Blockchain and the Future of Mobile Money

Blockchain and the Future of Mobile Money

Blockchain and the Future of Mobile Money

12th of February 2019

As the hype dissipates around cryptocurrencies such as Bitcoin the question remains: what relevance does the underlying blockchain technology have in an increasingly digitized world?

Mobile money has relied on traditional modes of establishing trust: you trust a mobile operator to take your cash in return for a digital representation of that cash, the government trusts the operator to maintain liquidity, the operator trusts the bank to retain that liquidity, and so forth.

This model of trust was enough to support the explosive growth of mobile financial services, but will it be enough to sustain it? Today’s mobile money operators contend with complex and competitive ecosystems, increasing regulatory pressures, and high costs, particularly for cross-border remittances.

Many of these challenges can be addressed with blockchain. It allows crucial digital relationships to grow organically with the rules for transacting being shared among participating organizations and the ledger for those transactions being cryptographically secure, immutable, and mutually verifiable. In short, it facilitates trust in the digital era.

Blockchain opens doors to new opportunities by providing a platform for:

  • Partnerships with organizations that provide a share of liquidity
  • Building KYC and AML regulations into the rules for transacting
  • Auditability: allowing governments and internal auditors access to their own cryptographically verifiable copy of an immutable ledger

These are among some of the properties of blockchain that have made it enticing for mobile money. But other properties make it less so:

  • Poor performance and scalability
  • Difficult to use for analytics and business intelligence
  • Lack of control over which parties can participate or view which transactions
  • Cumbersome and complex infrastructure requirements

Many of these issues can be overcome by using a private enterprise blockchain, which avoids intensive consensus mechanisms and provides enterprise control over access and a richer set of query interfaces into the blockchain. Implementation, however, is still a massive challenge because of the lack of skill and stable APIs into the various blockchain technologies.

How do we know this?

We’ve encountered these challenges implementing blockchain into our mobile money solution. To address them, we have created a REST API gateway that insulates the core mobile money systems from changes in the underlying blockchain technology and automated and simplified the provisioning of blockchain resources, making them run in both private and public cloud. We believe we have created a feasible and desirable mobile money system that adds the benefits of blockchain, without the complexity and with the performance to scale.

While, of course, we are hoping to sell our platform, we are also keen to engage and discuss your experiences and requirements from blockchain, as it is still a new and evolving domain.

If you’d like to know more about Alepo Mobile Money and how we got there, join us for a demo at Mobile World Congress, Barcelona from February 25-28, 2019 at booth 5H71. Click here to schedule a meeting.

Pankaj Garg

Pankaj Garg

Product Owner, Mobile Financial Solutions

Pankaj Garg is a telecom and FinTech expert with over 14 years of experience in the software industry. Handling digital BSS offerings is among the many hats he wears at Alepo. Always up to speed with the newest advancements in the products he handles, he takes it slow only when he’s road-tripping across India to discover new places.

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High Circulation Ratio Is Key to Mobile Money Profitability – Here’s How to Improve It

High Circulation Ratio Is Key to Mobile Money Profitability – Here’s How to Improve It

High Circulation Ratio Is Key to Mobile Money Profitability – Here’s How to Improve It

14th of June 2018

Every day, the mobile money industry processes over $1 billion and generates direct revenues exceeding $2.4 billion yearly, according to GSMA’s 2017 State of the Industry report. In fact, mobile money transactions in Kenya have now exceeded the country’s gross domestic product according to estimates by ICTworks. No small feat for a platform introduced a little over a decade ago in the African nation where today, five operators coexist.

 

The poster child of mobile money success, Kenya demonstrates the massive scope for the platform as an enabler of economic growth. Mobile money has enabled financial inclusion of millions of people by empowering them with digital financial services.

 

Without taking away from its unparalleled success, it is important to note that mPESA – at the forefront of Kenya’s mobile money revolution – entered a largely unbanked market, with minimal competition, relied heavily on agents for transactions, and used first-generation, feature phones as the main conduit of transactions. Whether in the developed or developing world, few parallel examples remain. Today, operators must organically build complex and varied ecosystems to attract money into the platform and creating incentives to remain in the system.

 

The key measure of how useful money is within a given mobile money ecosystem is the digital circulation ratio. A measure of how many times money is transacted before being cashed out.

 

Simply put, increasing the digital circulation ratio involves increasing reasons to enter and stay in the system.

