Telcos: From mobile operator to mobile bank?
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With the recent COVID-19 outbreak, the benefits of mobile money have become apparent. While many economies have ground to a screeching halt due to shutdowns and the restriction of public life, money money has proven to be a lifeline for many businesses and private individuals.
While mobile money is hardly known in developed countries, it has profoundly impacted people's lives in emerging markets, especially Sub-Saharan Africa. Unlike developed countries, where nearly everyone has access to banking services, large parts of the population in these regions suffer from financial exclusion. Traditional banks fail to provide sufficient coverage. Their underlying cost base makes it impossible to offer banking services to all people, especially the poor, in a financially viable way.
With mobile money, telcos have risen to the challenge. They are ideally positioned to capitalize on the growth opportunities this technology has to offer. Due to their existing mobile operations, they are already trusted brands with a large customer base and broad geographical reach. Moreover, they can build on an extensive pre-existing infrastructure. From the physical network, enabling them to reach customers even in remote areas, over existing sales and distribution organizations, including points of sale and established partnerships with merchants, right to the internal processes and procedures to manage large numbers of customers and individual transactions.
Telcos can let mobile money services practically “piggyback” on their existing infrastructure, leveraging cost advantages that cannot be matched by any bank. And since many services can be delivered remotely, they are less dependent on having physical presences such as branches or ATMs.