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Mobile Financial Services – Widening the pie through interoperability

By Arshad Majeed

It is usually a challenge for competitors to decide to work together! Whether competitors collaborate or not, it usually comes down to whether the players involved choose to maximize the total size of the pie or just their slice of the pie: expanding the market, versus expanding one’s own market share.

In networked industries, in general, the better the collaborative effort, the larger the pie and hence each one’s share. Realizing the value of interconnectivity for network solutions, Telecommunication providers built their infrastructure to ensure voice and data bearer services were interconnected between all providers hence, allowing for the industry to grow through an increased subscriber base.

Mobile Financial Services Interoperability

We have yet to see this line of reasoning extend to Branchless Banking. Banks deciding to work together in this field is probably less a matter of if and more of when – just like it has been for banks sharing ATM networks and mobile operators sharing towers; it is in fact not about when but about how this will be accomplished.

Customers have taken interoperability of their telecom providers into their own hands – through acquisition of multiple SIMs, however, it is unfortunate that they have to connect two mobile money platforms to each other by using one platform to send their money and using another platform to withdraw it. Financial institutions have an opportunity to interconnect their independent platforms and provide a one-window solution to customers which is independent of their banking service provider. The big question– why don’t Financial Service providers take this opportunity and provide an interconnected cross platform solution by sharing a few infrastructural elements including their valuable cash merchants? If this is done at an early stage, it can help reduce deployment costs and jump-start the future opportunities.

Key Ecosystem Clients

Leveraging such benefits is about building an ecosystem with three types of players: First, there are the end-users, individuals and businesses who want to keep some money in their account and occasionally transfer money to others.

Then there are the corporate or bulk users who want to make payments to many beneficiaries (e.g. distribution of salaries, social welfare payments, dividends) or to receive payment from a large number of users (bill payment, government taxes).

Finally, there are the cash merchants, who are stores seeing an opportunity to make money from reselling mobile money and exchanging it for cash on demand.

Points to Ponder

Banking Service Providers need to give serious thought to working together to add maximum value to each of these three types of users.

  • Should they interconnect their platforms to create any-to-any payment possibilities for their end-users?
  • Should they offer common payment interfaces to bulk users, so that utilities, employers, and the government do not have to negotiate with and integrate into each mobile money scheme separately?
  • Why shouldn’t the customer of any mobile money scheme be accepted at any cash merchant regardless of which scheme they are with, much as VISA and MasterCard merchants accept payment from any issuing bank?

Moving from Competition to Collaboration

The fact that a player or two are ahead of the others in a particular market is in principle no reason not to seek ways to collaborate. Everything has a price. Players that are ahead in this market should see sharing their cash merchants or bill payment systems as a way of monetizing their prior investment in channel building.

Different mechanisms for interoperating will emerge; it is only a matter of time. Operators will need to figure out ways of integrating their platforms with each other to offer uniform access to customers. In the case of mobile operators and shared ATM networks, this has worked wonders and it is high time that the same should be extended to mobile money space as well.

What a remarkable difference it would make for the industry by creating a universe where mobile money is considered the norm rather than a choice.

Triple Bottom-line Impact

Regardless of the mechanisms that eventually get adopted for Branchless Banking, the industry’s environmental footprint should diminish with a proportionate reduction in physical infrastructure per transaction. Further, as physical infrastructure poses a barrier in banking accessibility across economic backgrounds due to the relatively high costs of infrastructure, banks’ feasibilities naturally rule out investing in many areas. To this end, Branchless Banking also bodes well for creating a much wider spectrum of social accessibility, bringing banking to the doorsteps of a much more diverse set of clients.


Arshad Majeed’s banking career stretches over 26 years during which he has held various senior positions in local as well as foreign banks such as Deutsche Bank AG, The Chase Manhattan Bank Ltd., Muslim Commercial Bank, and Mashreq Bank.

Arshad has been associated with Meezan Bank as SEVP – Country Head of Operations since the year 2000. All back office operations including General Banking, Trade Finance, Credit Administration, Treasury Back Office, Equity Market, and Open End/Closed Ended Mutual Funds operations fall under his umbrella. He is a member of various senior-level internal committees of Meezan Bank and has also conducted numerous country-wide training courses an internal trainer.



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