More options for the consumer

The most straightforward way of increasing the digital circulation ratio is to offer customers more ways to spend, giving them the incentive to use their mobile wallets more frequently for a variety of purposes. Traditional options like bill payments and money transfer remain significant, but there is also scope for more complex transactions. Some of these include:

  • Buying insurance plans
  • Mutual funds
  • Government subsidy distribution
  • Payments to enterprises (college fees, for instance)
  • Saving money (micro savings)
  • Microloans

Using a mobile money platform helps people build their credit scores, making them eligible for microloans through financial institutions. The score is calculated based on the transaction type, history, transaction value, location, services used, frequency of use, and so on.

Extending services to merchants, enterprises

GSMA states that in 2017, digital circulation averaged 1.6x. However, deployments that successfully scale merchant payments have a ratio closer to 4x. Further, the most successful providers are those whose platforms offer a vast payments ecosystem; each one, on average, is integrated with seven banks, at least 90 billers and 30 organizations for bulk disbursements, and 6,500 merchants.

 

It is business to business (B2B) and business to business to consumer (B2B2C) models that are fundamental to this success. These capabilities help expand the available vectors into the system, while providing more reasons for them to remain within. Some of these include:

 

  • Retailer payments to suppliers: Suppliers now become part of the system by virtue of receiving payments.
  • Supplier payments to enterprise: By having the option of making payments through the platform, the suppliers remain within the system instead of cashing out once they receive payments.
  • Enterprises disbursing promotional cashbacks or employee salaries: Now, the enterprise has reason to continue using its money through the system.

 

Building such business lines requires high flexibility, not only to create different rules and policies for each business line, but also to provide business entities with internal autonomy. Flexibility provides capability, but to turn it into opportunity, the vital factor is trust. Thankfully, trust can be mediated using private blockchain.

The potential of blockchain

In creating a more diverse and complex ecosystem, it is essential to bring in major partners such as government agencies, large corporations, non-profits, and various other entities – all of which must command trust. How is trust between various entities facilitated? The answer is blockchain, where a tamper-proof ledger of all financial transactions is maintained by and shared between selected partners.

 

At Alepo, we strongly believe that the ability to easily roll out blockchains to partners could be a game-changer. While fully decentralized blockchain-based mobile money systems have limited appeal owing to lengthy transaction times and increased costs, private blockchains can help to create highly regulated and trustworthy relationships between various major entities that participate in the ecosystem. In such an environment, the blockchain ledger is only shared with select third parties and is opaque to other participants in the system.

Diversity and innovation are the future

Mobile money systems need to create opportunities at every level and build their own ecologies, rather than relying on tapping into societal and/or economic factors. They need to have advanced partner and business channel management, flexibility in how these channels are monetized, as well as capabilities to monetize customer data itself through innovative services such as microloans. As the systems become more diverse and complex, there is a diversity in monetization methods that can be employed – analytics, advertising, revenue-share models, and more. For the success of any system, it is crucial to choose a platform that can support different business models and multilayer disbursements.

mobile money profitability

A varied ecosystem can drive up the circulation ratio

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Pankaj Garg

Pankaj Garg

Product Owner, Mobile Financial Solutions

Pankaj Garg is a telecom and FinTech expert with over 14 years of experience in the software industry. Handling digital BSS offerings is among the many hats he wears at Alepo. Always up to speed with the newest advancements in the products he handles, he takes it slow only when he’s road-tripping across India to discover new places.

Subscribe to the Alepo Newsletter

Alepo VP to address telcos on mobile money, WiFi offload at PITA conference in Guam

  • The trade show, in its 22nd year, is the largest telecommunications event in the Pacific
  • The objective of the event is to highlight new and different ways of securing digital lifestyles in the Pacific Islands
  • The Pacific Islands are a centrifuge of innovation given the unique challenges faced by communities
  • Alepo’s Vice President of Sales Amelia Power is scheduled to make two presentations on April 24, where she will discuss opportunities for WiFi offload, and the challenges and opportunities for financial inclusion using mobile money in the Pacific

AUSTIN, Texas, Friday, April  20, 2018: Core network and IT software solutions provider, Alepo will be presenting at PITA 2018 Guam, the annual general meeting and trade show organized by the Pacific Islands Telecommunications Association, taking place April 23-27.  The objective of the event is to highlight new and different ways of securing digital lifestyles in the Pacific Islands

Now in its 22nd year, the telecommunications event sees participation from 115 organizations across 35 countries. It is the largest event of its kind in the Pacific. The region presents unique challenges for creating digital communities. Populations are geographically dispersed, and there is a sharp digital divide between, as well as within nations. However, these challenges imply that there is vast potential to increase access.

