The following interview with George Held, Group Marketing Director of Zain’s One Network, was originally published in the Q1 2009 MMU Quarterly Update. In the interview, George details his projections for customer adoption, the key elements of the launch strategy for Zap, and the importance of working with regulators. Since the February launch, 3,000 Zap outlets have been created across Kenya and (impressively) 200,000 customers have registered for the service, which represents about 8% of Zain’s subscriber base in the country.

Interview:

GSMA: Can you tell me a bit about Zap?
Held: On the technology side, Zap is a stored value account which is connected to financial institutions. So in addition to enabling people to transfer funds from one stored value account to another, customers have full access to their banking services. This is done in close partnership with Citibank and Standard Chartered Bank, who are our key financial partners in all countries in which we provide this service.

GSMA: How does Zain differ from previous or other offerings?
Held: Usually the services offered are mobile money system, and then converting it back out again); in many instances, agents register new customers too. Agents usually earn commissions for performing these services.They also often provide front-line customer service—such as teaching new users how to initiate transactions on their phone. Typically, agents will conduct other kinds of business in addition to mobile money. The kinds of individuals or businesses that can serve as agents will sometimes be limited by regulation, but small-scale traders, microfinance institutions, chain stores, and bank branches serve as agents in some markets. Some industry participants prefer the terms merchant or retailer to describe this person or business to avoid certain legal connotations of the term agent as it is used in other industries.'>agent supported solutions. They enable sending money from one individual to another. Zap offers more than money transfer – it’s also payments, bill payments, bank access – so it’s a much broader scope of customer facing functionality than anybody else in the market has offered to date.

GSMA: How optimistic are you about the growth potential for Zap?
Held: From the markets in which we’ve already commercially launched, the results are above even our most optimistic expectations. We are getting more customers on Zap than our normal activations, which is absolutely phenomenal. We’re expecting penetration levels after the first year of operations of 35% to 40% of our existing base.

GSMA: So after one year of operations, 35% to 40% of Zain’s mobile subscribers will be using Zap?
Held: Yes, and not just theoretically be using the service – but actually using it. There is a big difference.

GSMA: It sounds like Zap has been fairly well received so far and that you’re optimistic for the future. Let’s talk a bit about your launch strategy and what you believe to be key success factors. First, what type of research or consumer analysis drove product development of Zap?
Held: Product development and research are very important points. We’ve spent more money on market research during development of the product than on the technical solution. We’ve spent a huge amount of money with different research agencies making sure that our interface is simple and user friendly, that it works in all languages and that the subscription process is easy. At the same time, I would stress that we’ve been working very closely with the central banks to make sure that all KYC elements are properly integrated. It’s a very careful balance between KYC compliance and user friendliness of the service. We believe the balance that we struck here has contributed to our successful take-up.

GSMA: On the topic of central banks, if you could make one request to regulators, what would it be?
Held: To continue having an open mind, which the regulators we’ve been working with so far have had. To understand what this has done for the economies of the countries where services have been launched. So far the central banks have been supportive to us, and we hope that all new countries where we’re launching will be as open minded and forward looking as the central banks in countries where we’ve already launched.Actually, in some countries we’ve received a full permission from the central bank to launch the service. So it’s not just a letter of understanding – it’s a letter of ‘no objections’. We decided to take a proactive role and talk to central banks from the beginning together with our financial partners. This was key to getting support from central banks.

GSMA: When launching a new service, how valuable are short-term letters of understanding from central banks in the absence of full mobile money regulation which can take some time to develop?
Held: Actually, in some countries we’ve received a full permission from the central bank to launch the service. So it’s not just a letter of understanding – it’s a letter of ‘no objections’. We decided to take a proactive role and talk to central banks from the beginning together with our financial partners. This was key to getting support from central banks.

GSMA: How does your mobile market share – in other words, whether you’re a leader or second place – impact the strategy you use when launching in a country?
Held: It doesn’t. We believe all of our customers need the same access to services. We won’t ignore markets simply because we’re not a market leader. In our markets, we are a first or strong second player, so we are never really in the position of being a weak player. We are building one brand of Zain and believe customers in different markets should have the same experience and scope of offering.

GSMA: How important is product differentiation – specifically when launching in markets where there is a lot of competition?
Held: It’s impossible in this business to find a sustainable differentiator which no other player will be able to match. For example, our counterpart in Kenya, Safaricom, is as intelligent as we are technically and by way of infrastructure. To me, the name of the game is execution, go-to-market strategy and customer interface. It’s not about “do you have NFC; are you using RFID”. That’s not a sustainable differentiator. Market execution is the only sustainable differentiator.

GSMA: So what are the things that Zain has done right during your launch to ensure Zap succeeds?
Held: There are a few things. First, from the beginning we worked very closely with the central banks. To us this was very important because it ensured we avoided possible conflicts. We sought guidance from the Central Bank on how the service needed to be implemented. Central banks appreciated this approach. Second, we believe that user interface, simplicity and convenience have been key. And finally, execution of our go-to-market strategy has been important. Those are the three key elements.

GSMA: Can you tell me a bit more about execution of go-to-market?
Held: We don’t believe that a product like Zap can be introduced by a couple of billboards and TV ads. The name of the game is going to the streets in the caravans and explaining to people how the service works.

GSMA: What has Zain done beyond billboards and TV?
Held: During development, we spent more money on market research and clearly understanding customer needs than on technology to make sure our interface was built on customer requirements. During launch, and probably most importantly, we rolled up our sleeves and went to the remote villages to explain to people how Zap works.

GSMA: Thanks very much for your time, George.