How can MNOs Start Offering Financial Services?

In this blog post, Traderoot Africa CEO, Louis Volschenk, discusses the opportunity for Mobile Network Operators (MNOs) to start offering financial services and banking products to their customers.  

The telecommunications industry has been through a phase of exponential evolution over the past few years with the advent of smartphones and mobile internet. As a result, Mobile Network Operators (MNOs) have become major players in the tech industry, leveraging their extensive customer base and network infrastructure to deliver value-added services to consumers and merchants alike. 

The Opportunity for MNOs

With the increasing adoption of mobile banking and payments, MNOs are in a unique position to offer financial services and banking products to their customers. By leveraging their existing infrastructure and customer base, MNOs can quickly roll out financial services and products to millions of customers, enabling them to perform transactions, access credit and savings products, and more. 

For many disruptors entering the financial services sector, access to customers is one of the biggest challenges, so MNOs already have a major advantage in this regard. Furthermore, this captive market of customers can enable MNOs to offer personalised and tailored financial services that meet the specific needs of their customers. This can be done by leveraging data analytics to gain insights into customer behaviour, preferences and needs, and then developing customised financial products that meet those needs.

So what does a MNO need to launch a suite of financial services and products? Aside from a market, there are three key elements. Firstly, a MNO will need the platform, product or service itself. Secondly, they will need the required licenses to be compliant with industry regulations. And thirdly, they will need distribution of their product or service.

Ready-made Fintech Solutions

One of the key challenges that MNOs face when it comes to offering financial services is the complexity and cost of developing bespoke solutions. Fortunately, there are many ready-made fintech solutions that MNOs can utilise to quickly rollout financial services and products to their customers.

These fintech solutions can be customised to meet the specific needs of the MNOs, and can include everything from mobile payments and money transfers to loans, savings accounts and insurance products. By utilising these solutions, MNOs can quickly enter the financial services market and offer value-added services to their customers.

Compliance and Regulatory Challenges

One of the main challenges that MNOs face when it comes to offering financial services is compliance and regulatory requirements. Financial services are heavily regulated, and MNOs must ensure that they comply with all relevant laws and regulations in the countries in which they operate.

To overcome these challenges, MNOs must work closely with financial regulators to obtain the necessary licenses and approvals to offer financial services. They must also ensure that their systems and processes are compliant with the relevant laws and regulations, and that they have robust risk management and governance frameworks in place.

Distribution Channels

Finally, MNOs must consider the distribution channels that they will use to offer financial services to their customers. While MNOs have a captive market of customers, they must also ensure that they have a broad distribution network that enables customers to access their financial services.

This can be achieved through partnerships with banks and other financial institutions, as well as through the use of agents and other third-party service providers. By leveraging these distribution channels, MNOs can ensure that their financial services are easily accessible to customers, regardless of their location or device.

MNOs have a unique opportunity to offer financial services and banking products to their customers, leveraging their existing infrastructure and customer base. By utilising ready-made fintech solutions, MNOs can quickly rollout financial services to millions of customers, offering personalised and tailored products that meet their specific needs. While there are challenges relating to compliance, regulatory requirements, and distribution channels, MNOs can overcome these challenges by working closely with financial regulators, and leveraging partnerships and third-party service providers.

In conclusion, the rapid evolution of the telecommunications industry and the widespread adoption of mobile banking and payments have opened up significant opportunities for Mobile Network Operators (MNOs) to enter the financial services market. By leveraging their existing infrastructure, extensive customer base, and ready-made fintech solutions, MNOs can quickly offer a suite of financial services and banking products to their customers. However, MNOs must navigate compliance and regulatory challenges by working closely with financial regulators and ensure robust risk management and governance frameworks. Additionally, the establishment of broad distribution channels, including partnerships with banks and third-party service providers, is crucial for ensuring easy accessibility of financial services to customers. With careful planning and strategic execution, MNOs can capitalize on their advantages and position themselves as key players in the financial services industry, providing personalized and tailored solutions to meet the specific needs of their customers.