The mobile money industry has grown massively since MMU launched in 2009; back then, there were fewer than 20 mobile money deployments in the world, and today, there are more than 100. MMU has played an important role in identifying lessons and best practices, which we’ve shared via case studies, toolkits, handbooks, webinars, Working Groups and field visits. We’ve provided crucial support, both commercial and regulatory, to several mobile money deployments around the world.

Despite these developments, the full potential of mobile money for financial inclusion is yet to be realized, since most mobile money deployments which have launched are not yet operating sustainably and at scale. There are four main barriers that we see facing deployments today:-

• Operational hurdles – Several important mobile money best-practices have been identified but have not been consistently replicated throughout the industry. There is still work to be done on market segmentation, customer activation and agent network development before more mobile money deployments reach scale
• Regulatory barriers – In a number of markets, regulatory issues are limiting the commercial viability of deployments, such as onerous customer registration / KYC (“know your customer”) licensing requirements, e-money, agent regulation
• Inadequate investment – As margin pressures have been increasing on MNOs’ core business, the number of proof-points for mobile money as a profitable business is still too low; therefore, MNOs still perceive mobile money as risky relative to other investment areas, and often fail to allocate sufficient investment towards deployments
• Learning gaps – As a young industry, the mobile money sector still has a lot to learn, and there are still areas where best practices have not yet been defined, e.g. new product development, or how to interoperate more effectively among different ecosystem players

With the support of its donors, MMU will help the industry to respond to these challenges.  To help overcome operational hurdles, MMU will devote more resources to creating and extracting relevant lessons from mobile money deployments. MMU will use methods of sharing knowledge which have already worked well, while also trialling new ways to embed best practices across the industry. Building on from MMU’s recent publication about MNO-MNO interconnection, we will soon kick off new research to look at the technical and commercial feasibility of linkages between mobile payment platforms and financial institutions, or other potential “bulk users” of mobile payment platforms. MMU is also working on mobile money regulation, helping MNOs to engage with their financial regulators to create more enabling regulatory environments, as well as promoting the role of mobile money for financial inclusion among international standard setters.

With a strong legacy behind us, MMU stands on the cusp of a new phase, with new donor partners, a bigger team and more opportunities to engage more deeply with deployments. Since the start of this year, MMU has recruited two new MMU Managers, Lara Gilman and Phil Levin, as well as our new Regulatory Director, Simone di Castri. As we continue to grow the team, MMU will be able to work with more deployments in more markets, and have an even greater impact towards creating more sustainable, scaled mobile money deployments which serve the unbanked. These are indeed exciting times for MMU and for the industry, and we look forward to working with you, and sharing what we learn over the next three years.

We’ve had a superb first day at the 5^th MMU Working Group here in Kuala Lumpur. Here are some of the highlights from the presentations and discussions:-

Is there money in mobile money? Yes there is. MMU unveiled some of its latest research, drawing heavily on data sourced from MTN Uganda (one the grantees from the MMU Fund). The data shows that this mobile money deployment turned cash-flow positive on a month-to-month basis just 14 months after launch. Also, MTN Uganda’s experience has been that mobile money has had a dramatic effect on customer churn, and this has been a significant profit driver; the service has reduced customer churn from around 5% to as little as 0.2%. There will be a series of blog posts issued about mobile money profitability over the next fortnight, revealing more insights on this hot topic (the first of the series was posted here yesterday).

The importance of being … data driven. MMU’s work with grantees highlighted that many operators sometimes struggle to get hold of the right operational data to appropriately manage their deployment – and sometimes, the data that they track may actually hide some significant underlying issues . Getting the right management information reports set up, with appropriate drill-down, is essential for allowing operators to adequately monitor the health of a mobile money service and diagnose any issues. MMU has also developed a reporting framework, and has signed agreements with key vendors to incorporate these reports free of charge into their mobile money offering – more details on the reports, and the vendor agreements, will be available soon.

