Chris Connolly

It’s About Launching Ecosystems, Not Just Products: Insights on the next generation of mobile financial services from the Mondato Summit Asia

On Nov. 11, 2014, Mondato Summit Asia welcomed approximately 100 participants from across the region to the Raffles hotel in Singapore. There, an impressive line-up of speakers and panelists from all parts of the ecosystem explored the next generation of mobile financial services (MFS) in Southeast Asia. (NextBillion was a media partner at the event.)

Day One

The summit was kicked off by Mondato’s CEO, Judah Levine, who started the conversation by exploring the evolution of the MFS ecosystem and highlighting the drastic changes that have occurred over the past few months, including Apple Pay, ISIS’s rebranding, MCX, security breaches, Equity Bank’s MVNO, Alipay’s IPO and the Paypal/Ebay split. “You can no longer launch just a product and expect incredible overnight success,” he said. “It is about launching an ecosystem.” Among his predictions for the future were increasing dynamism and innovation in the MFS industry, a trend toward augmented mobility and connectivity, and the importance of social media as a big driver of consumer comfort. He cautioned, however, that there would also be more chaos and complexity for all stakeholders involved.

The morning’s keynote was presented by Mahesh Narayan, director of client access at Standard Chartered Bank, who focused on mobile money (MM) as a game changer in Southeast Asia. Narayan provided an informative overview of MM in the Philippines and Bangladesh, including adoption, players and regulation, and looked at the advantages to businesses, NGOs and users of MM. In particular, he stressed that businesses can use MM to make financial services less expensive and easier to use, as well as leveraging mobile for informational purposes to benefit them and their end consumers.

Although the main challenges are the acceptability of mobile phones for payments, optimal use of distribution networks and general awareness, he said, Asia is fast catching up to Africa and MM is here to stay.

Continuing on the theme of financial inclusion, Matthew Driver, president Southeast Asia for MasterCard, spoke on key learnings from their global financial inclusion and mobile money initiatives. Women and SMEs are underserved in the region and users are often intimidated by financial institutions, he said, so stakeholders need to humanize the design based on consumer needs and create utility in the system through a relevant baseline product. He also focused on the key consequences of financial inclusion, such as its ability to stabilize the poor, as well as identifying its “enablers” and “accelerators.” For the payment networks, he said, the challenge is consumer acceptance and creating an enabling rather than competitive space.

The focus on consumer needs was also a central theme of George Neo’s presentation on bringing together mobile social messaging with commerce and payments. Neo, senior vice president of emerging solutions at Blackberry, concentrated on social commerce and how the Blackberry Messenger platform is imitating a real-life marketplace, where people first interact socially before making a purchase. Big brands now need to reposition themselves from passive placement to actively reach out to customers, he said. And social media platforms are the perfect tools to facilitate this, as they allow brands and merchants to engage directly with customers.

Social was also the main focus of the panel entitled “Leveraging Social Networks, Loyalty Programs, and Inventive Distribution to Transition Registration into Usage.” Moderated by Mondato’s Diana Boncheva, the panel included representatives from Visa, Zalora, WearYouWant and Blackberry, and provided examples of the unorthodox use of social media. Panelists explained the unexpected direct competition between social media sites and e-commerce sites, as well as having a fascinating discussion on what was the most significant payment method where social media and e-commerce intersect.

Day Two

Day two launched with a morning session focused on the advances for embedded MFS, with speakers from Google, MetLife, Uber and Amazon and a panel on regulatory considerations. Keynote speaker Simon Kahn, chief marketing officer at Google in Asia Pacific, discussed how Google views innovation and identified their guiding principles, which include having a healthy disregard for the impossible, focusing on delighting the user, keeping it simple and sharing everything (such as opinions, data, goals and metrics) that is possible with the public. These principles have created a “delightful chaos,” he said, in which Google has been able to move from search engines to cloud computing, nano-technology and even wearables, with a core focus on mobile.

Zia Zaman, chief innovation officer at insurer MetLife Asia, provided a financial institution perspective on innovation principles in the second keynote. Disruptive innovation, risk tolerance, adaptivity, audacity and relentlessness, as well as deep customer empathy, are all key for innovation in the financial services sector in particular, he said. As such, companies need to balance innovation with a solid reputation to ensure the enduring trust of their customers.

After engaging demos from the Mondato Summit Awards finalists, the afternoon session focused on MFS in emerging markets. Leesa Shrader, senior branchless banking consultant at CGAP, introduced CGAP’s Applied Product Innovation Program and presented some of their learning from Indonesia. Based on an in-depth survey of 72 people, insights included the need for MFS providers to give people an aspiration – “a dream package” – and to focus on the agent rather than the mobile phone in developing the user experience. Shrader introduced “Project mPOSsible,” an mPOS (mobile point of sale) initiative aimed at mobilizing airtime networks to increase digital network acceptance. She also offered some insights on how to increase usage of mPOS in emerging markets.

Myanmar, one of the last frontiers for MFS, was the subject of a presentation by Tom Newton-King, head of Mobile Financial Services at Ooredoo Myanmar. Newton-King brought the audience up to speed on the current state of play in Myanmar, including the recent launch of $1 SIM cards by Ooredoo, and the recent passage of “demi-regulation,” allowing for non-bank-led mobile money. With over 1 million customers signed up in 16 days and 2.5 million active customers currently, Ooredoo has been making impressive inroads, he said. There are, however, challenges to such a rollout in virgin territory, including the need to leapfrog technology directly to 3G networks (something which has slowed uptake), and the requirement for customer education and awareness in a world where there is no brand recognition, but where there is a pervasive lack of trust in banks. The result is a need to rethink distribution due to excessive burdens on the current agent network.

Award Winners

The day closed with the crowning of this year’s Mondato Summit Asia Award winners:

· The Mondato Social Impact of the Year Award for MFS in Emerging Asia went to BanKO, the Philippines’ first mobile phone-based, microfinance-focused savings bank. A milestone partnership between the Bank of the Philippines Islands, Globe Telecom and Ayala Corporation, BanKO is leveraging its combined assets in banking and telecommunications to promote financial inclusion for the country’s “unbanked.” It is pioneering the delivery of formal financial services through its network of partner outlets: existing establishments in the community that have been selected, trained and accredited to conduct customer identification for account opening applications, and perform cash-in/cash-out transactions. These outlets are the critical link to bringing financial services to communities, even in remote locations, and ensuring pervasive reach and accessibility across the country.

· The Mondato Asian MFS Innovation of the Year Award went to mHITs Remit, the world’s first cross-border mobile-to-mobile micro-remittance solution enabling users to send money instantly from Australia to overseas counterpart mobile money services. Funds are sent directly to recipients using their mo-bile number as the account identifier without any need for a transfer agent or bank. Through the simple account structure of mobile money systems, where the mobile number is used as the account identifier, transactions can be addressed and routed internationally. The service is simple to use and works on all mobile phones without the need of an Internet connection, smartphone or downloadable app.

· The Mondato Asian MFS Startup of the Year Award went to Sixscape, which has created some breakthrough technology in IPv6 (the new Internet Protocol) and Public Key Infrastructure (cryptographic identity). They have created two new proto-cols which take Internet messaging and authentication to entirely new levels. The two technologies combined will help restore privacy and trust in Internet communications.

Editor’s note: This post is a compilation of posts published on Mondato’s blog. They are adapted and republished with permission.

Chris Connolly leads Mondato’s media efforts and provides research and analysis to support its reputation as a thought leader, as well as assisting Mondato’s work in the field of MFS regulation.

digital payments, financial inclusion, mobile finance