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Asia-Pacific Telecom Insider / Vol. 3, No 1, Edition 4 - Up to 2.3 Billion Mobile Finance Users in APAC by 2015
Pyramid Research, Inc, April 2011, Pages: 16
In recent years most technology-focused discussion in the Asia-Pacific mobile industry has centered on 3G deployments in emerging markets and evolution to LTE in developed markets. On the services side, to the main topic of discussion is how to increase data usage to offset the declining voice revenue per subscriber. Nevertheless, no one in the industry can ignore the fact the rising importance of mobile finance (mFinance) and its impact on the industry, especially after seeing the accomplishments of Safaricom's M-Pesa in Kenya. While M-Pesais regarded by some as the most successful mFinance service in Africa, if not the world, both GCASH from Globe Telecom and Smart Money from Smart Communications in the Philippines are setting the stage for mFinance's acceleration in the Asia-Pacific region.
MFinance will play a vital role in transforming how monetary transactions in the Asia-Pacific region take place in the future, bringing banking services to the palm of people's hands and replacing cash payments with the use of handsets. Although most people might still feel more secure using money in its physical form, the convenience of digital money is now breaking boundaries and changing how people behave when making monetary transactions.
People in emerging markets around the world are not only deprived of access to physical banks, but they also lack the certified documents to open a bank account. MFinance acts as an agent to close the gap between the service and the users, and converts the mobile phone into a financial institution. On the other hand, in developed markets where banking outlets are within close proximity of both residential and financial districts, mFinance's role is to replace the wallet by merging the functions of cash and credit cards into a single instrument.
In the Asia-Pacific region, mFinance involves services like mobile top-up, minutes transfer, remittances, and merchant payments. Most of the activities are geared more heavily to the emerging Asia-Pacific markets rather than developed markets. However, the demand for mFinance still exists in developed markets in the form of online shopping and online banking, which more and more users are relying on instead of driving to retail and banking locations. Through business process innovation, regulatory setup and consumer education, opportunities for mFinance in developed markets can be tremendous. Similarly for emerging markets, as mobile networks improve and 3G/smartphone device penetration increases, we can see mFinance extend out from simple banking services and move more into the realm of mobile commerce (mCommerce).
While demand side drivers for these services are clear and well-researched, the rationale for mobile operators entering into these new service offerings is sometimes less clear, especially given the wide range of mFinance offerings that are being launched across the region. We believe mFinance will help operators to reinforce and improve their market position, whether markets are developing or developed. While market maturity will influence the types of services offered to end users, increased customer loyalty, retention and additional revenue streams will be created by operators in both developed and less developed environments. Regardless of market maturity, the familiarity with platforms and convenience of execution are the key drivers behind uptake, and we believe that the mFinance area will act as development catalyst to the whole Asia-Pacific region over the next five years. With the resulting introduction of innovative business models, partnerships and best practices, mFinance will become a service that will forever change the region's financial behavior.
This report will outline the existing mFinance services in Asia-Pacific, with a focus on insights in emerging markets rather than in developed markets. We will then examine the market dynamics in the region to understand the potential mFinance has to meet the demand of the considerably underserved population. The report will conclude with two case studies from the advanced and emerging markets in the region where mFinance has gained traction,as well as a discussion of the initiatives operators have taken to promote mFinance services.
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