So like many technophiles, I’m pretty excited about the potential of mobile money in Uganda. Being a Ugandan developer though I am also pretty frustrated that it isn’t evolving as fast as I’d like.
So while I hope, and work towards making the future I would like to happen, I speculate about what that future might actually look like and what events might happen. So here is a (perhaps overly optimistic) prediction of the future of mobile money in no particular chronological order. Some predictions might actually be mutually exclusive!
A Public Mobile Money API
An Application Programming Interface or API is like it says an interface through which one application interacts with other applications. Typically an application’s API defines what kind of access that other applications have to it.
If ever mobile money is to be opened up to e-commerce and allow new applications to be built by third parties, there will have to be an API for it. As the telephone service providers running mobile money today get more comfortable and work out the kinks in their systems, they will eventually release an API.
Competition will be a key driver here, because the first telecom company to release a public API for mobile money will become the new best friend to developers countrywide. Although, if they release a hard to use API then the second one out with an API that’s easier to use will take the role of best friend to the developers. The better the API the more ‘killer apps’ developers will build on it and the more subscribers the telco will have using their platform.
Telcos Start To Think Like Banks
It’s only a matter of time before telecom companies realise that they could make a lot more money by investing the large amounts of money going through and sitting in their mobile money systems than they could ever make by charging per transaction. When they realise this they will start to adopt strategies that ensure that they have as much cash as possible sitting in their system. They’ll want to make sure that more people deposit money with them and fewer people take money out of their system. To do this they might;
- Eliminate the middle man by getting rid of the current mobile money agents. Why pay agents when you can do what banks do and just deploy ATMs. Besides with transaction costs waived, anyone can be an agent. Any business or individual would be happy to oblige someone in need of cash, just send them the money via mobile money and they’ll give you cash from the cash register or wallet. It’ll save them the trip to the bank! Its likely the ATM’s will be rendered useless pretty fast actually.
- Waive transaction fees, This means free deposits and withdrawals from mobile money. If there is no added cost of carrying out a transaction via mobile money, then that’s one less reason to ever withdraw the money. This one-ups banks because even if banks waive fees, you’d still have the inconvenience of finding a branch and waiting in queues to deposit money into your account.
Telecom companies have one other reason to start thinking like the banks do; The very act of managing a cellular network gives them tons of information about the habits and movements of millions of people. Add mobile money and telecom companies can potentially know who you talk to, where you go, what you buy and possibly a lot more. Whats more, a significant bit of this information is actually available just from watching network load at different locations and times, no NSA style spying necessary. What this could translate to is that telecom companies could be able to make better investment decisions than even banks and other old school financial institutions.
Mobile ID Becomes ID
With the Ugandan government seemingly going nowhere with the national ID scheme, there is plenty of reason to believe your Mobile ID could become the preferred ID. Think about it, you always have it with you, you had to register to get it, it can be used to contact you and you are heavily invested in it, with or without mobile money, your phone number is already your ID. With a mobile money API they’ll likely never have to ask you for another ID to confirm you are who you say you are.
In fact, with the system they have in place now, it would be trivial for telecom companies to provide Identity services to third parties.
Right now all mobile money service providers are pretty independent and each is running the service on their own proprietary system configurations and designs. However, just like the Payment Card Industry Data Security Standard (PCI-DSS) creates security standards adhered to by the world’s major debit, credit, prepaid, e-purse, ATM, and POS cards; Eventually a standards body will be formed that will create standards for mobile money type systems. It might even be the PCI-DSS that does this as they are probably the closest thing to experts in this nascent field in the world.
UCC and the Bank of Uganda will push the mobile money service providers to form a standards body. Best case scenario ISO, IEEE, ITU and a bunch of other global standards bodies will provide significant input to it. With time we’ll start hearing Mobile money service providers talking about things like ‘MMI-DSS certification.’
Further along, mobile money will become such a major source of some telcos revenues that some of them will decide to split their telcom business from their mobile money business.
Almost all telcos are in the process of converting their network to full IP networks. IP networks utilise a layered architecture that separates network applications from the network infrastructure they run on. Ultimately mobile money is just another application running on a communications network. In the future, the two might actually be stronger as separate entities. The spin offs could go a long way in making mobile money services network agnostic.
Right now it is more likely that the company would spin off its mobile money business but as that develops and margins from traditional voice and text keep dropping, we are approaching a future where it is more likely that they will spin off their telecom business, and keep the mobile money business.
Bank Mergers and Acquisitions
Alternatively, banks and telcos could head towards mergers and acquisitions. Commercial banks will come to the conclusion that they could acquire many more clients by acquiring the mobile money subscribers of the telcos. The telcos in turn will realise that they could use the expertise that banks have in investing and managing large amounts of money. As a result mergers and acquisitions will happen. The first to do it will be in such a position of power that competitors will have little choice but to do the same.
Mobile money has put African governments like Uganda’s in an unfamiliar position, a pioneering position. In many other things the Government only has to copy what the more developed countries did. The Government usually has the benefit of hindsight (not that they use it much). When it comes to mobile money however, the developed world seems to be as new to it as we are. So we have an opportunity to be the ones to pioneer a technology for the world. Let’s hope we don’t mess it up!