Mobile Money in Emerging Markets - 2nd Edition

Introduction

Abstract

Executive summary

Mobile money is causing a significant transformation in how banked and previously unbanked people in emerging markets are conducting their financial activities. These services play a central role in extending the reach of formal financial services to the unbanked and financially underserved populations in emerging economies. Furthermore, the mobile phone is the first self-service banking channel for a substantial share of the already banked individuals. In some countries mobile money services have already matured to the extent that significant business opportunities are emerging for companies from adjacent industries, such as insurance providers and merchant acquirers.

The number of registered mobile money accounts in emerging markets is forecasted to grow from 323 million in 2011 at a compound annual growth rate (CAGR) of 25 percent to reach 1.24 billion by 2017. Approximately 225 million of the registered accounts in 2011 were in Asia-Pacific and Chinese banks alone accounted for approximately 150 million of these. Around 97 million accounts of the total have been registered through mobile-centric branchless banking initiatives such as M-PESA. The concept has thus far been most successful in Africa, where 81 percent of all mobile money accounts have been registered through a mobile-centric branchless banking service.

The number of active mobile money users in emerging markets is forecasted to grow from 61 million in 2011 at a CAGR of 36 percent to reach 381 million by 2017. Active users are defined as individuals who have used the mobile money account during the past three months to make a payment, send money or receive money. The growth in activity levels and the number of users is resulting in a rapid increase of transaction volumes. The total value of mobile money transactions in emerging markets reached US$ 44 billion in 2011 and is projected to grow at a CAGR of 44 percent to reach US$_395 billion in 2017. In 2011, Mobile money transactions in Africa stood for 63 percent of the total value and Kenya alone accounted for US$ 13.2 billion.

The majority of mobile money services that target the unbanked have thus far been launched by mobile operators such as MTN Group, Bharti Airtel, Orange, Tigo, Digicel, Vodafone, Safaricom, Globe Telecom and Smart Communications. However, the level of interest from financial institutions has grown rapidly during the past year. Financial institutions that already have launched mobile-centric branchless banking services include several international groups and large domestic players such as Standard Bank, Barclays Bank, Dutch-Bangla Bank, BRAC Bank, GTBank and UBL. A range of new start-ups and other providers have also launched mobile money services. These companies include Celpay, MobiCash, Cellular Systems International, Movilway and M Service.

The fourteen leading mobile money platform vendors have today an installed base of 307 mobile money deployments, of which 141 have been installed at financial institutions, 135 at mobile operators and 31 at other organisations. The six largest vendors serving mobile operators have provided the platforms for more than two thirds of the installations showing a relatively consolidated market. The vendor landscape that serves financial institutions is in contrast highly fragmented. Market conditions are also changing as large corporations such as Visa, SAP, Temenos, Infosys, Ericsson, Gemalto and Oberthur Technologies recently have entered the mobile money platform market. Several of these vendors are leveraging assets from adjacent businesses to create new types of value propositions, which can lead to a shift in the competitive dynamics.

The evolution of mobile money ecosystems in emerging markets is also driving the share of international money transfers that are sent to mobile money accounts. Berg Insight estimates that remittances sent to mobile money accounts will grow at a CAGR of 55 percent from US$_850 million in 2011 to US$ 12 billion in 2017. In addition to money, value is also being transferred in the form of prepaid airtime. The value of airtime sent internationally has more than doubled year-on-year in the past years and is on track to double again in 2012. Berg Insight forecasts that the total value of international airtime transfers will grow

Table of Contents

Table of Contents

Table of Contents

List of Figures

Executive summary

1 Mobile money in emerging markets

• 1.1 The opportunity for mobile money
  • 1.1.1 The unparalleled reach of mobile phones
  • 1.1.2 Extending the reach of formal financial services
  • 1.1.3 Serving banked consumers better and more efficiently
  • 1.1.4 Mobile money and branchless banking
• 1.2 Mobile money services
  • 1.2.1 Basic services and partnership-enabled services
  • 1.2.2 Advanced mobile financial products and microinsurances
  • 1.2.3 Mobile payments at merchants
• 1.3 The main challenges
  • 1.3.1 Creating a value proposition and driving usage
  • 1.3.2 Building, incentivising and managing agent networks