“Alepo sees the Pacific as strategic in a number of ways. We have always felt that the Pacific provides one of the more innovative markets in the world. As an OSS/BSS software company, we have had a long and successful role in enabling LTE in the Pacific,” said Amelia Power, Vice President of Sales, Alepo, who will represent the company at the conference.

Through two talks, both scheduled for April 24, Power will address the adoption challenges and opportunities of mobile money in the Pacific and how WiFi monetization can complement a WiFi offload strategy.

While limited access to traditional banking services, as well as a largely cash-based economy, implies a potential for mobile money, customers are yet to embrace the options available to them. “In our financial inclusion presentation, we will tackle some of the key challenges for mobile money in the Pacific and look at how blockchain is essential for addressing those challenges as it enables new kinds of partnerships that provide compelling use cases, which, in turn, drive the adoption of mobile money,” said Power.

 “In WiFi offload, we want to look at the crucial role of WiFi in expanding connectivity with low capital expenditure and how monetization plays a role in growing your network organically, as well as in creating new classes of business products,” she added.

About PITA

The Pacific Islands Telecommunications Association (PITA) is a non-profit organization that represents the interests of Pacific Islands in the field of telecommunications. Its objective is to improve, promote, enhance, facilitate, and provide telecommunications services within member and associate countries.

For more information, visit www.pita.org.fj

About Alepo

Alepo Research Report: Asian Mobile Network Operators (MNOs) Keen to Partner with Over The Top (OTT) Players to Combat Revenue Loss

Alepo recently published new survey findings of Asia Pacific mobile network operator executives regarding the impact of OTT services on their businesses and their outlook for OTT partnerships and other data monetization strategies.

Thursday, June 23, 2016, Austin, TX – Ahead of Mobile World Congress Shanghai 2016, Alepo (www.alepo.com) – a global provider of core network and IT software solutions for communications service providers, today released a new research report highlighting the need for more effective strategies for Over-the-Top (OTT) services by mobile network operators in Asia-Pacific region. The report, “Mobile Operator Survey: OTT Services Outlook in Asia-Pacific,” is based on a survey of mobile network operator executives conducted by Alepo to understand revenue loss and other business challenges caused by the rapid emergence of OTT providers in the region.

Alepo’s research reveals strong leanings towards MNOs looking to create revenue-sharing partnerships with OTT providers. While just over half of the survey particpants reported to have working partnership agreements with OTT providers in place today, nearly all expressed interest or intent in creating partnerships.

Key Survey Findings Presented in this Report

  • Declining voice revenues versus rising OTT voice services is one of biggest challenges that the respondents face today.
  • Revenue loss to OTT providers is higher for messaging (SMS) services than for other services, including mobile voice, video, and mobile money.
  • Nearly two-thirds of respondents directly compete with OTT providers with their own video, messaging, or content services.
  • While just over half of respondents have working partnership agreements with OTT providers today, nearly all expressed interest or intent in forming OTT partnerships.
  • Respondents overwhelmingly agree that OTT providers are a major threat to their business, yet they are very optimistic about the potential for win-win partnerships.

Download Your FREE Report Here!

Danielle Elaine Smith, Director of Marketing at Alepo, commented on the report’s findings. “It’s clear that mobile network operators in Asia Pacific recognize the emerging threat of OTT services on the bottom line and are proactively seeking new strategies and business models to overcome that.” She added, “This report indicates that the implementation of those strategies is not limited by an unwillingness to partner by either the operators or the OTT providers, but rather by poor or outdated policy and charging control infrastructure that can’t adapt to meet the new realities of today’s dynamic APAC telecom markets.”

Alepo provides award-winning policy and charging control solutions to combat operator revenue loss to OTT services and enable winning partnerships between OTT providers and mobile network operators. With a complete, carrier-grade data monetization ecosystem, Alepo enables mobile network operators to better monetize their 3G and 4G mobile data networks, partner with third-party providers, push new offers to customers in a modern mobile app, and much more.

Alepo will attend Mobile World Congress Shanghai on June 29 – July 1, 2016. During the event, Alepo will give live demos of its real-time data charging and policy control solutions for 3G, LTE services, and WiFi. To schedule a demo with Alepo at Mobile World Congress Shanghai 2016, please visit https://www.alepo.com/news-events/upcoming-events/

About Alepo

For more information, please visit www.alepo.com.