Typically, operators’ satisfaction level with their technology vendor is low … because expectations are too high? MMU shared its research into what operators look for in a technology partner, and how satisfied they have been with their engagement. The research showed that only 1 in 3 operators are satisfied with their technology vendor – the speed of implementation being the biggest driver for dissatisfaction. However, there was an interesting discussion around why this is – we’ll be posting more on this topic when we’re back in London

It took one bank, one operator, and one very strong shared vision to launch M-Kesho ….  Waceke Mbugua from Safaricom and John Staley from Equity Bank talked about their partnership which was created in order to offer the M-Kesho service. The partnership took a long time to set up, but one of the key success factors was that each CEO, from either side of the partnership, was committed to the vision of launching such a service. The partnership was developed in excruciating detail – and will be described as one of the case studies in MMU’s upcoming report on how to develop effective operator-bank relationships. Even the M-Kesho logo is a visual representation of how precise the balance is between the two parties in the deal.

KYC – how low can you go? The final session of the day explored KYC – explaining why it is important, and also describing ways that this can be done without creating a barrier towards financial inclusion. Maybelle Santos from SMART Money shared interesting insights from how they have developed and rolled out their KYC processes. In summary, close engagement with their regulator was essential; and certain barriers had to be overcome in order to comply, particularly in rural areas… such as the lack of photocopiers and also the fact that a customers’ eyesight can actually be a greater barrier than financial literacy itself (some of the barriers were simpler than others to overcome than others). This was followed by an interactive training session for operators.

Today was packed with content, and we’ll be sharing a series of posts over the coming weeks, which will go into more detail on these topics. In tomorrow’s session, one of the key themes will be how to successfully market mobile money. We will also be discussing bill payments, international remittances and e-money.

Also, MMU is tweeting live from the Working Group – so make sure you follow us on twitter (gsmammu) if you want to hear some of the key insights as they come up, wherever you are in the world. And keep an eye on the blog over the coming weeks for more in-depth accounts from some of the sessions.

When the MMU Programme was officially launched at MWC last year, the MMU message ringing through Barcelona was about opportunity and potential; we announced that there were 1 billion customers with access to a phone today, but no access to formal financial services… And that serving these customers presented a US$5 billion direct revenue opportunity for mobile network operators by 2012. As we announced the MMU Fund – set up to accelerate deployments around the world – all eyes darted around the room, eager to see where the next MPESA success story would spring from.

A year on, we’re still waiting for our next MPESA – such success stories don’t arrive overnight, but we have a clearer view of where the next one might come from, and most importantly, what it will take to make it happen. We’ve dug into the detail around a number of mobile money models, including True Money in Thailand and WING in Cambodia – we understand who their customers are, what the value proposition is and why they are set up in the way that they are (focusing particularly on why deviations from the MPESA model have been needed in these markets); we have a better understanding of the challenges that exist around mobile money, particularly in the area of agent networks and how to build, incentivise and manage mobile money distribution successfully; and we have allocated nearly all of the MMU Fund to projects which are going to contribute massively to our understanding of mobile money, through testing hypotheses around aspects of distribution, the provision of more sophisticated services such as savings and insurance, and how to acquire and activate customers.

So the focus of our Working Group will be to share these learnings with the industry – from our case studies, our ongoing research on agent networks, early insights across the Fund portfolio, and from key operators themselves such as Zain, Grameenphone, SMART and Roshan. We’re keen to hear your views and to gain further insights from you which will help to further enrich these learnings. The MMU team is very excited about Barcelona – we look forward to meeting many of you there, for what is sure to be an interesting, insightful (and exhausting!) few days.

“These and our previously announced MMU grants are being used to significantly accelerate acceptance and adoption of mobile money services for base of the pyramid customers globally,” said Gavin Krugel, Director GSMA. “The operators are working to reduce the infrastructure gap that exists in rural areas and are making mCommerce more accessible, convenient and affordable to customers.”

“Mobile money can change the lives of unbanked people for the better. Mobile money services bring genuine and immediate benefits, by helping people carry out the kind of daily transactions and remittances we take for granted, or by providing monetary tools to help improve a small business or even set one up. For most it will be the first time they have had a financial identity – this is a profound and positive change,” Eden Zoller, Principal Analyst, Ovum.

