MTN Mobile Money Opened APIs – Was It Worth It?

Is opening APIs worthwhile for digital financial services providers? For MTN Group’s Cedric N’guessan and Elsa Muzzolini, the answer is a resounding “yes.” In short, open APIs have enabled more partners to leverage MTN’s payment capabilities and to do so at a lower cost to MTN and its partners. Further, open APIs are generating revenue for MTN while delivering a broader range of use cases for customers.

Why did MTN open APIs?

In 2018, MTN faced a challenge: it was a mature mobile money business with 21 million active users of its mobile money service, MoMo, but it also had ambitious plans to grow to 60 million active customers within three to four years.

“We realized that business as usual would not achieve the type of growth we were after and began to think outside the box,” said Elsa Muzzolini, MTN Nigeria General Manager MFS Commercial.

In most markets, MTN had already integrated with larger third parties, such as banks, insurers and large bill issuers, to create more use cases for MoMo and grow its customer base. These integrations had contributed to growth, but MTN believed customers were ready for more advanced use cases and even starting to demand them. However, completing integrations on a wider scale to enable these use cases was too time and resource intensive for MTN and third parties.

“In our journey to transiting from a product to a platform, we took the view that it is only by enabling a large ecosystem of partners that we could accelerate the digitization of more payment use cases through our platform. By empowering our partners, we can make our platform ubiquitous for both consumers and businesses,” said Cedric N’guessan, MTN Group Executive - Group Head of Digital & Fintech Business Development.

Open APIs presented another, potentially more cost-effective way for MTN to make its services available to third parties. Ultimately, the company decided to launch an open API program to:

1. Digitize and speed up partner onboarding and activation processes at a lower cost to partners and MTN
2. Enable more partners to leverage MTN's assets and capabilities
3. Provide more relevant services to customers, reaching more customers and increasing transactions per customer
4. Increase revenue from the MoMo business

How did MTN know it was ready to open APIs?

Once the decision was made to pursue an open API strategy, a number of questions remained:

• Which market was ready for APIs? MTN had already integrated with larger enterprises. Its priority for open APIs was to reach smaller businesses. Ideally, it wanted to launch in a market with plenty of early-stage innovators and an enabling ecosystem of other actors (funders, accelerators, innovation hubs, etc.) that could help these small businesses understand how to take advantage of APIs. MTN decided to launch in Uganda. It supported the growing innovation ecosystem there by hiring a local developer to provide in-person training and by working with local universities to train developers on the use of APIs.
   
• Did MTN have the people and skills for open APIs? MTN was confident in the ability of its people to adapt to the needs of running an API business, both at a group and country level. However, it acknowledged it would need new team members when the API business matured. For example, areas like community engagement and API product management require new skills.
   
• Did it have the technology for open APIs? MTN outsourced most of its technology. Critically, this arrangement aimed to minimize the gap between the business needs and the technology, ensuring the technology team focused on meeting specific businesses needs and driving revenue.
   
• Did it have executive buy-in? The team took a lean approach that allowed it to deliver value for the business and its partners early on through a minimum viable product that didn’t require heavy up-front investments. The limited upfront investment helped with getting C-level buy-in, but there was still pressure to deliver. Ultimately, the approach kept executives happy with progress and enabled MTN to gradually improve its offering.

"Start small and make sure to add value to the business early. That is the best way to secure additional resources to invest in improving and growing the API business. Most importantly, keep it simple."

Cedric N'guessan, MTN

What do the numbers say?

In November 2018, MTN MoMo launched its open API program in Uganda. By May 2021, the program was live across 12 African countries. Over 15,600 registered users were experimenting with the open APIs in MTN’s sandbox, and more than 900 partners were live in production with new services. These included solutions in pay-as-you-learn low-cost school network, pay-as-you-go solar, cross-border remittances, e-commerce, insurance, agricultural technology companies, crowdfunding, bike-hailing, savings, credit cooperatives and more.

As these new API-enabled services began to emerge, MTN saw impressive growth in open API usage. In January 2020, 14 months after the launch of its API program, there were 3 million successful API calls (i.e., instances of third-party apps using the APIs). Most API calls were done to collect payments or facilitate disbursements and remittances. By August 2021, the number of successful API calls had jumped to over 50 million.

MTN has kept pricing simple. The APIs are free, but the company earns revenue from fees on the underlying transactions. With COVID-19 and other variables at play, it is hard to separate out the API program’s impact on transactions per customer. However, as the growth in API call volumes demonstrates, the emergence of more use cases has increased MTN’s overall transaction volumes and translated into more revenue.

You may be wondering about the cost-benefit analysis – was it worth the effort? Again, Muzzolini and N’guessan’s answer is a resounding “yes.” There are a few reasons why.

First, the team adopted a lean startup-type approach to its open APIs program. It did not wait until it had everything figured out to start developing APIs. It started with a minimum viable product, moved quickly and tested the product with developers early on. It improved its offering iteratively, asking senior management for more significant resource allocation only as the open APIs were gaining traction in the market. The rapidly growing take-up of MTN’s APIs ensured there was sufficient upside to cover initial investment and justify additional resources.

Second, MTN MoMo limited upfront investment and risk by outsourcing the technology requirements to its existing technology provider and structuring a deal to share revenue. This effectively converted potential CapEx into OpEx and allowed the team to test demand for its APIs without the need for prohibitively high upfront investment.

What’s next?

MTN’s MoMo team will continue to listen to its users with a view to improving their user experience. It also has plans to share a number of its other capabilities with third parties via APIs to further fuel innovation. This could range from MoMo’s app and USSD channel to its KYC, notification and authentication capabilities.

For CGAP, this blog post wraps up a dedicated four-year API program. We have many lessons for those considering getting started with open APIs. For us, having worked on this program since its inception, the requirements to open APIs are similar to those for any other innovative product. Beyond whether there is demand for the product, the ingredients for success include the right people, access to the right technology capabilities, the ability to adapt as you learn, the willingness to take risk, and commitment from the executive team.

When asked for advice for others embarking on this journey, N’guessan noted: “Focus on solving a business challenge. The technology can become a distraction. Start small and make sure to add value to the business early. That is the best way to secure additional resources to invest in improving and growing the API business. Most importantly, keep it simple.”

This post wraps up CGAP's four-year research program on open APIs in digital finance. Visit our collection of resources on open APIs to learn more about the learnings from this program. It includes FAQs about open APIs, case studies on financial services providers that have opened APIs, and a suite of practical resources designed to help other providers get started on their own API journeys.