The Benefits Of Providing Liquidity For Mobile Money

Mobile money has become a key financial enabler for many customers across developing markets, particularly here in Africa. The ease of access to instant funds without needing an existing bank account or credit card is particularly appealing to consumers in rural areas or lower-income households who might not have access to traditional banking services.

However, mobile money services are also extremely popular across the socioeconomic spectrum, especially the younger generation of consumers on the continent, who run their daily lives from their mobile phones.

For mobile network operators, securing profits and driving ongoing revenue growth have proven challenging in recent years, thanks to a drop in demand for traditional mobile services and emerging competition from fintech companies.

Providing liquidity for mobile money and offering mobile money services has the potential to benefit both MNOs and consumers. Read on to discover the benefits of providing liquidity for mobile money.

Providing Liquidity for Mobile Money – What Does It Mean?

When a fintech company, bank or mobile network operator provides liquidity for mobile money, they essentially provide a line of credit to their customers. Customers have access to this credit and redeem it by purchasing goods or services using mobile money. The customer will have a mobile money wallet or e-wallet that will be topped up with the amount provided to them by the mobile money operator.

Mobile money essentially allows customers to make transactions using their mobile devices instead of traditional banking services. Customers can send and receive mobile money to and from other customers and use mobile money to buy prepaid services, pay for subscriptions and utilities and perform “cashin and cash out” transactions at mobile money agents.

How Do MNOs and Customers Benefit From Mobile Money Services?

MNOs who provide liquidity for mobile money can expand their existing services beyond traditional voice and text services which are losing value.

By offering mobile money to customers, MNOs can offer the services that come along with mobile money to their customers, such as eCommerce, subscription, lifestyle and airtime and data services. MNOs can amend their existing business model and tap into novel revenue streams that will improve their bottom lines.

Offering mobile money also helps customers. A large portion of Africa’s population remains unbanked and mobile money, for many customers, is a means of accessing credit.

Many unbanked customers are unable to create bank accounts due to various reasons such as location, lack of employment or even possibly because they lack any form of ID registration.

MNOs, with their extensive database of customer data, are ideally positioned to help unbanked customers access funds through mobile money, which customers can use from their cellphones anywhere in the world.

How Can Providing Liquidity for Mobile Money Help with Customer Retention and Growth?

Providing liquidity for mobile money doesn’t just help MNOs expand and improve their services, it can also help with customer retention and growth, something MNOs have been battling with for several years.

The demand for instant access to goods and services has only increased over the last year and more customers expect to be able to make transactions directly on their phones, instead of withdrawing cash or paying via traditiona lbanking platforms.

Fintechs have recognised this rapidly developing trend and are responding to it, which threatens MNOs’ security. MNOs are currently at risk of losing their customer base to fintechs. Providing liquidity for mobile money to their customers is the fastest, most effective way to close the gap and retain customers.

Customers who use mobile money will enjoy a better customer experience and experience a higher satisfaction rate, which will encourage customer loyalty.

By providing access to mobile money and related services, customers will be incentivised to stay with their MNO service provider and be less likely to migrate to a competitor or a fintech service provider.

Mobile money will increase customer ARPU and reduce churn while attracting new customers who want access to mobile money services.

Conclusion

 MNOs may understandably be hesitant about directly providing liquidity for mobile money. Partnering with a service provider who can offer liquidity as well as mobile money services will allow MNOs to offer an exceptional front-end customer experience, while the back-end management is taken care of by specialists, without the MNOs taking on the liquidity burden themselves.

Airvantage is one of the largest service providers to MNOs across Africa. We specialise in:

●       Mobile wallets and mobile money lending

●       Advanced airtime and data lending

●       Agent lending and handset finance

●       Financial identity as a service

If you’d like to find out how Airvantage can provide the liquidity you need to offer mobile money services to your customers, book a consultation with us.