Mobile money services have huge potential in markets where mobile penetration vastly outpaces the number of people with bank accounts.

However, according to Gartner, service providers, including banks and mobile operators will need to invest substantial efforts in building an "ecosystem" to make the service work within the local regulatory and business environment.
Mobile money refers to mobile banking and payment services and includes functions such as balance and history enquiries, money transfer, bill payment and prepaid top-up.
"Following the popularity of mobile money services in countries such as the Philippines, where 80% of the population has mobile access but only 20% have bank accounts, we are seeing rising interest from both mobile operators and financial institutions in offering the service in emerging markets," says Sandy Shen, research director at Gartner.
Gartner has identified seven crucial steps to enable providers to make successful mobile money offerings in emerging markets. These offerings include:
* Step 1 – talk to the regulator: Regulators must be involved from an early stage to gain their support, especially in markets where mobile money offerings have not been established. Present regulations are centred on banks and may potentially destroy the business case for mobile money, so service providers need to talk to regulators to educate them and gain their support.
* Step 2 – define the business model: In general, there are four business models: Led by the bank; bank-operator joint efforts; led by the operator; and led by a third party.
* Step 3 – select a vendor: Due to the nascent nature of mobile money services, start-up companies are sprouting up to chase opportunities in various segments of the market. Gartner recommends vendors with an end-to-end robust solution that is market proven and those with successful deployments of scale. A vendor should also have a solid understanding of the local regulatory and business environment and a proven track record.
* Step 4 – set up the agent network: Agents play an essential role in "cash-in" and "cash-out," one of the most valuable elements of the mobile money service. Service providers must chose their agents with care, ensuring that they consult regulation as to which businesses can assumes agent roles, as well as the process of approving and registering the agent. Agents should be trusted by both the customer and service provider, frequently visited by the customer, and readily equipped.
* Step 5 – recruit service partners: Service partners are third parties that accept mobile payments offered by the service providers and examples include retail shops, chains, utilities, internet/broadband providers, transportation companies, governments, schools and charities. By connecting the service partners to mobile money services, the service offers more value and makes it more attractive to the end user, creating stronger loyalty.
* Step 6 – manage risks: Risk management is key to the success if the service, both for consumer protection and regulatory compliance. It should cover technology risks, operational risks – such as misuse of PINs and theft of handsets – and compliance risks.
* Step 7 – market the service: For major cities, marketing is not that different to other services and should include above-the-line-advertising, billboards, campaigns and events. The challenge is to market to rural and remote regions where the majority of the target market resides and where there is a lack of marketing channels. Word of mouth is the best way to advertise in this case and one way is to recruit a community leader, such as a priest or doctor that can impact the wider community. Agents are also an ideal channel to market the service, particularly those in a local store where they are in a natural position to introduce new services.