Africa: Mobile Financial Services Business Models Evolve with Regulations, Consumer Needs and Economic Environment

Summary With other revenue sources declining, most mobile operators in Africa have launched a mobile money service. Adapted to local regulations, different business models are used to address the unbanked opportunity. But regulations are changing and operators find they need to offer more sophisticated banking services, so a collaborative business model is emerging. Convergence between banks and operators is already well under way in Africa. This report includes case studies of Orange in Cote dIvoire, Safaricom in Kenya and MTN in Uganda. Key Findings The mobile financial services (MFS) market presents a huge opportunity in Africa. Demand for MFS has gradually grown during recent years, and the services are generating significant revenue for mobile network operators (MNOs). Safaricom's revenue from M-Pesa has even exceeded that from SMS: in 2012 it reached KSh16.87bn ($199m). Operators have been developing bank partnerships and networks of distributors - agents - to address the MFS market. Different models compete with each other: some of them are aimed at customer acquisition, others at customer loyalty. Government regulation, however, is a major issue confronting operators in this market. MNOs continually have to adjust their business models in order to remain compliant with regulations and add more advanced banking services. What are the best strategies? This Insider presents case studies of Orange, Safaricom and MTN, examining how these different operators approach the mobile financial services opportunity. We conclude with some recommendations. Synopsis NA