themes:
1. Re-applying Value Added Service models. Mobile Money is NOT ring tones. It is not a simple service a Mobile Operator plugs into the side of their business and is a huge success overnight. This is very similar to those eCommerce businesses that thought “built it and they will come.” VAS services are traditionally short-term focused as the industry goes from fad to fad. Mobile Money players need to understand that the service they are putting into the market is not a short-term play that can build critical mass through intermittent promotions. Mobile Money as a product is like banking, it takes a longer term commitment to slowly build a realistic customer base. In the Mobile Operator world this segment is usual identified by the low SAC (Subscriber Acquisition Cost) and low churn. Remember banking customers very rarely change their banking service provider, unlike Mobile Operator customers.
2. Blind Arrogance. After 10 years of industry development, there are some brilliant minds in the industry all willing to help guide businesses through the journey of establishing new services. Which I can tell you from experience, is a tough journey. Players need to be open to listening to the experiences of others such as Consultants, Established Business, Vendors and Industry Bodies. Too often have I seen companies say “We know what we’re doing,” when the reality is they have no one on staff that has done this before.
One example that is close to me has been the recent approach by Cambodia’s Number 1 Mobile Operator, who despite established competition in the market that all worked with industry regulators and advisory boards, launched a Mobile Money services without engaging the country’s banking regulator. Blindly assuming “We don’t think what we are doing is banking.” This comes after they were given financial assistance from the GSMA’s Mobile Money for the Unbanked Fund. A fund specifically targeted at assisting organizations get access to the appropriate support mechanisms and advice required to launch successful financial inclusion services. The Phnom Penh post has been covering the story:

As the articles point out, both the Cambodian’s Banking regulator and the GSMA are somewhat confused as to why an organization would take such an approach to launching a service when the country’s two prior Mobile Money launches were done with full co-operation with the regulator. Ex-WING CEO Brad Jones has also been quoted as welcoming healthy competition to Cambodian market. He saw competition as a means to creating broader acceptance of Mobile Money services and great for Cambodian’s large percentage of unbanked citizens.
The Phnom Penh post now suggests that the GSMA has indicated they will stop grant payments to the Mobile Operator until the situation is resolved. 

So will this be positive lesson learned, or another scar on the face of an industry still battling to establish its place in society? My hope is that the GSMA and other players can take this as a clear lesson in what not to do and seek the guidance of those that have a wealth of knowledge to share. Mobile Money stands to benefit so many in countries like Cambodia, let’s all work together to ensure its success.