Business consultancy project

Mobile Financial Services

The expansion of mobile broadband and smartphone penetration reinforced mobile devices interference to the different industries and diverse mobile network industry landscape by creating productive collaborations with other business areas. MNO started to reshape the new business opportunities through cooperation with financial institutions. The implementation of the MFS services by MNO is becoming a new trend for creating a revenue stream and strengthening customer retention. Firstly, mobile payments were used for micro-payments by SMS through MNO billing infrastructure. However, in the next stage, mobile operators extended presence in financial services. The agreement between Mastercard and GSM Associations integrated worldwide operator driven financial transactions (Mobile Operators and Fintech, 2017).
The involvement of the Mobile operators in financial services constitutes the value preposition both from financial institutions’ and consumer’s perspective.
The advantages for financial institutions:

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  The possibility of downloading apps to mobile device
  
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  The connection from mobile broadband
  
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  The availability of seamless connections 24/7
  
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  Facilitate payment process
  

Mobile operator’s extensive coverage creates effective connections between banks and consumers. Besides, the availability of online transactions makes a substantial contribution to the increase in online transactions.
The advantages for customers:

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  Simplicity in connection (sign-in, sign up)
  
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  Online balance control
  
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  Security control
  
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  Online payment possibilities.
  

The availability of financial services through mobile simplifies customers’ life by avoiding additional bureaucracy. Consumers can easily connect their accounts check balance and make payment or transactions though mobile at any time, besides, consumer getting online information in time and can control account information by avoiding any fraud action time. Mobile network channels are considered more secured and encrypted rather than public internet and being protected from man-in-the-middle attacks. (Mobile Operators and Fintech, 2017).
However, considering the involvement and characteristics of the operation system the contribution of MNO`s in mobile financial services can be divided into 2 parts
Collaboration Model
Figure.25. Collaboration Model

transactions (Makendahl & Andersson, 2010) Operator Centric Model.
The collaboration model is used as a new value proposition for both business environments, and mobile network operators with financial institutions maintain the transaction between consumer and merchant or service providers. Both MNO and financial institutions can benefit from this partnership by reinforcing their strong side. Mobile operator’s contribution contains providing communication infrastructure while financial institutions control safety

In operator centric model, mobile operators are comparably independent in the maintenance of mobile payments. Mobile network operators install the application and perform transactions through operators’ billing infrastructure.

Figure.27 Operator Centric Model

The customer makes transactions through application and transactions delivered to the merchant through the operator`s network, and MNO deducts the fee from the customer`s balance or adds to monthly bill amount.

The collaborative model is applied in

developed countries, where mobile network penetration and financial intuition accessibility are high. Operator centric model is used in emerging markets, where mobile network penetration is comparably high, but most of the population does not have access to financial institutions and mobile operators partially replace financial institutions functions. (Trends in Telecommunication Reforms, 2014)

MFS In Emerging Markets.

The involvement of mobile financial business in the mobile network operator’s portfolio occurred in the developing countries. The intense penetration of mobile phones and the absence of the financial industry infrastructure created new possibilities for establishing new business models. The mobile industry infrastructure has rapidly integrated into the developing markets and brought a considerable increase in the subscription. Whereas, at the beginning of the 2000s ,more than 2,5 billion people in developing countries did not have access to financial services. MFS started actively developing in the emerging markets, and in Y 2012 the 70% of mobile financial service market was controlled by mobile network operators
Table.8 MFS in developing world