Wednesday, August 29, 2012

Mobile Money in China. The next big thing?


Everything is big in China. It has the world’s biggest population with over 1.2 billion, it has over 160 cities with a population of more then 1 million, there are over 1 billion mobile subscribers, and millions of people have bank accounts. Despite this, the gap between access to bank branches in urban areas versus rural locations is huge, with only 0.34 banking outlets per 10,000 people rurally, compared to the national figure of 1.34. Further, in an interesting post this week in the Economist, the author noted that there had been almost zero impact from traditional mobile money services in China, despite the benefits that would be derived, particularly given the lack of bank branch access in rural markets, and the massive urbanisation that is currently occurring. Is this about to change, and in true China fashion, when it does change, will it awaken the world to the opportunity of mobile money in emerging markets?

In contrast to the article in the Economist, whilst there has not been much happening in China in the context of ‘M-Pesa type’ activity, there has certainly been a lot of activity in regards to mobile payments. Mobile banking has been present in China since 1999, and all of the major banks including China Construction Bank, Agricultural Bank of China and the Bank of China allow customers to access accounts, make funds transfers and other services through a mix of STK, WAP and 3G data. There have been deals between operators such as China Mobile and the domestic scheme China Union Pay to develop the use of mobile for payments, including NFC and remote payments. Consulting firm McKinsey believe that China is currently at an inflection point with mobile payments set to become a $40 billion industry driven largely by digital content and ticketing, and that competition is going to become intense between banks, mobile operators and third party providers. Much of this activity however will centre on the urban centres, and will not address the need to fill the gap between urban and rural access to banking services.

It is this gap where I think some of the most interesting mobile financial services activity in China is about to start. The regulators in China have been watching markets in Africa and elsewhere for some time now, and have recognised the opportunity that mobile money and branchless banking can bring to help drive financial inclusion. In March 2011 the China Banking Regulatory Commission issued a circular that encouraged financial institutions to look at alternative channels such as mobile to improve access to finance in rural locations, in an effort to assist with economic development in those regions. There has been recent discussion that the People’s Bank of China were keen to commence pilots in rural locations specifically in mobile money, and had issued guidelines that will govern where these pilots will occur, and the participants to deliver the services. The services that need to be provided to customers include airtime top-up, remittance and some payments. The guidelines provide strict requirements for KYC and risk management, and also provide recommendations on the type of agents that should be selected, including convenience stores, mobile phone shops and post offices. PBOC make recommendations on how services should be marketed, and provide an overview on how participants in the mobile money pilot should report their findings back to regulators to aid with future regulation of mobile money. The guidelines are extremely interesting in that they appear to have been drafted with a close eye to other mobile money schemes in emerging markets.

As an industry we should watch China with great interest over the next 12 months to see how these pilots develop, and whether a framework for large-scale extension of branch accessibility can be built. With over 30% of the population unbanked, there is a significant opportunity to drive financial inclusion through mobile, perhaps catapulting China to be the leading mobile money market in the world. For a country where scale is everything, this could be a phenomenal achievement in the history of financial inclusion.  

- Brad Jones

Sunday, August 12, 2012

‘’Follow That Taxi!’’...To Learn How To Build a Mobile Money Agent Network in Indonesia

In Indonesia a number of mobile money players have started stretching on the sidelines, waiting for the referee to call a start to play. The referee in this case is the Bank of Indonesia. The starting whistle is the much anticipated changes to the regulations that allow setting up of Cash-Out Agent Networks- while in theory are allowed today but in practice current rules are too restrictive.


The excitement over Indonesia’s mobile money potential is well founded. It has a population of 250m, 60%-70% of which are unbanked or under-banked. They are also adopters of technology; mobile penetration reported to range from 90-110%, they are the second largest users of Facebook globally, and third largest Twitter users.    
As mobile money players start preparing their business models, I want to highlight a success story of another Indonesia business- Blue Bird Taxis and the local lessons they can teach mobile money businesses looking to build an agent network in Indonesia.

Blue Bird Taxis, it has a fleet of 20,000 taxis and drivers, serving more than 8.5 million customers each month. Their metallic blue cars are instantly recognisable. Ask any Indonesian for help with a taxi and they will invariably refer you to Blue Bird, commenting they are trustworthy and reliable. Blue Bird’s reputation is evidenced at Jakarta’s Soekarno-Hatta Airport where queues at the Blue Bird Taxi rank are twenty deep while other taxis wait idle.

An instantly recognisable brand, considered reliable and trusted to point to that they are referred to strangers, what mobile money business would not want the same for their agent network? So what lessons can we learn from Blue Bird Taxis?

# On-boarding and Ongoing Training: Blue Bird recognises that drivers are the face of their business. They put each of their drivers through a basic orientation course to familiarise them with company policies and procedures. There are also regular follow-up briefings at which drivers are encouraged to share ideas and experiences in dealing with unusual situations or difficult customers

This results in well trained and knowledgeable business representatives. As the saying goes, a chain is only as strong as the weakest link. Ensuring a level of quality in the agent network representing your business will create strength in the overall brand.  

# Consistent Customer Experience: Use a Blue Bird taxi and you will notice all the drivers are in uniform, they are polite and friendly, they don’t talk on the phone or play loud music, seatbelts are fitted in the back seat and there are no overpowering scented de-odorises. While this might seem background to the ultimate service of being driven from Point A to Point B, as a daily user of taxis when I use another taxi company it’s the varied customer experience that I notice.

Similarly mobile money customers want consistency in the service experience with agent networks. Another important thing to note is the relative service expectation from the customer. If the mobile money business uses existing retail merchants, the merchant is not selling a customer a can of Coke, they are the interface for the customer to access their money. Customers view this as a more personal interaction and expect it to be treated differently.      

# Supported by Strong Customer Services Team: Blue Bird’s Call Centre has received Customer Satisfaction and Loyalty awards for the past 6 consecutive years. These have been measured on speed of answer, staff knowledge & manner, consistency and customer satisfaction. While the Call Centre is the focal point for direct customer interaction, Blue Bird also use their call centre to support their drivers- when a driver needs help with directions, a difficult customer or an accident, the trained call centre staff are available 24 hours and at short notice to assist the driver.

A Mobile Money Agent can feel alone. They are nervous about making a mistake, especially when faced with an unusual situation or disgruntled customer. A supporting call centre that can be relied upon to resolve issues quickly, increases the confidence of the agent network and the customers they serve.    


Regulatory change in Indonesia will see a number of mobile money businesses quickly establish in attempt to gain market share in a very attractive market. Indonesians are mass adopters of new technology; however they also value a customer service etiquette favouring politeness and fairness. Potential situations that could result in conflict will be avoided. Blue Bird Taxis have focused on their driver business model- typically a weak area for taxi businesses, and made it core to their success. Once the regulations do change, mobile money businesses will need to have a similar focus on their agent network model if they want customers to trust and use their service.     


-Paul Reynolds


Paul specialises in business start-ups with a focus in the past 5 years in mobile payments. He has worked in Indonesia for the past 12 months for a leading global mobile money business.