According to research, only 13 per cent of the population of Bangladesh has a bank account, which means that upwards of 130m people have no access to formal financial services. MMU funds have been awarded to two participants in Bangladesh, AKTEL (a joint venture company between Axiata Group Berhad of Malaysia and NTT DoCoMo, Japan) and Grameenphone Ltd. In November, AKTELwill launch a bill payment service (through mobile) for electricity subscribers, which has been awarded by the Bangladesh Power Development Board (BPDB) to AKTEL. Under the mCommerce initiative, AKTEL is introducing SMS and IVR based services with the aim of assisting financially constrained rural communities who wish to mobilise money in an easier and faster manner. Grameenphone aims to improve penetration of financial services to rural areas to enable migrant workers in urban locations to remit funds to their families based in those rural communities.

By reaching the underbanked, the unbanked and those financially handicapped by high interest rates from existing services, Grameenphone and AKTEL are enabling individuals to create financial identities which will benefit the whole community. With regulatory approval, the implementation of mobile money services will enable Bangladeshis to take advantage of more efficient, less time consuming and more secure new services and in the long run help alleviate poverty in Bangladesh.

Sri Lankan-based Dialog plans to introduce mCommerce services to the North and North-Central provinces of Sri Lanka. Dialog will focus on regions deficient in financial services infrastructure, and on initiatives to enhance people’s lives by providing a range of mCommerce services at affordable prices including utility bill payment, person-to-person money transfers, over-the-counter payments and cash withdrawal/deposits.

Less than 10 per cent of the working population of Cameroon has a bank account due to poor banking infrastructure and low penetration but also, as the majority of Camaroonians are self employed, they do not have the payslips that are required to open accounts. MTN’s MobileMoney service, which was created by partnering with a large microfinance network, will reach out to the farmers, workers and small entrepreneurs where money transfer can be used for peer to peer, account to cash and cash to cash payments. Subject to regulatory approval, MobileMoney will also be used to pay utility bills which can be received directly to mobile phones and payment made instantly.

According to research, 60 per cent of the Ugandan populace does not have access to any type of financial services and 71 per cent save in ‘secret’ places such as under the bed. MTN Uganda will help connect the 86 per cent of people who live and work in rural areas to banking services, paying particular interest to small-scale traders and those who buy and sell agricultural produce. MTN services highlight the simplicity and security of mobile money transfer, which will narrow the gap between rural and urban communities and enable merchants to use mobile money transfer to reduce transport costs and to help them to avoid being the target for opportunistic thieves.

Vodacom Tanzania has an established and growing M-PESA customer base, however lack of disposable cash on the part of the agent network is seen as a major obstacle to increase agent e-money float holding and hence transaction volumes. The MMU grant will support a project to enable Vodacom Tanzania to provide a geographically wider line of e-money credit or revolving credit to increase the total float holding value within the M-PESA agent network. This additional investment will see customer access and usage improve as entrepreneurs are empowered to invest in the M-PESA business opportunity and grow the agent network.

The AXIS mDUIT project is a greenfield deployment in Indonesia and is due to launch in December. AXIS has a significant opportunity to bank the unbanked via mobile in Indonesia as only 40 million of the country’s total population have bank accounts, whereas 90 million have mobile phone subscriptions. AXIS will offer a range of services to consumers via mobile, including payments, savings and credit.

In the proposed service, Brazilian operator Oi intends to provide individuals living in poor and remote communities access to basic banking services, encouraging development. The proposed service will allow individuals to receive welfare funds, make domestic remittances and buy products at participating merchants’ stores. A cash-out option is also being considered.

Building a distribution network that has the ability to grow and manage customers in a country at war is the main focus of Afghanistan operator Roshan. Currently 97% of Afghans are unable to access traditional banking services as 76% of Afghans reside outside major urban centres. M-Paisa will provide mobile money services to rural entrepreneurs, women, public and private institutions, and those in extreme poverty.

