The group of countries making up the Association of Southeast Asian Nations (ASEAN) is amazingly diverse. From population size (largest – Indonesia: 260 million; smallest – Singapore: 5.6 million) to wealth (highest per capita GDP : Singapore, $90,000; lowest: Cambodia, $3,700), local market idiosyncrasies determine how differently technology is being used to alleviate social/business issues.
In Singapore for example, we’re seeing a host of crowdfunding platforms, AI-powered robo-advisors, cyptocurrency trading/exchange operations and even VCs structuring themselves as funds regulated by the central bank (this should be interesting). These startups/VCs dominate headlines and seem to receive more than their fair share of funding. I don’t think there’s doubt that these technologies will be more prevalent in the way we bank/invest in the future but today, I’d like to focus on a fintech segment which has been around for over a decade, already has hundreds of millions of users and has spawned an industry in which companies providing the service are profitable (eat that “pre-revenue” firms!) and provide social benefits at the same time. I’m talking about Mobile Money.
It’s impossible to have a discussion on Mobile Money without bringing up M-Pesa, a model case study for how services providing access to finance is a viable business model (M-Pesa contributed 20% to Safaricom’s total revenue in 2016) and brings about social good (194,000 households have been lifted out of poverty since 2007 because of access to M-Pesa) These other statistics are staggering:
Having said that, few will remember that the first mobile money service was launched in 2001 in the Philippines. And over the past few years, we’ve seen vast adoption of mobile money services in Indonesia, Malaysia, Thailand, Cambodia, and now Myanmar and Vietnam. (yes, we’re lagging in Singapore)
Myanmar is currently the 4th fastest growing mobile money market in the world and a plethora of mobile money services are active. All three of the major telco operators have applied for licenses to operate mobile money services, with two already approved (Telenor’s Wave Money and Ooredo’s M-Pitesan). MPT (the largest telco in terms of subscribers) Mobile Money is expected to launch soon. The local telcos have used their strong agent network to proliferate adoption of mobile money services in the mould of M-Pesa. In fact, the CEO of Ooredo’s mobile money service, M-Pitesan, Mr. Jacques Voort, is the former head of M-Pesa’s operations in Tanzania.
Besides local telcos, TrueMoney also recently launched its services in the Burmese market, with a fairly strong value proposition: TrueMoney has a regional presence in Thailand, Cambodia, Philippines, Vietnam, Indonesia & Malaysia and allows Burmese nationals working abroad to transfer funds back home within the hour. True is owned by the CP group in Thailand, which is the sole operator of 7-Eleven stores in the nation. Currently, over US$ 2 million is being transferred between Myanmar and Thailand daily.
Last but not least, several startups are active in this space, with OK Dollar leading the way. They were recently granted a Mobile Financial Services license by the central bank and already have more than 100,000 users. Several other startups such as T2P have used partnerships with established local businesses to provide themselves with a ready agent network but it remains to be seen how adoption of these services scale.
Myanmar shares several similarities with Kenya and Tanzania (population size, banking infrastructure, rural/urban split, GDP per capita) and the technology available to Mobile Money service providers are more widespread and cheaper than when M-Pesa was launched a decade ago. However, new challenges face the success of this industry. M-Pesa’s ability to scale was unhindered by competition. Safaricom had bought sole rights to the technology (created by a student!) and developed/launched it quickly to gain a dominant market position. The fragmented mobile money landscape in Myanmar might confuse consumers and lack of interoperability compounds this. A fragmented market also means that the share of revenues of this nascent industry is being split amongst (too many) players. Which of these players will continue to invest in building out product features AND their local agent network which will increase the reach of these services? How long will it take for their investments to provide to sufficient return to shareholders?
Let’s go back to basics. Finance, and the efficient distribution of capital, has a real potential to play a big role to play in improving social issues. Back in 2006-2007, “financial innovation” created Collateralized Debt Obligations (CDOs) and made it “accessible” to retail investors, around the same time that M-Pesa was launched. That’s an extreme example, but let’s hope that financial innovation in this case takes the lead from what M-Pesa has enabled in the African continent.
Mobile Money will be a focus at the 18th edition of the Asia IoT Business Platform being held at Yangon, Myanmar on 23 & 24 November 2017. Drop me a note at irza@industry-platform if you’re interested to join us.
13 October 2017