Mobile Money Services - Design and Development …
Mobile Money Services - Design and Development for Financial Inclusion
Rajiv Lal Ishan Sachdev
Working Paper 15-083
Mobile Money Services - Design and Development for Financial Inclusion
Rajiv Lal
Harvard Business School
Ishan Sachdev
Harvard Business School
Working Paper 15-083
Copyright ? 2015 by Rajiv Lal and Ishan Sachdev Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author.
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Harvard Business School July, 2015
Professor Rajiv Lal, Stanley Roth, Sr. Professor of Retailing (rlal@hbs.edu) Ishan Sachdev, Research Associate (isachdev@mba2013.hbs.edu)
We would like to thank the many individuals who have provided feedback on this paper throughout its development, including Michael Joseph, Betty Mwangi, & Innocent Ephraim (Vodafone), Monica Brand
(Accion Frontier Investments Group), Matu Mugo (Central Bank of Kenya), Tarun Khanna (Harvard Business School), Michael Tarazi (CGAP), and Ignacio Mas. 1|P a g e
Table of Contents
1. Introduction .................................................................................................................................... 3 2. Structure of a Typical Mobile Money Service ................................................................................... 5 3. Key Competencies of a Successful Mobile Money Service ................................................................ 7 4. Key Decisions Facing Mobile Money Operators & Regulators ......................................................... 12
Regulatory Structure.......................................................................................................................... 13 Corporate Structure........................................................................................................................... 21 Business Model ................................................................................................................................. 23 Product Offering ................................................................................................................................ 28 Agent Network .................................................................................................................................. 34 Driving Adoption ............................................................................................................................... 38 5. Conclusion ..................................................................................................................................... 43 6. References..................................................................................................................................... 45
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1. Introduction
Mobile money services are being deployed rapidly across emerging markets as a key tool to further the goal of financial inclusion. Financial inclusion, the development of novel methods to enable individuals at the base of the pyramid to access formal financial services and become part of the formal financial system, is considered a key pre-requisite for lifting these populations out of poverty and for driving economic growth.
There have been some notable successes, such as Vodafone / Safaricom's M-Pesa in Kenya. Within five years of its launch, M-Pesa had 15 million customers, equivalent to 37.5% of the country's population, and was processing $10 billion annually. However, the success of mobile money services more broadly has been limited ? in its 2012 Mobile Money Adoption Survey of mobile money services in emerging markets targeting the unbanked, GSMA identified only 14 "sprinters," or those services which were scaling rapidly, out of the 150 total such services. Even replicating successful services in additional geographies has proven challenging, including efforts by Vodafone to take the M-Pesa model to other countries in which it operates, such as South Africa. In addition, mobile money operators do not seem to have, a-priori, a good sense for which factors will determine the ultimate success of a deployment. Yet, the pace of new deployments is only accelerating, and given these past results and the apparent challenge in learning from them, it is likely that many new deployments will also prove less than successful.
Therefore, in this research, we analyzed an array of mobile money deployments from across the emerging markets to attempt to understand which characteristics are critical for the success of a mobile money service, particularly at launch. Our research covered five successful mobile money deployments ? Telesom ZAAD in Somaliland, Dialog eZ Cash in Sri Lanka, Econet EcoCash in Zimbabwe, SMART Communications SMART Money in the Philippines, and Globe Telecom GCASH in the Philippines ? and five less successful deployments ? Vodacom M-Pesa in South Africa, MTN m-money in Uganda, Eko Financial Services in India, and the broader situations in Nigeria and Brazil.
We performed our analysis by reviewing existing primary research on these deployments, in order to understand how they were developed, structured, and implemented, and how those factors impacted their eventual success, or lack thereof. We then used our conclusions to develop a preliminary framework to help prospective mobile money operators with the design and development of a de-novo system. This framework lays out what we believe to be the key decisions mobile operators must make, and our perspectives on which paths will lead to the highest chance of success. [Note that our sources came primarily from the time period of 2011 to 2013 when detailed research on these services was done, so our conclusions are drawn from their state at those points in time. Although they might have evolved since, to the best of our knowledge any such changes don't impact the conclusions we reached, and we've added updates where significant structural changes have occurred.]
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