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Banking the UnBanked in Asia – Big Opportunity for Telcos +Service Providers

July 21st, 2012

Wireless Mobile Service Providers in Emerging market are looking to exploit their scale (high wireless penetration 70-80%) to bridge the gap with low Banking accessibility and penetration (20-30%).

Ofcourse Telecom Operators are not the only ones who can use this model but are at a definite advantage because of their reach. Their are many channels through which Mobile Banking can be offered and also choice of technologies.

Even at a 5% adoption rate, it could be USD 20bn in value in Asia. Success of m-banking in Kenya, which now has +50% adoption and contributes 16% to revenues to Safaricom, much more than Airtel’s VAS & 3G Revenue together. It is thus imperative why Mobile Banking is being embraced by Telcos like Airtel, Idea and Independent Companies like ITz Cash, Paymate, mChek, etc.

However, their are hurdles that need to be addressed. 1) low commission rates of 0-5% limits revenue upside despite rising transaction volumes; 2) competition from independent providers (Google, PayPal etc) is rising, especially with rising smartphone penetration. This can also be an opportunity if telcos collaborate with these players. 3) technology is still evolving, both in emerging and developed markets. NFC enabled handsets are limited, as are contactless payment readers at point-of-sale; and 4) stringent regulations in some emerging markets, to curb money laundering, have also restricted its rollout.

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