SMART Communications’ Island Activations Program in the Philippines, will benefit those on remote islands or inland locations who are isolated, have no or limited access to financial services and limited electricity. SMART aims to build remote economies through reaching the underbanked and unbanked and so enabling customers to send and receive domestic remittances, re-load e-wallets, pay bills or send money via the SMART Money Platform.

These are four of the eight projects that have been approved for funding to date. The others will be announced in due course. There is still time for operators to apply for a grant – either by contacting me sdesai@gsm.org or emailing mmufund@gsm.org.

I have spent the last few days at the GSMA Asia Pacific Conference, which took place in Shanghai, China. This event is run by a committee of operators who set the agenda, invite speakers and host the event. The Conference attracts over 300 attendees with strong operator representation from across the region. For the first time at this event, which has been traditionally focused on roaming and interconnectivity issues, approximately a third of the agenda was dedicated to mobile money. This is a strong indication that operator interest in this subject is starting to rise in the region.

At this event, I met operators who were able to tell me about their deployments in Thailand, Malaysia, China and Indonesia. There were also operators from countries such as Fiji, Nepal, Cambodia and Mongolia who also interested in mobile money. Here are a few key highlights from this event:

Operator in Thailand is using RFID technology for mobile money payments

True Money launched in Thailand three years ago, and is available to banked and unbanked customers. Customers can either link their bank account to their True Money account, or they can buy scratch cards to load money onto their phones (however, a cash out service is currently not permitted by the regulators). True Money customers can pay bills and purchase airtime via their phone, and they can also pay for goods and services in retail outlets by using an RFID device that sits next to their SIM card (which is called Touch SIM). I haven’t yet heard of such technology being used in any other country – Thailand seems to be the first. True Money currently claims about 5.6 million users of its e-Wallet service. The number is rising by about 100,000 new users every month and the company is aiming to reach 10 million users by the end of this year.

Operators are launching mobile money with both domestic and international remittance options 

Telkomsel in Indonesia and Celcom in Malaysia have both recently launched mobile money services and international remittance has been a key component of their business model from launch. There are large international migrant communities across Asia who need to send money home across borders – and mobile technology is being embraced to meet this need.

No country is too big or too small for there to be consumer needs for mobile money 

I spoke to operators from countries as large as China and as small as Fiji, all of whom saw mobile money as being a key commercial opportunity for them going forward

The key themes that were raised by operators in discussions about mobile money focused heavily on regulation and security (particularly around pros and cons of USSD versus SMS) – so these are clearly concerns and questions that are being raised more globally by operators. In addition to the key themes being similar, I was struck also by how keen operators across the region were to share knowledge and information about their deployments, so I hope that we shall be reporting more from these other countries in the near future.

Feel free to share your thoughts and perspectives on additional mobile money activity in Asia by posting a comment below.

I didn’t need the English translation to work out that this spells the latest acquisition of a mobile money solution by another technology provider. As its name suggests, Roamware has focused exclusively until now on roaming services, with over 60% market share and 382 operators as customers. The rationale for this acquisition was made very clear by Roamware’s CEO, Bobby Srinivasan: “the move into mobile banking and mCommerce is a natural extension for us as it leverages our customer relationships, business partnerships and technology innovation – banking for the unbanked is a massive market opportunity for Roamware. The Macalla acquisition brings us domain expertise and a proven platform that will enable us to take a leadership position in this emerging category”.

This market move, which demonstrates strong advocacy for the growth and profitability of mobile money for the unbanked, follows a stream of similar announcements this year by technology providers. In the last nine months, we have heard about Sybase 365′s acquisition of Paybox, Nokia’s investment in Obopay, as well as Fundamo’s partnership with Clickatell. And it would be prudent to expect more announcements to unfold as this market continues to develop.

As more and more operators are becoming interested in mobile money, it is encouraging to see that the largest technology players are anticipating and responding to their customer’s needs; which is great for the industry and ultimately the unbanked. Mobile money has rightly earned its place within the portfolios of many dominant players in the market – and this will pave the way for mobile money to arrive onto the handsets of even more unbanked customers around the world.