Are telcos the new banks?
The previous posts on microfinance highlighted the idea that the mobile phone is likely to be the platform of choice in delivering financial services to hundreds of millions in the developing markets over the next decade. But this idea does not just apply to developing markets; mobile devices are already important platforms for commerce in developed economies and there is no reason to doubt that the growth of mobile commerce will not continue apace everywhere. Indeed the ability to reduce transaction costs to a point where you can easily and profitably transact micropayments, then you have the basis upon which to compete for any business. As Kid Mercury points out:
The best businesses are always those that can profitably serve the least valuable customer; their ability to secure the bottom of the market decreases the likelihood of a competitor coming in and taking the market from underneath them.
Where is the pressure highest to achieve this lowest common denominator? Probably in mobile telephony. Companies providing mobile telephony are increasingly being asked to process payments for everything from games to music, gambling to information services on top of their traditional (but highly complex) need to bill for network access in real-time. That’s not to say that these companies have mastered this skill. Indeed it is one of the biggest challenges they currently face. (from The importance of being paid, FT Digital Business:)
Operators, though, will also need to think again about how they approach the whole question of billing, and begin to think less as a telecommunications company and more like a bank.
So if they start thinking like a bank, when do they stop? When does pre-pay stop and deposit taking start? When is post-pay just another form of credit? And how do companies like PayPal or Bango fit in?
I think it will be fascinating to watch this play out. Watch this space.
