Perfect partners

As senior vice president of Utiba Mobility, one of the world’s leading mobile payment specialists, Gregg Marshall is well placed to discuss the latest trends in the fast growing mobile money sector. He tells CommsMEA why mobile operators and banks are perfect partners.

Tags: IndiaMobile money transferUnited Arab EmiratesUtiba Mobility
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Perfect partners
By  Roger Field Published  December 23, 2009 Communications Middle East & Africa Logo

Tell me about the company. How long has it been established and where does it have a presence?

The company is very strong and has multiple customers in India, Bangladesh, Indonesia, Vietnam and the Philippines. We now have offices in New Deli, Ho Chi Minh, Jakarta, Manila, Beijing, Dubai and also in San Paulo in South America. We have gone from zero staff to about 120 employees over the last nine years. The company is privately held and has no outside funding, so there are no VCs and no significant debts of any kind. It has funded its growth out of cash flow.

Utiba is involved in three lines of business at the moment. We are one of the pioneers in handset-based electronic pre-paid top up, so we have established this business in many countries where airtime top up dealers sell airtime using USSD or SMS interfaces off their handsets. We have some very large installations including Globe Telecom in the Philippines with about 4 million top ups a day, Indosat in Indonesia and Mobilink in Pakistan are very close to those numbers. For Bharti Airtel, we do about 11 million top ups a day.

We have also pioneered person-to-person cash transfers, and we are now doing about $100 million of throughput every month, with around a million transactions a day and 3 million active users who are doing transactions from remittances to selling eBay purchases in the Philippines. We have mobile money solutions in Kuwait, Madagascar, Pakistan, Bangladesh, Indonesia and the Philippines.

How do you see person-to-person cash transfers developing?

This is a huge growth area that everyone is looking at. In the future it will be huge in Africa and we want to push further into Africa and the Middle East. In the MEA region we have trade agreements in Kuwait with Orascom Group to provide mobile commerce infrastructure for them, we have mobile top up and mobile money installed and operating at Telma in Madagascar and a few other projects in progress in the region.

It is an area of intense focus for us in the future, especially as Africa seems to be embracing this concept of mobile money transfer. With the outflow of remittances from the Middle East it is everybody’s dream to have as a source of business.

What are the most popular services?

Prepaid electronic top up is by far the largest. It is a 'razor blade' business; everyone has to do it in order to use their mobile phones and of course in most of the developing markets that we are working in, most of the subscribers are prepaid. In terms of mobile commerce and mobile money transfer there are a couple of applications that are getting a lot of attention. In some developing countries it is a challenge for people to pay a utility bill in person. This has been successful in a number of markets including the Philippines.  Person-to-person money transfer is taking off and is highly successful in Kenya and in the Philippines.

What services do you think will be big in the  future?

Of course the holy grail for this is international remittance so a $500 billion a year remittance industry around the world and that is just what is known in the formal channel. The promise of the mobile device for that purpose is that people can control where they are sending their money and can get money immediately directly into accounts where it needs to be and it takes away the risks of the informal channel. That is the piece of the industry that everybody is working hard on now to put into place.

What challenges are there to continued growth of the industry?

There are a couple of challenges and among them is distribution, so how do you get a dealer network in place where people can turn cash into mobile money that is available to them through their mobile device? And how do you get commercial agreements going with a big enough group of retail banks that people can be brought into the formal retail sector?

The second challenge is regulatory. This is new technology and it has the potential to revolutionise the way people interact with banks and it has capability to serve the couple of billion people around the world who have mobile devices but don’t have bank accounts.

Where do the operators fit into the equation of mobile banking and remittances?

The operators have been innovators and pioneers in trying to introduce these new services. They did so because they have these large subscriber bases and they are looking for new revenue streams and for sticky services.  This type of service holds real potential to attract new users and encourage people to stay with them.

Banks have been watching with a more wary eye for fear telcos get involved in banking, but I don’t think that will be the case. Banks are also a bit jealous of their banking mandate and keen to make sure nothing goes wrong with that.

But the banks are still not that interested to have some of these customers anyway. If someone has so little money, it costs more to service their account anyway than they will make from it at that deposit level. Mobile transactions have opened up the formal banking sectors to a whole new audience, so I think there is a natural partnership between the banks and the mobile operators.

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