At first glance, mobile operators and fintech startups seem to be vastly different; each has different functions, uses and services. However, when these two collaborate, the result can be beneficial for not only the entities themselves but for the end user as well.
In simple terms, operators provide mobile network services to subscribers while fintech startups use technology to make financial services more accessible and convenient for customers.
Very different, right? But what if we look at them as complementing each other?
While mobile operators have stepped into the financial services arena with mobile money services, Fintech companies are finding it more and more efficient to utilize the infrastructure set up by these operators. Both mobile operators and fintech companies have a lot to gain from each other by partnering and pooling their skills, resources and networks.
Let’s look at some avenues of collaboration that can be explored by both entities to widen their scales of operation and ultimately, enhance their profits.
In marketing and branding of services
The operator has an overwhelming advantage when it comes to direct marketing of services to its subscribers. In this regard, when they collaborate with fintech startups, they can directly upload relevant fintech applications to the devices of their subscribers.
Moreover, with the rapport that they already have with their customers, it is easy for them to successfully promote partner services on their online platforms for uptake by their subscribers. Also, with the direct interaction with their customer base, they can easily act as the first line of customer service for those subscribers who choose different financial products.
With collaborative branding mechanisms, both entities will increase their clientele base as they draw new subscribers from each other; strategic synergy which can result in a sharp increase in sales for both entities.
If they choose to partner in any of the ways mentioned above, the operators and fintech service providers can work around ways of splitting the revenues that result from collaboration. For instance, in a branding partnership, the operator can become the vendor of the service provider’s products and will remit pre-determined percentages of sales to the fintech company.
Alternatively, the mobile operator can be the distributor of the financial services and be paid commissions on resulting proceeds. If convenient, the service provider can become the supplier of products being offered by an operator and will essentially be paid as such.
Taking advantage of Mobile Operator’s enablers
Customers wish to make seamless payments without having to be redirected severally to other platforms. Carrier billing is the first enabler advantage that financial institutions can take advantage of when they collaborate with mobile operators.
Mobile operators also come with the strategic advantage of access to Mobile Connect. This GSMA mobile identity platform enables mobile device users to have a single means of authenticating their identities and logging into different online platforms.
Many mobile users shy away from fintech services because of the prospects of having an additional username and password to remember in order to remotely access financial services. With access to the services of Mobile Connect, mobile operators give a strategic advantage to fintech providers. This is because subscribers can continue using their usual mobile login credentials to access financial services.
Checkouts are also simplified with Mobile Connect and once they finish using their fintech apps, users will simply submit pre-filled forms without having to fill them over and over.
Moreover, with Mobile Connect, the mobile numbers that identify subscribers can be attached to bank accounts to enable easy submission of payments. For instance, when an end user needs to send cash to someone else, they will merely need to feed in the other person’s phone number. This will help cut down on the number of financial transactions usually left halfway by customers who find it cumbersome to fill in bank details of other people in check out forms. Mobile numbers are comparatively easier to handle in this regard.
Collaboration in ensuring security of accounts including preventing fraudulent activities
Customers are always yearning for hassle-free transactions and as such, do not want to be put through countless account authentication measures. While financial institutions have to conduct proper monitoring of account activities to guard against fraud, this can be achieved without necessarily bothering the end user.
Mobile operators can share the information they have on their subscribers with fintech companies, with the permission of the former. Relevant information such as the history of a SIM’s swap and location can both be crucial in helping safeguard an account and preventing fraud. In addition, based on use of the mobile account, an operator can provide the risk rating of an individual to the financial institution especially when it comes to credit and loans.
Moreover, an operator that supports the services of Mobile Connect also gives greater security assurance to both the financial institution and end users. Rather than merely relying on passwords that can be hacked, one will need to have their mobile as the first tool for authentication of their account before they can access it. Mobile Connect also provides additional security layers that work to the advantage of the financial institution that has to protect its customers.
Mobile operators need to move beyond the provision of basic network facilities if they intend to remain relevant and useful. Much of this depends on how convenient its services are to the targeted customer base and a strategic collaboration with fintech startups and companies will give way to myriad paths for ensuring happy and satisfied customers.
Are you a mobile network operator looking to partner with a fintech startup? Get in touch and join our network of partners who are providing mobile money and remittance services to users all over Africa, Asia, UK and Europe.
About TerraPay: TerraPay is the world’s first mobile payments switch – a B2B transaction processing, clearing and settlement service for mobile wallets. Our best-in-class technology serves as the interoperability engine that enables our partners’ customers to send and receive real-time transactions across diverse payment instruments, platforms and regions.