The Role of Mobile Operators in Expanding Access to Finance

This Brief examines opportunities and risks involved when mobile operators also offer financial services. It examines whether the company that operates the mobile network needs to actually provide financial services or whether others should offer financial services, with the mobile operator merely providing the underlying wireless connectivity. Allowing mobile operators to design, market, and sell their own transactional savings products has helped to extend basic financial services to the mass market in the Philippines and Kenya. The paper states that:

• Mobile operators' strengths include their network of physical, retail outlets, ability to provide secure, user friendly transaction platforms, and capacity for marketing;
• Advantages to them of offering financial services include additional revenue, churn reduction, branding, and reduction in distribution costs;
• Options for mobile operators in financial services delivery include offering secure communications services, mobile wallet services, and mobile banking capability;
• Risks to operators include breaches in data and transactional security, loss of operational focus, customer care costs, and additional regulation.

Finally, mobile operators' existing customer base includes a large number of unbanked people whom they can convert into customers of financial services, instead of acquiring new customers.