2 Mobile money service providers

• 2.1 The value of a mobile money system
  • 2.1.1 Value components
  • 2.1.2 Network effects
  • 2.1.3 Orchestrating the evolution of an ecosystem
• 2.2 Service providers
  • 2.2.1 Deployments launched by service provider category
  • 2.2.2 Mobile operators
  • 2.2.3 Financial institutions
  • 2.2.4 Third party service providers
• 2.3 Deployment statistics
  • 2.3.1 Deployments launched by region
  • 2.3.2 Registered mobile money users
  • 2.3.3 Active mobile money users
  • 2.3.4 Mobile money transactions
• 2.4 Case studies
  • 2.4.1 Financial institutions lead mobile money in South Africa
  • 2.4.2 The growth of mobile money in Kenya
  • 2.4.3 Celpay finds early mobile money success in B2B services
  • 2.4.4 MTN Group views mobile money as a key strategic area for future growth
  • 2.4.5 Kopo Kopo enters the emerging merchant acquirer market in Africa
  • 2.4.6 Tigo succeeds with mobile money in Paraguay after re-launch
  • 2.4.7 India reaches 36 million registered mobile money accounts
  • 2.4.8 Movilway targets mobile money opportunities in Latin America

3 Mobile money platform providers

• 3.1 The platform for mobile money services
  • 3.1.1 Technical overview of a mobile money platform
  • 3.1.2 Requirements from service providers
• 3.2 Market overview
  • 3.2.1 Leading technology vendors by target customer group
  • 3.2.2 Competitive landscape
  • 3.2.3 Pricing models
• 3.3 Mobile money platform vendor profiles
  • 3.3.1 C-SAM
  • 3.3.2 Comviva
  • 3.3.3 Ericsson
  • 3.3.4 eServGlobal
  • 3.3.5 F1Soft
  • 3.3.6 Fundamo
  • 3.3.7 Gemalto
  • 3.3.8 Infosys
  • 3.3.9 InterAcct Solutions
  • 3.3.10 Halcom
  • 3.3.11 M-Com (Fiserv)
  • 3.3.12 mFino
  • 3.3.13 Monitise
  • 3.3.14 MoreMagic
  • 3.3.15 Pozitron
  • 3.3.16 ProgressSoft
  • 3.3.17 S1 (ACI Worldwide)
  • 3.3.18 Sybase 365 (SAP)
  • 3.3.19 Tagattitude
  • 3.3.20 Telepin Software
  • 3.3.21 Temenos
  • 3.3.22 Utiba
  • 3.3.23 YellowPepper
  • 3.3.24 ZTE

4 Mobile international remittances

• 4.1 The international remittance landscape
  • 4.1.1 Formal money transfer flows
  • 4.1.2 Informal money transfers
  • 4.1.3 Cost of remitting money
  • 4.1.4 Regulations
  • 4.1.5 Success factors for remittance services
• 4.2 Remittance methods
  • 4.2.1 Structure of a remittance operation
  • 4.2.2 Remittances through a physical agent network
  • 4.2.3 Remittances through electronic channels
  • 4.2.4 International airtime transfers
• 4.3 International value transfer market analysis
  • 4.3.1 The competitive landscape for consumer-to-consumer remittances
  • 4.3.2 The competitive landscape for international airtime transfers
• 4.4 Case studies
  • 4.4.1 Remittances to M-PESA accounts in Kenya
  • 4.4.2 Globe refocuses GCASH offering from remittances to mobile money
  • 4.4.3 Western Union expands mobile remittance partnerships
  • 4.4.4 MoneyGram accelerates mobile remittance strategy
  • 4.4.5 Boom Financial Services launches US - Mexico mobile remittances
  • 4.4.6 HomeSend builds mobile-centric hub for international remittances
  • 4.4.7 Tranglo builds position in international value transfers
  • 4.4.8 TransferTo records 150 percent growth in airtime transfers volumes
  • 4.4.9 Ezetop maintains leading position in the cross-border top-up market

5 Forecasts and conclusions

• 5.1 Mobile money forecasts and analysis by region
  • 5.1.1 Africa
  • 5.1.2 Asia-Pacific
  • 5.1.3 Latin America
  • 5.1.4 Eastern Europe, Middle East and Central Asia (EMECA)
• 5.2 Mobile money service providers
  • 5.2.1 Organizational structures
  • 5.2.2 Service offerings and long-term strategies
• 5.3 Mobile money platform vendors
  • 5.3.1 Platform development trends
  • 5.3.2 Changes in competitive dynamics
• 5.4 Mobile remittances
  • 5.4.1 Sending and receiving remittances with a mobile phone
  • 5.4.2 Analysis of the mobile remittance opportunity
  • 5.4.3 Mobile C2C remittance forecast
• 5.5 International airtime transfer
  • 5.5.1 Service provider market shares
  • 5.5.2 Forecasts and analysis

