Wednesday, March 14, 2012

The Demise of Nokia Money

Dramatic news in the mobile money world this week with the announcement that Nokia was withdrawing from its Nokia Money business to focus on core offerings. The change in strategy will not happen immediately however, with a Nokia company spokesman outlining that the service will continue to operate in India whilst it works on an exit strategy with its partners, regulators and other stakeholders.
For those of us in the industry, this hasn’t come as a major surprise, as there have been rumours and discussion about the possibility of this for some time, and visible changes in strategy and senior management from Nokia as they completed the test and learn cycle of their financial services offering. As an industry however, it is interesting to consider what lessons can be learned from this experience. As an observer over the last three years, three major observations on challenges with Nokia Money spring to mind. These are; overblown expectations, strategic alignment and distribution.

The Nokia Money service launched with much fanfare and expectations of 80 million customers by the end of 2009, and 300 million customers by the end of 2011. These numbers far exceed the total number of emerging markets mobile money customers today, and it can only be guessed that internal business cases were highly geared to massive take-up. This was probably the same for Nokia’s primary technology partner Obopay, who managed to convince Nokia to take a substantial stake in the company, with speculation that this was around US$70 million. Whilst I am a huge supporter of this industry, and I firmly believe that investment by big players are key to success and scale, the old adage of payments remains the same – scale takes time. Unfortunately setting unrealistic timeframes on customer scale, and therefore revenue have probably made it difficult to maintain support for a business offering in an organisation that is already facing external pressure for results.

The original Nokia Money business plan was to build an open payments system that linked unbanked customers to financial institutions in order to transfer money, pay bills and airtime, and buy tickets. The concept was attractive in that Nokia created a customer friendly user interface that could operate on either Nokia, or other branded phones. Eventually Nokia phones would be pre-loaded with the application, which could then be activated by the customer through their service provider. Distribution would be managed by the extensive network of Nokia outlets and agents that are present in emerging markets. I struggled a little with this proposition – my experience in emerging markets has been that the best agents tend to be the ‘mom and pop’ shops that offer a range of services and products and see mobile money as an additional revenue stream. My observations in many markets is that mobile phone shops, whether they are Nokia distributors or not, tend to focus on smaller volume, larger ticket price items, and as such struggle to understand the economics of transaction based revenue.

From a strategic alignment perspective, the challenges that Nokia are currently facing are well documented, and CEO Stephen Elop has commented that Nokia need to focus on core activities such as handset production and logistics and distribution. Unfortunately for Nokia Money, unmet expectations of customer take-up have probably caused the senior management of Nokia to lower the axe on a business that sadly was starting to show some 'green buds' of growth. I have been fortunate in meeting many of the people involved in the development of Nokia Money, and to a person they were committed, intelligent and focused on what they were trying to achieve. I am sure these latest developments are disappointing for them, but they should also be proud of the achievements they had in furthering the development of this industry. As the industry matures and scales over the next five to ten years, I am sure organisations like Nokia will look in hindsight at a missed opportunity to diverge their business in emerging markets. Nokia have come a long way from manufacturing rubber boots in 1865, but in the long run, their strength has appeared to be the ability to adapt and innovate into new markets and products. Only time will tell whether exiting financial services in emerging markets has been the right move.
- Brad Jones


  1. well written mate....what is mobile money? wharts

  2. Hi Wharts, thanks for reading. Over the last five years there has been a lot of activity in emerging markets where mobile operators, and increasingly banks are providing financial services to the unbanked using mobile phones as the primary channel for banking, and third parties such as mobile phone shops and convenience stores as agents for deposits and withdrawals. Markets such as Kenya have seen incredible growth, with over 15 million people now using the service there provided by Safaricom. In a market I know you are familiar with, Papua New Guinea, mobile phone provider Digicel has launched financial services to address customers that the banks have found it difficult to reach, but are addressable by mobile operators given they push distribution right into the rural areas. A very interesting area which I am delighted to have found myself in!


  3. Nokia are right to exit MFS as a consumer branded service. I think they should stay in the game and try to develop their loose distribution into a full agent/merchant network for interoperable payments acceptance. They need to leverage the ...fact that they still have to manage (or have others manage) the supply chain for handsets and promotional payments. They should require prepaid as a mechanism for this, brand it, badge it with acceptance marks, and then extend it to a revenue source for agents.


  4. It takes guts to exit a market after hyping it for so long, so I have to give Nokia the credit for taking the tough decision. They had some good ideas and strengths that should have helped Nokia Money, but it would always be a tough task convincing banks, customers and regulators that it's a good idea to have a service tied to one brand of phone, even one as ubiquitous and accessible as Nokia. On the other hand, though, banks and regulators usually have no problem with a service tied in to one mobile operator.

    One of the most interesting things about Nokia Money was that it provided a rich interface without needing a dedicated data channel or high end phone. It's a shame that Nokia's attempts to provide a bridge to cover the gap between the basic interface of USSD and the bells-and-whistles of a data-enabled Java phone or Smartphone aren't going to be continued in the field of mobile money. I am quite confident that they have enough smart people to learn some lessons and keep working on making all the benefits of mobile technology accessible to their users.

  5. Well written Brad.

    Michael you raise a good point about the mobile interface. The USSD menu user experience is really poor. Nokia Money App and interface was one of its real strengths.

    In emerging countries two major trends growing exponentially are;
    1. The adoption high end feature/smart phones
    2. Drop in MNO network service quality due to the increase consumer demand

    Interestingly Orange have recently announced plans to create a Facebook app that runs on USSD- presumably as reduced service using a low impact technology. This is great if you are a consumer with a feature rich phone, want social media connectivity, but also want to conserve prepaid phone credit.

    For Mobile Money to be successful a business needs to manage an array of complex components, which is why most services fail to get traction. However for the customer interface application, Nokia were definitely ahead in that component.

  6. Great post Brad... Some really good analysis of Nokia's time in Mobile Money. Commentary is fair, but still recognises the efforts behind the scenes. They have a some smart people in the team, let's hope they stay on in the Mobile Money space. One obvious omission from Nokia's announcement was any comments around the partnership they announced in Pakistan. (


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