Mobile communication connects more than five billion people. Nothing else has a similar reach. The 2017 GSMA Mobile Economy report revealed that there will be 5.7 billion subscribers by 2020. That’s why today, there’s no digital transformation without its key players and facilitators – the mobile operators.
Mats Granryd, Director General of the GSMA, stated: “Mobile is a global platform that today supports two-thirds of the world’s population, delivering the connectivity and infrastructure that is powering new digital economies and addressing socioeconomic challenges.”
However, mobile operators are bringing in less revenue. As the recent study by McKinsey highlights, it’s one of the key challenges facing telecom companies, where revenues have dropped an average of 6% since 2010. Capital spending has remained stubbornly high, at around 15-18% of revenue, and no incremental cost cutting or business as usual improvements will alleviate the resulting squeeze on margins. So what was there to do?
An aggressive approach to digital transformation was recommended, to take advantage of FinTech to add strategic value, while cutting costs.
But not all Mobile Operators understand that FinTech solutions is their chance to increase revenue. Moreover, mobile operators have significant advantages to offer to the FinTech community. Financial startups and mobile operators may be the perfect partners due to FinTech startups bringing rapid innovation and flexibility and MNOs providing a powerful market reach with their distribution capabilities.
Here’s the GSMA data that proves that FinTech and MNOs need each other:
Here’s an example from CreditPilot (Banking, Financial services and Insurance). Two of the mobile operators that CreditPilot supports on their financial VAS platform, have over 100M subscribers. In the last 2 years, these operators have seen a 5% Churn reduction of subscribers using P2P remittance, local & cross-border money transfers and other financial services.
VAS transactions – or Value Added Services provide financial transaction capability between subscribers, such as micro-insurance, micro loans, utility and 3rd party payments, mobile payment and payment cards.
All fees are split between the Mobile Operator, financial institutions, and the transfer facilitators.
Here’s what Renato Andrade from CreditPilot had to say:
“Statistically, clients who use the most services their MNO provides, aside from calls and internet, of course, I mean, services like various mobile banking options, etc, are less likely to switch their MNO. They’ll stay. This alone makes a key point of interest for any MNO – the more it can offer its subscribers, the more stable its subscriber base going to be” he adds, that “Combine FinTech with the resources and the giant client base of mobile operators, a synergy like that creates an entirely new, game changing product.”
It’s only a matter of time before the FinTech and MNO alliance is going to change the market, and shape the way people connect tomorrow.