Nigeria Mobile Marketing
News and development about Mobile Marketing in Nigeria
Wednesday 13 May 2009, 8:23 AM
Can Mobiles Benefit Nigerian Micro Finance Banks?
Some viable MFI’s are posting results that are close to what established commercial Banks with over 50 Branch networks were earning before the pre – consolidation era when they had to increase their capital Base.
Virtual Banking and Mobile banking will give massive leverage to the commercial Banks in the next few months and this will massively differentiate them further from the MFI’s and widen the gap. In the evolving scenario, what opportunities are open to the MFI’s? Can they take on the Mobile channel as a strategic channel to play catch up? Will the Banks just use them as a cash in / cash out points for their Mobile money roll out plans?
From the regulatory point of view, MFI’s are allowed to play in mobile landscape but Infrastructurally, they are limited by their access to technology platforms like the financial switches. They still not directly connected and will have to get connection via a third party Bank.
Mobile Banking and mobile money is the easiest route to go for any growth oriented MFI in Nigeria with wide disparate demographics and prohibitive cost for Brick and mortar Branch roll outs. Mobile presents a strong compelling advantage for the MFI’s.
Though the Mobile is an unfamiliar terrain for most operators in the financial services sector but opportunities abound. The question is, what is out there.
64 million mobiles subscribers is a significant and potential customers base that can be engaged using the mobile channel.Network coverage is nearing 70 percent of total landmass in Nigeria, an extensive reach is what the Mobile channel offers. Mobile Phones is also what they already have with negative acquisition cost to enable potential customers use the service.
Using Mobile Phones, the MFI’s can develop independent collection points, therefore cash in / cash points using the Human Atm models across areas of operations and in concentrated commercial areas like the Major markets without a need to physically have a Brick and Mortar presence.
Increase the market penetration by serving the currently unbanked population leveraging on their Mobile and Network coverage to bring services to these group of financially excluded at a significantly lower cost to the customer and less paper work which is always a barrier for many semi Illiterate and illiterate citizens which mostly constitute the majority of the financially excluded.
Getting more products to the existing customers is a way to retain and keep customers. Many other products can be bundled into the mobile service provisioning of the MFI’s to make it more attractive to existing customers.
Remittance business which has been the cash cow of commercial banks are areas where the MFI’s can change the business models. Online remittance gives them the reach to the potential senders; worldwide while the Mobile Phone of the local receiver is the connection point of engage for the MFI’s.
To save cost and achieve competitiveness in the face of biting Global Cash crunch and in local operating environments in Nigeria, Virtual and Mobile Banking is not a question when for the MFI’s, It is a question of How.
Emmanuel Okoegwale
Nettel@africa telecommunications regulations and Policy scholar
emmanuel@mobilemoneyafrica.com
PreviousComments on this post
Micro Finance Institutions target market should be different from those of commercial Banks. If they are struggling to get a piece of the pie, it suggests that they are not targeting Micro businesses and they are targeting the same customers as commercial Banks. If they are achieving impressive returns it suggests that they are either charging excessive interests and making their products unattractive or are investing in ventures not related in anyway to Micro Finance.
Certainly there needs to be improved regulation with regards to Micro Finance Institutions. This should ideally include a form of monitoring to ensure that they adhere to the terms and conditions of their licenses. There should also be some form of target setting and auditing of returns against targets.
I am not certain what role if any mobile technology has to play in the success of MFIs.
I think there needs to be some clarification on the number of mobile users in Nigeria. Is the 64 million the number of active lines? If it is then the reality is that the number of mobile users is much lower. A number of mobile users have two or more mobile lines and this is clouding the true number of mobile users. The penetration rate is very low in rural areas. This is still largely because the cost of calls are still quite high and not very reliable. Additionally I think the operators are happy with their lot. They are happy with their customer base, largely made up of users in urban areas who have greater spending power. I don’t think enough is been done to market mobile services in rural areas. Operators and Banks are largely following the same strategy of concentration of effort in urban areas. The operators have the advantage of unreliable service, forcing many users to have more than one line.
With a low rate of penetration I am not sure if mobile has any real value to add to efficiency of services provided by MFIs in the short term. What MFIs require is to develop independent agents that are able to provide key services n behalf of the MFI.
One final point is that many of the MFIs targets are likely to be semi literate or illiterate citizens whose sole use of the mobile phone is likely to be for voice only and so introducing mobile banking and mobile money may not get the level of usage to make it a success and enable providers to see a god rate of ROI.
Graham Orodje
graham-orodje@taurusmobile.com
An MFI shouldn't be worrying about growth, or a piece of the pie, it should be worrying about creating sustainable income for the poorest people in the country.
To see banks as a rival is to miss the point. If the consumers can use a bank they are already out of the kind of poverty trap that MFIs are there to deal with.
Mobile money transfer (MMT) is about giving the people who work 18 hours a day just to have enough to eat the time to work instead of having to spend half a day travelling by bus and standing in line to pay domestic bills. The money poor are also very time poor.
It's also about making money virtual and so secure. If you are a farmer you get paid once a year when the harvest comes in. How do you look after that money and manage it when you don't have a bank account.
The issue you should be worrying about is Know Your Customer legislation which often prevents the very poorest people from opening an account. Banks use it to prevent competition and so people starve.
Simon
