The Macro-economics of Mobile banking

It is well-documented that the introduction of the mobile phone created extensive shifts in the make-up of the macro-economic spending profiles. For instance in markets where mobile phones took off, beer sales and even clothes sales went down. This means that people actually diverted money from drinking to pay for communications.

If we assume that mobile banking initiatives will ultimately lead to huge financial success, we should be able to identify those sectors that would "loose-out" and which less money will be spent on. In other words, from which sector will money be reverted to pay for mobile banking? I would like to venture the following:

• Businesses that work with cash (printers of cash, cash distributors, etc.)
• Transport companies as people would not have to make trips that they otherwise would have had to do
• Expenses related to distribution (distribution of airtime, postal services etc.)
• Money remittance companies with big margins
• Banks (when they charge big fees)

It may be worthwhile to give this more thought, as this would be an indication what industry players may be apposed to mobile banking.

Apple iPhone caused the recession

I just had a good chat with my friend Falk and we agreed (after an intense discussion), that the Apple iPhone caused the recession. The user-interface of the iPhone is brilliant for music and other multi-media. Anyone that has one will agree on that, but it is impossible to read and (especially) write e-mails on this interface.

With the growing adoption of the iPhone more and more people reverted to responding to e-mails haphazardly and this led to the downturn in the economy.

...not all of my postings should be serious.

Some comments on the Obopay deal

So the Obopay, Nokia deal was announced this week and everybody with an interest in this space saw it. Nothing has been as big since the Firethorn deal. (see my blog about this). I have also written a blog some time ago comparing the differences between Firethorn and Obopay (see here), and have also highlighted the fact that Qualcomm now have shareholding in both.

This is all history now as Nokia has now emerged as a key player in the space, with a sizable shareholding in Obopay (we think) and a senior Nokia executive now on the board of Obopay. While we all applaud the deal as it raises the visibility of mobile banking (and set a new benchmark for valuations also...), a number of questions must be asked about the transaction?

1. On what basis was the valuation done? One needs to ask this question as it is probable that Obopay was valued in access of $200 million. Seeing that Obopay does not have much of a revenue history it is unlikely that the basis for the valuation was profitability.

2. What is it that Nokia would would want to do with this investment? I have difficulty reconciling this with their handset strategy. Whereas the Navtech deal made a lot of sense, controlling a niche financial services company will not do much. The last thing that clients want is a financial product that only works on one handset.

3. The dynamics of Obopay relative to banks with a telecommunications company as a major shareholder would become interesting. At the same time, mobile operators (while hugely dependant on handset makers) are not the best strategic friends of these companies. Does this mean that Obopay will now "go-it-alone"?

4. Last question: What does Obopay want to do in Africa? And maybe this is the key question and the reason for Nokia investing.

Great to ask these questions. Would be nice if we could also know the answers.

A day in the history

I stumbled on an old document on my hard drive that I wrote in 2001. It was named "Fundamo competitors". I found it interesting to see who I rated as the players then and to think what became ofthem. Below is a list of companies that I viewed as competitors in 2002:

• Arctic Website Hosting - I think they were acquired by some-one, but am not sure what happened to them
• Macalla - Neill and his partners are still going strong
• Mobile Magic from Finland - I don't know what happened to them
• Brokat - remember the big collapse, then the Ecorus story and then the purchase of the assets by First Data?
• Siemens - I think Siemens was re-selling Brokat solutions then (They also had a small stake in Brokat if I remember correctly)
• Cellpay - This is the Israel-based company, also known as Adamtech. They closed down.
• Trivnet - Still around. I think they are now doing well after some difficult years.
• Digital Rum - Diversified and now selling different products
• ACI - I am not sure if they ever were very active in the space, but I viewed them as competitor in 2001.
• Elata - Company based in England. I am not sure what happened to them
• Sicap - One of the first solutions based on USSD technology. I am also not sure what happened here
• Vallista - What happened to Vallista? I have not heard from them for some time now.

It would be interesting to learn more about the people that created these pioneering companies and what they do now.

Mobile Commerce: Pakistan

I recently attended mCommerce Pakistan held at the Marriot in Karachi on the 11 March. The event was organised well with a big audience and a lot of interest in the presentations. It was clear that the initiatives taken by the Central Bank to define the deployment of branchless banking have an impact in stimulating mobile banking initaitives.

Although the title of the conference indicated a much wider topic (mobile commerce - which typical should include advertising, LBS, mobile TV and entertainment and much more - see my recent blog), almost all the discussion and presentations focussed on mobile banking. This was of course very satisfying as I believe that mobile banking is fundamentally at the heart of mobile commerce.

