Are relationships between banks and operators to offer mobile money for the unbanked real partnerships?
Posted: January 19th, 2011 | viewed: (1,491) | Comments: ( 0 ) | Topic: Blog Post, MNO - Bank Relationships |
At the 2010 Leadership Forum for mobile network operators and financial regulators in Rio de Janeiro, one attendee made a provocative suggestion during a discussion about operator-bank partnerships: “The premise of partnership is a premise. A bank could just be a service provider… and that may be the role in which they’re most comfortable.”
Take, for example, Commercial Bank of Africa (CBA), which is the institution which held the combined value of all agent and customer accounts for Safaricom’s M-PESA, the most famous mobile money service in the world. For CBA, the M-PESA float account is simply a deposit account—albeit a high-transaction-volume one, on which it earns very significant transactional revenues. In this case, the operator-bank relationship is simple—CBA provides a service to Safaricom—and consequently straightforward to manage….
Alternatively, an operator can be a service provider to a bank or a third party that carries out bulk of the activities required to offer mobile money for the unbanked. An example from this end of the spectrum is WIZZIT, a mobile money service in South Africa. WIZZIT contracts with mobile operators to use make use of the USSD channel so that customers can initiate transactions on their handsets, but it carries out the other activities in the mobile money value chain itself.
Of course, more complicated partnerships arrangements can be devised. We conclude “Mapping and Effectively Structuring Operator-Bank Relationships to Offer Mobile Money for the Unbanked” with a case study on easypaisa, a mobile money service in Pakistan that is run by a virtual organization composed of staff from and Tameer Microfinance Bank and Telenor Pakistan (which owns a majority stake in Tameer). Carefully allocating segments of the mobile money value chain between Tameer and Telenor has allowed both institutions to play to their strengths.
But contracting across firms can be time consuming, particularly when hammering out new kinds of commercial arrangements, and it introduces coordination costs. That’s one reason why some operators opt to own the bulk of the mobile money value chain themselves, and contract with banks only to perform those functions they cannot themselves (such as float holding). Whether or not this kind of relationship should be called a partnership is a semantic question. But it exposes a real tension between a desire to fully leverage the assets and capabilities of a bank on the one hand—which would require a complex agreement and might be prone to stresses—and a desire for control and/or simplicity.
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