FinTech to TechFin – the Future P2P ecosystem
FinTechs have become an integral part of our everyday vocabulary. For several years now, the rise of FinTechs has been the trigger of an extensive debate: Should these new players be considered as competitors to the existing banks and the traditional services they offer, or should they be considered as their partners? Experience has shown that mutual success can be reached through Business & Technology partnerships between traditional banks and FinTechs.
Source: What’s Going On in Banking 2019, Cornerstone
On the other hand, TechFins have only joined the ecosystem recently. A TechFin is a technology company that delivers financial products as part of a broader offering of services (e.g.: Google, Amazon, Facebook, Apple, Baidu, Alibaba, Tencent, etc.). They use their own technology and have a strong impact on the end user.
FinTechs and TechFins are both addressing the mobile money market, mainly driven by the Middle East & Africa. According to the 2018 State of the Industry Report on Mobile Money published by GSMA, there are 866 million registered mobile accounts in the world (20% increase from 2017), representing 1.3 billion USD processed daily by the mobile money industry.
More than half of all Mobile Money Programs launched in the world are in the Middle East and Africa, with the African region priming the list with the most dynamic growth in terms of mobile market and most of the programs are deployed by Telcos.
When talking about Mobile Money, P2P still holds the lion’s share: while merchant payments start to play a larger role in circulating value, P2P transfers represent almost 90% of mobile money services. The total circulating value grew 30% year after year.
Source: 2018 State of the Industry Report on Mobile Money, GSMA
Interoperability, the key challenge for a mobile money program
Most of the mobile payment programs available today are launched by Telcos, with interoperability being managed through one-to-one agreements (e.g.: Safaricom and Vodacom agreement with Vodafone for M-Pesa).
Interoperability is not only a challenge for Telcos, but is also a concern for TechFins, such as Apple. The multinational tech company only deploys services available on iOS, which are not fully interoperable. For example, Apple launched Apple Pay Cash which is only available for iPhone users, creating closed loop systems. Additionally, Apple market shares remain low in Africa compared to other regions. Even though the company has launched Apple Pay in more than 30+ countries, only 2 countries launched the service in the Middle East and none in Africa.
Launching a successful interoperable mobile payment program
According to a recent study on Mobile Money by Aite Group, a successful mobile payment program needs to offer a mix of additional mobile services to P2P transfers such as: faster payments, merchant payments, cross border payments, social payments, bill payments, interoperable payments, etc.
It is in an environment as unique as Morocco that the Central Bank of Morocco and the National Telecom Regulator trusted HPS to launch an interoperable mobile payment program to fight economic and social inefficiency and to move Morocco from a cash-dependent society to an epayment-led society to benefit the entirety of the ecosystem and its players. Each bank will be launching its own wallet platform that will be connected to a national mobile switch to provide interoperability. Customers will be able to send money to their peers, receive money (social benefits), pay merchants, pay their bills, etc… the foundations of a successful program according to Aite.
To know more about how HPS helped banks and financial institutions to open their systems and launch an interoperable mobile payment program, please contact sales@hps-worldwide.com
