Mobile Banking: Role of Network Operators
Mobile operators have a large role to play in expanding access to finance. In certain countries, allowing mobile operators to produce, market and sell their own transactional savings products has opened a path for extending basic financial services to the mass market in a way that traditional banks have not done.
Mobile operators have a comparative advantage in the creation of a mobile payments service from their core strengths in the following areas:
- Secure electronic transaction capture (“front-end”) capability
- Network of physical retail outlets
- Transaction processing (“back-end”) platform
- Marketing and sales
The business case for operators to offer mobile payment services directly is based on four main advantages:
- Additional revenues from bearer and transaction charges
- Churn (or customer turnover) reduction
- Brand positioning based on service creation and innovation
- Distribution cost reduction
The role that mobile operators play in mobile banking go from one extreme to the other, from simply offering secure communications services, to mobile wallet services, to account hosting services, and finally to acting as the account issuer, becoming a (authorized or de-facto) financial institution.
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