Exclusive interview with Brian Richardson, founding director and CEO, WIZZIT, South Africa, industry pioneer and regular speaker at Mobile Money Africa.
1) What projects that you are involved with currently are you most excited about?
As pioneers in financial inclusion and leaders in mobile banking, there is not much rest for us. What is incredibly exciting is the level of interest from banks in emerging markets. Up until now, the stance of many banks has been to wait and see and as we are all aware, they have had many other pressing priorities to address. There is an enormous amount of “noise” in the mobile banking space and a lot of unsubstantiated hype which causes confusion for everyone.
At the end of the day, the product or service offering has to meet the needs and demands of the market; it has to be affordable; and it has to meet the financial and strategic objectives of the service provider. There are still today question marks as to the business case around mobile money but there is no doubt about the potential in the industry. Mobile banking has proved over the last few years that it has a place and that it is here to stay.
Banks seem to understand that they have to be participants in this space or they will lose ground, particularly in the payments space, to “outsiders” which would include Network Operators and other third parties. Once this is lost, could or would the banks ever be able to recover? The biggest cost therefore for the banks is to do nothing. Having made the decision ”not to do nothing” the question is then – what do they do?
There are several options: they can partner with an MNO (Mobile Network Operator). This has its challenges as has been proven. A “partnership” between the two has not been proven to be successful as culturally they are very different and the margins are so small that there really is not enough in it to excite either.
A further problem for the bank is that if it partner with MNO “A” in the provision of mobile money services, this is all very well and good for the banks customers who happen to be subscribers to “A”. Simple question – what happens to subscribers of network “B” and ‘C” and even “D”. Does the bank have to go and strike up partnerships/relationships with each of the other network operators each with their unique issues and integration challenges?
More importantly, our findings and experience with 7 years practical experience and many millions of customers, is that the consumer wants more than a payments channel and a convenient way to buy airtime. They want to be financially included (not payments included) and have access to savings, loans, micro-insurance, etc. Only banks are in a position to offer this.
Much of our work apart from technical development is in strategically working with our partner banks – and potential partners, to work through this complex ecosystem. This in itself is incredibly dynamic and challenging. As you well know, the challenge of financial inclusion is not solved through technology. This is purely the enabler and I think it fair to say that the failures we have seen have been probably as a result of a focus on technology.
The ongoing debate around NFC is interesting and I feel that perhaps it is too early for emerging markets. Let’s see what happens in the developed markets first is my view.
A further topic is the interoperability issue. I think that there is a growing acceptance that for Mobile Banking to really gain traction there has to be interoperability – this is for the benefit of all despite fierce opposition from certain parties.
Finally the critically important “regulation”. Increasingly we are seeing the adoption of a “risk based” approach but there is ever increasing pressure from government to meet United Nations Millennium Development goals around financial inclusion. By all accounts, most countries in emerging markets are way behind where they should be.
2) You are considered one of the pioneers in the sector, what is South Africa’s legacy in Mobile Money?
South Africa is a tough market – dominated by four very large and very powerful entities. It is also an interesting market in that not only has the market grown up with a “card” paradigm, but South Africa has a very well developed card acquiring infrastructure. This is not typically the case in other emerging markets where the opportunity of “leap frogging” the card paradigm is very much more real. A mobile acquiring infrastructure for a start can be deployed at a fraction of the cost.
In South Africa, I feel that Mobile will always be supported by card (or vice versa) but as one entity will vouch for, it will be very difficult to ignore card totally. We have believed that the two channels can work together. According to Finscope, the number of people using Mobile Banking has almost doubled in the past year which is very encouraging indeed. By contrast, the number of people using internet banking increased by 1 %. The challenge in South Africa remains at the unbanked level and much work remains to be done. Mobile can certainly play a role in this.
3) What is your vision for this industry?
My vision since launch has been to utilize mobile to bank the unbanked of the world. I believe that Mobile is here to stay and will be the driving force and enabler behind branchless banking.
4) What surprises you about this industry?
What surprises me most is how many people think that it is easy. Expectations have been built to unrealistic levels from the ‘hype” that has been generated and of course people are going to be disappointed and let down. I think the lack of passion and enthusiasm around financial inclusion is a surprise given the enormous potential in the segment of the market.
I think that the lack of visible support from government and regulators is surprising given the high priority that this has as a key goal for the Millennium Development Goals. Many are all saying the right things but not much real tangible measurable actions and perhaps the strategy of “forcing the banks” to be all things to all people is not the right way to go. No business on earth, including banks, can successfully be all things to all people and effectively service the needs of all segments of the market. It cannot be done. Paying lip service to financial inclusion does not solve the problem either. My biggest surprise after all these years is the huge amount of time and effort we all have to spend on educating the market about the costs, dangers and inconvenience of cash.
5) Can you give us a sneak preview of your presentation/message at the upcoming Mobile Money Africa in Johannesburg in May?
No doubt that I will be throwing out my fair bit of controversy, which I do not expect everyone to agree with but hopefully will be the stimulus for lively discussion and debate. One thing I will continue to try and do is to put some balance and reality behind the hype. Financial inclusion is not a quick fix business. It is about long term patient capital with passionate, enthusiastic and committed people.