The other factor that was very interesting for me, was the number of banks that were represented at the event. One usually see mobile operators and players in the telecommunication industry attend mobile Commerce events. Atthis conference many of the attendees (but also speakers) were from banks.

Defeating poverty

So why am I so passionate about mobile banking? I find the technology fascinating and the complexity of helping to set up a working eco-system will aways enthral me. Yet, I honestly believe that we can help to ultimately defeat poverty by means of mobile banking. And this is what really excites me.

What is it that mobile phones bring that can make this dream possible? It is immediate feedback. Mobile phones in the hand of a consumer is the only way that the system can give immediate feedback to some-one spending money. It is my opinion that a lack of financial skills (how to budget, how to control spending and how to save) sits at the heart of the poverty problem that we have on here on earth where we live. If we are not able to teach people these skills, we will always sit with the problem of poverty

By utilising the ubiquity of mobile phones it is possible to develop education mechanisms with immediate feedback that could teach people basic financial skills. In this way it may be conceivably possible that we ultimately defeat poverty.

Mobile banking is business in the US

In a recent report published by Synergistics some startling findings about the take-up of mobile banking for Small Businesses are made. (Read more here). While the size of the sample and the research methodology can probably have an impact in the interpretation of the results, this is a massive endorsement for mobile banking.

According to this research, large percentages of the sample reportedly use mobile devices for financial transactions. As much as two thirds doing some kind of banking transaction, whereas about 40% have reportedly used their device to do a money transfer transaction. (40%!!). If this is just partially true, this is a major revolution. I still remember people talking about the potential of mobile banking for small businesses in the US just one year ago.

Granted, some of the transactions are e-mail based. (This is what you get in a Blackberry dominated society). Something to blog about in future maybe: Can an e-mail channel on a Blackberry be utilised for mobile banking?

Mobile banking South America

I was recently challenged to write something about mobile banking in South America. It is impossible for me to keep up to date with all the initiatives globally (I sometimes have difficulty to keep track of all the mobile banking initiatives that we are busy with in Fundamo - this is now getting close to fifty!)

However, I have known about Yellow Pepper and their successes in South America for some time and I believe that they have earned the right to be mentioned on my blog. Serge and his team have carved a specific niche for their services in a number of South American countries (Equador, Gautemala, Panama, Columbia, Peru and Bolivia). Since the company was founded in 2004, they have successfully deployed solutions to predominatly banks. Their success model is built on delivering defined products quickly and to take away the complexity from their customers.

It is companies like Yellow Pepper (and many more in other countries too), that will create a mobile banking enabled world.

LUUP in a loop?

The LUUP public relations function has been quite busy during the last few days. We have been exposed to two very powerful (and somewhat conflicting) messages within days from each other:

• The first message started hitting the media during the early part of this week (read here). "LUUP is dumping customers" one heading read. We were all interested (and shocked) that LUUP has closed their operations in the UK, Germany and Norway and not gradually or in a calm way. No, the message was something like: You have a month to move your money. After that no more LUUP service.
  
• The the second message with a very positive spin: Deutche Bank is embarking on a massive project and have selected LUUP as their partner to do this. Congratulations! Phew, for a moment there we thought that LUUP was in difficulty.
  

Then I started wondering: why, if you have just closed this big deal with such a major bank, why then immediately (with obvious urgency) close down your own operations? And if you have to do that, why not wait a month or two before starting to do this? What could the reason be for this urgency? Did Deutche Bank demand this as part of the deal? Does LUUP have limited resources and must now get everyone to focus on the German opportunity? Or was this just bad PR planning? Why is it that Deutche Bank did not do this selection on a RFP basis? Did they consider other solution providers?

Or as one blogging site commented: ("LUUP no longer needs their customers"). We will probably never know.

MFS as a mCommerce category

In a recent e-mail from Mushinzimana , I was asked if mobile financial services (MFS) is a mCommerce application at the same level as mAdvertising, mEntertainment etc.

I promised that I would post some comment on this.

First of all, it is clear that MFS is a "m" play. The question then is if one could see payments and banking (in this context) as commerce and if MFS should be seen as a subset of mCommerce. In looking at the other categories of mCommerce, mPayments sits at the root of any commerce. It is impossible to think of "commerce" without payment.

In conclusion, I would have to say that MFS is not a mCommerce application, but rather the foundation, the basis of mCommerce.