A new MMU article on the relationships between banks and mobile operators

Posted: January 10th, 2011  |   viewed: (2,449)  |   Comments: ( 1 )  |  Topic: Blog Post, Insight, MNO - Bank Relationships  |  

Share: By Neil Davidson

Offering a mobile money service for the unbanked requires the participation of both a bank and a mobile operator. That means these two parties need to align on what parts of the mobile money value chain each will carry out, agree on a way of working with each other, and decide how to split the value that is created by the service. All this is easier said than done, however; around the world, banks and operators report that it can take up to a year to hammer out an agreement to work together to offer mobile money for the unbanked.

To shed some light on the issues that can complicate bank-operator relationships, the MMU team is today releasing a new article called “Mapping and Effectively Structuring Operator-Bank Relationships to Offer Mobile Money for the Unbanked.” The article is written not just for banks and operators that are in the process of forging agreements with each other; it has also been designed to be useful to operators and banks that are already working together to offer mobile financial services for the unbanked, providing ideas for how roles and relationship structures can be refined in order to promote cooperation.

In the first part of the report, we indentify the comparative advantages that banks and operators bring to mobile financial services. We then describe the mobile money value chain, taking an in-depth look at the activities that need to be performed. For each activity, we ask the question: given their unique strengths, is a bank or an operator best positioned to perform it—or is it best outsourced to a third party?

In the next section, we focus on the nuts and bolts of contracting between banks and operators, describing the range of arrangements that currently exist and documenting some emerging best practices. We also include a checklist of important considerations when banks and operators come together to negotiate, or re-negotiate, their working model.

Two case studies conclude the report. The first features Safaricom, which launched M-PESA with a very simple arrangement with Commercial Bank of Africa but which took a totally different approach when it came to developing M-KESHO, a bundle of more advanced financial services, with Equity Bank. The other is about Telenor Pakistan and Tameer Microfinance Bank, which have created a virtual organization to run the mobile money service called easypaisa.

Over the next few weeks, I’ll be posting a few reflections on the subject of operator-bank relationships on this blog. For now, though, we invite you to read the article and to share your thoughts on it, either in the comments section on this post or by e-mail to mmu@gsm.org

Mapping and Effective Structuring Operator-Bank Relationships to Offer Mobile Money for the Unbanked.