Mobile Influencers: Mobile Transactions with Michele Scanlon

I’m starting a new topic here at Mobile Point View called “Mobile Influencers” where I plan to interview friends, colleagues, clients and associates who share an expertise and command of the mobile industry, as well as being very interesting people.

Most bloggers would just create a new label without the fanfare. Since my mission with Mobile Influencers is to bring attention to people and their views, it rightly deserves special notice and recognition. I hope you enjoy the view points and "point views" of my friends from the mobile, venture, operations, applications and management segments as they visit Mobile Point View and share their talents and perspectives.

Starting off the Mobile Influencers series is my good friend Michele Scanlon, who is the Principal consultant at Green Giraffe in Cape Town South Africa. Michele and I have known each other six years, and to me, Michele Scanlon is THE EXPERT for mobile payments in global emerging markets, whether in Africa, Asia, Middle East or Latin America. And her client portfolio reflects it.  Indeed emerging market mobile payments is usually what we talk about, wrestling with how to tap the mobile payments markets across the world’s developing economies. She’s constantly on the go covering territory and consulting to MNOs between Green Giraffe’s Cape Town and London offices. Let’s get right to it then!

Credentials, Experience & Talent

Michèle Scanlon, is the founder and Principal Consultant at Green Giraffe and has over a decade experience as an analyst and consultant focusing on the global prepaid markets, especially in emerging economies.

Her projects assist operators with marketing & operational strategies for prepaid distribution, tariffs and recharge strategies, vendor competitive positioning, as well as due diligence on investments illuminating the value of prepaid markets. Michèle’s recent focus has been on innovative applications beyond airtime top off including mobile banking strategies, remittances and prepaid electricity payment systems.

Michèle is regularly referenced as an industry commentator, and is a frequent presenter at key industry conferences such as the recent IIR Prepaid World, 25-28 Sep, 2007, in Budapest,Hungary as well as contributing articles and analysis within the mobile press. While with Informa in London she authored Informa Telecoms 2006 & 2007 editions of ‘Global Mobile Prepaid Strategies.’ Prior positions include managerial and director roles at EMC. She holds an honours degree in Finance from the University of Cape Town.

Welcome to Mobile Influencers at Mobile Point View, Michèle.  Thank you for making yourself and your expertise available to the readers of Mobile Point View. I very much appreciate your time and support of the Mobile Influencers column. To shake hands with the audience, tell us a little about yourself, your experience in the mobile industry, and specifically your interest in the mobile payments segment.

First off Paul, thank you for the opportunity of talking about this exciting new phase in the mobile world and having me kick off your efforts through Mobile Influencers. I'm flattered that you hold in me such a high category given the people you know in the industry and the contirbutions you've made to it.

I’ve been working in the mobile sector for 10 years as an analyst and consultant with specific focus on emerging markets, and prepaid strategies which account for the majority of customers in these emerging markets. I’m currently located in Cape Town, South Africa managing Green Giraffe Consulting, an independent advisory service for telcos, banks and other players looking to better understand the prepaid customer, mobile banking and other key developments in emerging markets. I’m in the right region at the right time, as there is tremendous focus on mobile payments in Africa right now from the GSM Association to the World Bank, to individual operators and payment providers.

What’s your view of the mobile payments segment, or more broadly mobile banking?
Prepaid now accounts for over 62% of all mobile customers and almost 75% of new network connections, which is data from Informa Telecoms ‘Global Prepaid Strategies & Forecasts’ report published July 2007.

The concept of prepaid mobile has significantly changed the take-up of mobile services, and the consumer purchasing habit of paying in advance, and using services as a credit balance being decremented is it-self changing the consumer purchasing habits in these markets. The recharge process is often done electronically with no PIN or voucher and this has created a trusted transaction between consumer, merchants and mobile operators which is crucial for the shift towards greater mobile-based transactions.

How do you segment the mobile payments business, e.g., mobile remittances, mobile banking information services, mobile payments, mobile transfers, etc.?

The whole arena of mobile transactions is an all encompassing term, and terminology often gets interchanged and lost based on perspective, meaning whether it is viewed from the Financial Institution or the Mobile Network Operator. I think one of the clearest definitions was outlined in a Vodafone/Nokia research paper earlier this year (which I’ve interpreted graphically for you below) whereby M-Transactions is any type of mobile-based transaction including prepaid airtime purchases and peer-to-peer prepaid airtime credit transfers that are already so commonly found in the prepaid mobile environment.

   

Under this, there are three main arms of transactions-- banking, transfers and payments--all of which are undergoing new investment and developments to stimulate demand. Some initiatives are focusing on the whole genre of mobile transactions while others are specifically focused on one channel.

There definitely has been resurgence in mobile banking and payment initiatives globally. Do you think a key element of that was a mis-step where m-transactions were launched in heavily banked markets such as Europe and the USA where many substitution channels for bank access exist? Why did it take so long to come to market? Why didn’t it work before?

I think there are really 3 key attributes to a successful mobile transaction service – trust, security and convenience, and it is on this last factor that previous European initiatives were not able to fully meet consumer expectations. If banking customers already had convenient access to ATMs and bank branches, there had to be another compelling reason why they would conduct the same transaction through the mobile device which could often incur additional charges.

This argument of providing convenience of location and service is finally coming to market with financial institutions realizing that the primary method to reach unbanked communities is through the mobile phone, and no where is this more relevant than in emerging markets. Compare for example the number of bank branches or ATMs per 100,000 in the UK & USA (20) to that in South Africa (6), or other parts of sub-Saharan Africa (less than 1).

As a whole Africa has just surpassed 25% penetration, the lowest globally, yet the continent’s largest form of infrastructure and market reach. Research from the FinMark Trust, a South-African based organization promoting access to financial services in the region highlights that 80% of those surveyed in Tanzania in East Africa were unbanked, but 20% of this group already owned a mobile phone. Even in South Africa which has a leading banking establishment, half of the population is considered unbanked. This is forcing financial institutions and governments to re-think their market approach for access to financial services and disbursement of social security and other grants.

In Part 2 of my conversation with Michele Scanlon we'll investigate whether there is really enough banking customers in these emerging markets to make the mobile transactions segment viable, micro-financing as well as illuminate the obstacles of entering the mobile transactions market.   

Please return to Mobile Point View later this week for part 2 of my conversation with Michele Scanlon, or become an email or RSS subscriber to Mobile Point View so you don't miss it.