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Mobile Money is a complicated ecosystem which usually excludes the handset manufacturer. It needs the banks, operators, regulators and specialist Mobile Money companies to work together. Nokia bought into this by taking a major shareholding in Obopay. This American company provides the Mobile Money infrastructure which Nokia has used in its Indian roll-out. Nokia provides a Java application which supports the Mobile Money services.
A common mantra in Mobile Money is the need for cooperation. This is usually vertical: an operator working with a bank. Nokia is looking a model that stretches horizontally as well, offering Nokia Money across a number of banks and operators in a region. It sees this as essential for generating the critical mass for Mobile Money to work. Nokia's agnostic approach includes providing the Nokia Money client for non-Nokia phones, which in the regions the company is interested in is primarily Samsung, and potentially using platforms other than Obopay.
Mobile Money also fits in with Nokia's social message. At Nokia World the company trumpeted its use of Biopaints, recycled metals and reduced packaging. From a Western perspective many aspects of a mobile phone feature set such as a torch or radio seem pedestrian, but imagine for a moment the problems of the unbanked. They need to go to the school to pay fees, to the electricity company to pay that bill, the animal food supplier to pay for that. They spend a good proportion of their lives travelling and queuing. The poor are not time-rich either. They work long shifts and managing money drastically reduces their earning potential. The ability to transmit money is fantastically liberating. But as Nokia says, it needs the ecosystem. It doesn't have to be hugely lucrative on a transaction basis but as it makes customers wealthier they spend more on their telecommunications and it makes them more loyal consumers.
Operators take a dim view of attaching services to a device which promotes loyalty to Nokia rather than to the operator, and while Nokia is looking to embrace operators in Nokia Money some will have their own solutions. This will make it hard to ensure that the Nokia Money application is pre-installed. Fortunately for Nokia the target countries tend not to use the subsidy model, and even where they do there will be the option to download the Java app from Ovi.
An interesting trend which helps support this is that many of the second-hand phones recycled from the likes of Fonebak and Mazuma are early smartphones. A Nokia 7650 or Sony Ericsson P800 will be doing service and providing a platform for money, health and education.
As the emerging nations, er, emerge, it becomes more important for Nokia to keep them loyal. The iPhone is every bit as aspirational in Laos as it is in Las Vegas, and Nokia wants to hang onto those customers. Building a financial relationship with them is a good way to do so.
The message at Nokia World might have been that Symbian and Nokia are back, but the message in the Third World is that they have never been away.
Simon Rockman is the head of the Mobile Money Exchange. The GSMA site which provides information and support for the Mobile Money industry.
COMMENTS
Very interesting article
A rare positive article about nokia and innovation which doesn't rely on smart phones costing hundreds of pounds. Hope this takes off. This could be useful in the West as well.
Hawala?
From Wikipedia: In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city. The hawala broker calls another hawala broker in the recipient's city, gives disposition instructions of the funds (usually minus a small commission), and promises to settle the debt at a later date.
@Mike S -- What happens when you lose your phone?
The same thing as when you lose your credit card. The money isn't in the phone, it's in your account. You get a new phone (or another second-hand phone) and have full access to your money. It's a lot safer than cash. People in the West typically take a couple of days to report a lost card, they take less than an hour to report a lost phone.
In developing countries, where people live on tiny amounts of money and much of it comes in one chunk at harvest time there is a real issue with security. They often keep the money in jars and give jars to friends and family for safekeeping so that if they get burgled they don't lose everything.
In Kenya people will pay money into M-PESA before going on a long bus journey and then withdraw it when they arrive.
There are few traditional banks for these people two switch to. Although they do well out of mobile money. Before M-PESA Kenya had 4 million bank accounts. Today they have more than 6 million. The growth has come from the education about financial services.
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