On February, as a part of the ICT Learning Days at the World Bank, Sonja Oestmann, the Director of Consulting and Partner of Intelecon, presented the findings from a report commissioned by the International Finance Corporation (IFC) about mobile money. Entitled “Mobile Money Study 2011,” the reports focused on the mobile money markets in four countries – Nigeria, Thailand, Sri Lanka, and Brazil.

The IFC has committed to further expanding financial inclusion by 2013 and see the potential in mobile money to help reach this goal. But while it has been successful in some countries, it has yet to take off in others. By focusing on vastly different countries in terms of region, socio-economic conditions, and financial infrastructure, the focus of the report was to show the different ways in which mobile money can be used as well as the business models that make them sustainable. It also used Kenya and Japan as examples of countries in which mobile money has succeeded.

 

Framework

The report included a framework to assess the sustainable viability of mobile money in a country as well as the most appropriate business model to utilize. This includes the partnership strategy, the necessary regulation environment, and the development tracks of mobile money products and services. By creating a structure of the market research that must be conducted, the report is aimed at providing this knowledge to regulators, mobile network operators, commercial banks, microfinance institutions, telecommunications manufacturers, and all others interested in expanding mobile money opportunities.

 

User Demand

The report also examined where the user demand of mobile money is based on the major money flows within each country. Based on these flows, the report listed the following as potential areas of demand:

• Government-to-person (G2P) payments
• P2P transfers
• Payroll payments from small companies in the informal sector
• Public transport payments
• Bill payments to major utilities (e.g., electricity and water), postpaid mobile accounts, fixed phone subscribers, pay TV (cable and/or satellite)
• Retail payments
• Business-to-business (B2B) payments
• Credit and microfinance
• International remittances
• Savings

 

Survey Findings

Surveys were conducted in order to further understand how and why individuals were using (or not using) mobile money in the four countries. One of the more interesting findings from the survey is the ability of marketing to increase the adoption of mobile money. Individuals using the service became aware of it directly from either the bank or the MNO. But the nonusers heard about the service indirectly from mass media. The conclusion in the report is that increasing adoption could be done more effectively through direct marketing with a personal touch. Another interesting finding is the state of the formal financial services effect on the perceived value of mobile money. In countries where the financial services sector is less extensive, mobile money is seen has a cheaper and faster alternative. But in countries with a strong financial services sector, cost and speed were not as important. Its perceived value was seen as an increased convenience.

 

Conclusions of Studies

The main conclusion from the report was that the value proposition for mobile money depends on the existing financial service infrastructure. When financial services are unavailable to a larger population, there is a higher demand for fast and cheap money transactions. But as the services improve, partnerships between banks and MNOs increase in significance. At the same time, the demand for mobile banking decreases as other e-payment services become competitors. In countries with an established and advance financial services sector, the demand for new services is based on performing at higher speeds, with greater frequency, and increased convenience.