Glossary

List of Figures

• Figure 1.1: Infrastructure indicators for select countries in emerging markets (2011)
• Figure 1.2: Examples of basic and partnership-enabled mobile money services
• Figure 1.3: Examples of advanced mobile financial products
• Figure 1.4: Marketing and customer adoption
• Figure 2.1: Mobile money value components
• Figure 2.2: Network effects in mobile money systems
• Figure 2.3: Distribution of deployments by type of service provider (mid-2012)
• Figure 2.4: Mobile operators by number of subscribers (2011)
• Figure 2.5: Mobile money deployments by operator group (December 2011)
• Figure 2.6: Banking infrastructure in select countries (2010)
• Figure 2.7: Regional distribution of mobile money deployments (mid-2012)
• Figure 2.8: Major mobile money deployments in emerging markets (2011)
• Figure 2.9: Mobile money users by country (2011)
• Figure 2.10: Mobile money transactions by country (2011 - 2012)
• Figure 2.11: Mobile and Internet banking customers at Absa Bank (2008 - 2011)
• Figure 2.12: Mobile money transaction volumes in Kenya (2007 - 2011)
• Figure 2.13: Mobile money subscribers by service provider in Kenya (Q4-2011)
• Figure 2.14: Comparison of mobile money services (December 2011)
• Figure 2.15: Kopo Kopo's advert for M-PESA merchant payments
• Figure 2.16: IMPS transaction volumes (2010 - 2012)
• Figure 3.1: Illustration of a mobile money platform
• Figure 3.2: Top platform vendors in emerging markets (Q2-2012)
• Figure 3.3: Overview of competitive landscape
• Figure 3.4: Pricing models for mobile money platforms
• Figure 4.1: Remittance flows to different regions in US$ billion (2008 - 2013)
• Figure 4.2: Top 10 developing world recipient countries (2011)
• Figure 4.3: Average cost for sending US$ 200 between different countries (2011)
• Figure 4.4: Top factors influencing remittance service provider choice (2006)
• Figure 4.5: Factors inhibiting use of formal channels for remittance transfers (2009)
• Figure 4.6: Remittance value chain
• Figure 4.7: Illustration of a remittance operation
• Figure 4.8: Electronic sending channels
• Figure 4.9: International C2C remittance industry market shares (2011)
• Figure 4.10: Key financial indicators of top remittance companies (2011)
• Figure 4.11: Electronic channel remittances as share of revenues (2011)
• Figure 4.12: Comparison of airtime transfer networks at receiving side
• Figure 4.13: Remittance service outlets in Kenya (2011)
• Figure 4.14: HomeSend pricing model
• Figure 5.1: Overview of emerging markets (2011)
• Figure 5.2: Mobile money accounts registered through branchless banking (2011)
• Figure 5.3: Mobile money users and transactions in emerging markets (2011 - 2017)
• Figure 5.4: Overview of Africa (2011)
• Figure 5.5: Mobile money in Africa (2011 - 2017)
• Figure 5.6: Overview of Asia-Pacific (2011)
• Figure 5.7: Mobile money in Asia-Pacific (2011 - 2017)
• Figure 5.8: Overview of Latin America (2011)
• Figure 5.9: Mobile money in Latin America (2011 - 2017)
• Figure 5.10: Overview of EMECA (2011)
• Figure 5.11: Mobile money in EMECA (2011 - 2017)
• Figure 5.12: Mobile money platform development trends
• Figure 5.13: Mobile remittance service cost comparison
• Figure 5.14: Mobile international remittance transfer forecast (2010 - 2015)
• Figure 5.15: International airtime transfer volumes (2011)
• Figure 5.16: International airtime transfer volumes (2011 - 2017)

Mobile Money in Emerging Markets - 2nd Edition published by Berg Insight AB in October 22, 2012. This report price starts from US $ 1306.

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Press Release

Berg Insight Predicts 381 Million Active Mobile Money Users in Emerging Markets by 2017