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www.bmiresearch.com
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bmiresearch.com
www.bmiresearch.com
• Introduction to MFS
• Growth Forecasts
• Key Players
• Country Case Studies
• The Future of MFS
Outline
www.bmiresearch.com
Mobile Financial Services Models
• Bank-led (mobile apps and SMS-based)
• Operator-led
• Collaboration between banks and operators
• Independent network-agnostic platforms
Intro To MFS
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Kenya Uganda Tanzania Cote d'Ivoire Zimbabwe Rwanda South Africa Ghana Zambia Sub-Saharan Africa
Nigeria
Mobile penetration rate (2014) Account at a financial institution (% age 15+) Mobile account (% age 15+)
Mobile Financial Services Still A Nascent Market
Source: BMI, World Bank
Key services
• P2P transfers
• Bill payment
• Savings and loans
• Merchant payments (C2B)
• B2B payments
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How Big Is The MFS Market? 2011 2012 2013 2014
MFS Subscriptions 39.97 57.15 78.87 101.48
Net Additions - 17.19 21.72 22.61
Operator Mobile Money Accounts 20.00 33.08 52.48 72.63
Other MFS accounts 19.97 24.07 26.40 28.86
MFS As % Mobile Subscriptions 9.0 11.0 13.7 15.7
MFS As % Population 4.8 6.7 9.0 11.3
Sub-Saharan Africa MFS Forecast
Source: BMI, Operators, World Bank, Regulators, National Banks
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2013 2014 2015 2016 2017 2018 2019
MFS Subscriptions, mn (LHS) MFS As % Mobile (RHS)
MFS As % Population (RHS)
Limits To Growth
• Tight regulations in Nigeria, South Africa
• Closed telecoms market in Ethiopia
• Political and economic instability in Sudan and DRC
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• Regional players will drive subscriptions growth
• Widening range of services increasingly important for
customer retention and revenue growth
Key Mobile Players
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Q2
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MTN* Orange* Tigo Airtel
Vodacom Safaricom Econet
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MFS as % of total mobile subscribers Y-o-Y growth in MFS subscribers
Total MFS Subscriptions By Operator (‘000) MFS Penetration And Growth Rates (%) – Q215
* Includes Africa and Middle East. Source: BMI, Operators ** Q115. Source: BMI, Operators
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The Wider Ecosystem
IT Solutions Providers
•MFS Africa
•eServGlobal
•Mahindra Comviva
•Interswitch
Financial Service Providers
•Ecobank
•Visa
•Commercial Bank of Africa
•First National Bank (ZA)
•Western Union
•MoneyGram
Operator-led MFS
Customers
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• Most mature MFS market globally
– Rising usage of MFS for merchant payments
– Access to affordable loans and savings
• Growth driven by increasing number of transactions rather than growing
customer base
Kenya – Deepening Reliance on MFS
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Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
Value, KESbn (LHS) Customers, mn (RHS) Transactions, mn (RHS)
Source: Central Bank of Kenya
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Safaricom Reaps The Benefits Of
Market Leadership
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25,000
Safaricom Airtel Orange Mobikash Equitel Tangaza
Mobile Money Subscriptions, '000 (LHS)
Mobile Money As % of Total Mobile Subscriptions (RHS)
M-Pesa 30-day Active as % of Total Mobile Subscriptions (RHS)
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FY2010 FY2011 FY2012 FY2013 FY2014 FY2015
M-Pesa Revenue, KESmn (LHS) As % of Total Revenue (RHS)
• New regulations have reduced Safaricom’s competitive advantage
• Equity Bank’s Equitel presents strongest threat with low cost services
Kenya MFS Competitive Landscape – Q115 Safaricom M-Pesa Revenue
Source: Communications Authority of Kenya, Safaricom Source: Safaricom
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East Africa
Vodacom 47%
Tigo 29%
Airtel 21%
Zantel* 3%
MTN 58%
Airtel 27%
Uganda Telecom
11%
Africell 4%
MTN 52% Airtel
25%
Tigo 23%
MFS Market Shares – More Even Competition
Drives Service Innovation
* = Tigo acquired Zantel in June 2015. Source: BMI, Operators, Regulators, National Banks
• Interoperability
− Tanzania: Tigo, Airtel,
Zantel – Vodacom joined
later
• Remittances
− Cross border
interoperability
− Tigo first, followed by Airtel
and MTN – M-Pesa deal
• Interest on deposits
− Tigo Pesa (Tanzania)
began dividends in Q214
− Vodacom to follow from
July 2015
Uganda Q115
Rwanda
Q214
Tanzania
Q414
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• Mobile operators specifically excluded from MFS licences
• More than 20 licensed MFS providers creates a fragmented market
• Banks more risk averse and lack operators’ distribution networks
• But bank-operator partnerships gradually learning to work around licensing
conditions to tap demand
Nigeria – Regulations Stifle Growth
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500
1,000
1,500
2,000
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4,000
Jan
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-10
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-11
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-11
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Number of Mobile Payment Transactions ('000)
Value of Mobile Payment Transactions (NGNbn)
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Jan
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-14
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-14
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-15
May
-15
Mobile As % of Total Transactions Mobile as % of Total Value
Mobile Payments Beginning To Gain Traction... ...But Still A Minor Share Of Total Payments
Source: Central Bank of Nigeria
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• Similar regulatory hurdles for telcos as in Nigeria
• Less need for MFS – financial inclusion more than twice the regional average
• Good reach of traditional banking networks – 27,000 ATMs and 360,000 PoS
• MFS take-up starts in urban areas and gradually extends to rural areas for domestic
remittances – but high banking penetration limits demand for MFS from urban consumers
Therefore stronger growth opportunities in the mobile banking segment than for
operator-led initiatives
South Africa
Vodacom M-Pesa KPIs – March 2015
Source: Vodacom
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1,000
1,200
Registered Users Active in Quarter Active in Month
Source: BMI, World Bank
2014
28.4mn 3G/4G subs
34.7% of mobile market
2019
38.7mn 3G/4G subs
44.7% of mobile market
South Africa
Sub-Saharan
Africa
(developing only)
Account at a financial institution (% age 15+)
68.8
28.9
Mobile account (% age 15+)
14.4
11.5
Number of people who have account at financial
institution (mn)
25.8
148.3
Number of Mobile Money Accounts (mn)
5.4
59.1
Number of people who made a mobile banking
transaction (mn)
7.5
31.3
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• Growth Drivers
– Broader range of users: B2B transactions, government
salaries
– Greater range of services: loans, savings, remittances
– Sector specific financial services: insurance,
agriculture, education, retail (online and offline)
– MFS meets financial markets: Kenyan government
plans to offer government bonds over MFS
The Future Of MFS
426 666 845 1,077 1,319 440 686
842 979
1,151
384
603
751
929
1,129
51
105
198
336
580
0
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4000
4500
FY11 FY12 FY13 FY14 FY15
Deposits P2P Transfers Withdrawals Other
+ 84%
+ 31%
+ 27%
+ 33%
• Tighter Regulations The Key Risk
– Kenya and Ghana are bringing
MFS providers under Banking
regulations
– As transaction volumes and
services grow other countries will
follow suit
Safaricom M-Pesa Total Transactions (KESbn)
Source: Safaricom
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