• Thursday, November 30, 2023
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Mobile money: are we on the highway or the byway?


Undoubtedly, the mobile revolution is here to stay. The adoption of mobile devices remains strong and it is expected to remain on the upward trend. Globally, the number of smartphones being shipped out has surpassed personal computers (PCs) and many companies are adopting mobile devices for enterprise-wide use.

The revolution and proliferation of mobile devices and the proliferation of innovative technologies such as Near-Field Communication (NFC), also known as tap-and-pay, which enables contactless transactions, including some mobile payments, opens up opportunities for the creation of the mobile marketplace without boundaries. The businesses that will succeed in the future will be those that are able to tap into this growing mobile marketplace irrespective of their traditional industries – banking, insurance, fast moving consumer goods, retail, pharmaceuticals, etc – and are able to convince their customers of the value and rewards of the mobile marketplace. Most of the world’s leading companies such as Google, Facebook, etc are investing heavily in the mobile marketplace, betting on this for future growth and success.

Mobile commerce (mCommerce) is clearly the next frontier – $3.3 billion was spent on global mobile advertising in 2011 and this is predicted to rise by 524 percent in 2015. A recent report by IDC Financial Insights predicted that the global value of proximity payments, both Near Field Communication (NFC or tap-and-pay) and mobile bar code transactions, will reach $296 billion by 2017. Paypal announced that it expected to process $7 billion in mobile payments in 2012, almost double the $4 billion recorded in 2011.

In Nigeria, mCommerce has the potential to create a latent market as well as be a trigger of transformation for Nigeria. In the financial services industry, the recent licensing of over 20 mobile payments service providers not only heralded the coming of age of the Nigerian financial services industry but also raised expectations of the potential transformation of the financial services industry landscape, closely linked to the achievement of the industry regulator’s Financial Inclusion drive in Nigeria. However, many of the mobile payments operators have since launched their businesses in Lagos, focusing on the banked population, and somewhat fixated with technology and infrastructure deployment. This creates an obvious vacuum in terms of innovation and customer value creation; hence, the adoption and uptake of mobile payments in Nigeria continues to be disappointing. The mobile payments offerings are mostly commoditised and there is no real differentiation between the players and their offerings to the customer, in terms of real value.

In addition, thus far in Nigeria, the definition of mobile payments has remained narrow, mostly limited to mobile money in terms of person-to-person (p2p) payments, which restricts the potential of the mobile marketplace. The definition of mobile payments should be broad enough to capture payments and mobility access to include business-to-business (b2b), business-to-consumer (b2c), business-to-employee (b2e), and machine-to-machine (m2m).

In reality, mobile money is just a product/offering within the mobile commerce spectrum offering various products and incentives to different market segments. For the more sophisticated market segments, ultra-convenience and multi-channel integration is the main objective. The consumer is able to transact across multiple channels based on preference and circumstance. For example, the customer starts a transaction via mobile and completes the transaction via internet, bank branch, ATM or vice versa.

For the mass market, where financial inclusion is also an objective, there are four key considerations or value drivers for customers, namely: ubiquity (readily available, anywhere and anytime); accessibility (capable of being reached and utilised easily); acceptability (exchangeable value based on awareness and comfort/trust levels); and convertibility (into units of currency/cash and into other goods and services).

So while there seems to be a lot of preoccupation on technology and infrastructure build-out, consumers may be more concerned with what the clear value proposition of using their phones to make payments is, the level of privacy and security of these transactions as well as with several other considerations outlined above.

While technology and infrastructure are important, undue focus and pre-occupation with them will not deliver the exponential growth we do so need; if anything, it takes away from it with the fragmented industry structure with fairly large number of players and high cost of business set-up as a result of duplication of investments in technology and infrastructure. The real winners will be players that are able to differentiate themselves from the competition, create innovative products, expand the definition of mobile money beyond person-to-person payments and funds transfer to value-added offerings to existing customers to drive usage; executing flawlessly with a lean business model. In addition, the winners will be able to address the needs of both existing users and non-users who may require incentives/rewards or other value-added propositions that will drive adoption and uptake.

This paradigm shift will go a long way to create a truly thriving mobile marketplace with differentiation in the marketplace that will revolutionise the Nigerian mobile marketplace. Till then, we may just remain on the byway.  


Bankole-Olusina is senior manager, head, Finance and Performance Management Service Line, Accenture Nigeria.

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