Finnish handset manufacturer Nokia is closing down its mobile money service in India as it sheds non-core parts of the business.
Nokia Money was unveiled in 2009 with the company looking to target unbanked people in developing markets - starting with India - by offering mobile financial management and payments services. The service was developed with US vendor Obopay, in which Nokia also took a minority stake worth $70 million.
A commercial pilot with Yes Bank in Pune began in 2010 and later that year another deal was struck with Union Bank. Only in December, the service was finally launched country-wide, independently from banks, as Nokia set its sights on India's vast, unbanked rural population.
Yet, the service is now being ditched, with a spokesman telling Reuters: "The mobile financial services business is not core to Nokia so we plan to exit the business."
According to newspaper The Hindu, around 1.2 million people use the Nokia Money service across the three platforms. Of these, 200,000 are direct Nokia customers, who will see the service wound down over the next three or four months and will have their registration fee refunded. Yes Bank and Union Bank could take over the platform and keep it running for their customers, says the paper.
Finextra verdict: This decision has caused a fair amount of head-scratching at Finextra Towers. Nokia seemed to be making real inroads with its mobile money proposition in India. It had the brand recognition, tie-ups with some of the nation's biggest banks, a mobile money license from the Reserve Bank of India, and 1.2 million fee-paying customers. Nokia is in the midst of overhauling its operations in a battle to shore up its business and regain market share lost in the general consumer shift to smartphones.
The top management team, led by former Microsoft man Stephen Elop, may view Nokia's dalliance in the mobile money market as a distraction at a time of serious structural upheaval, but they would be wise to consider the company's history. As the Nokia Website tells it: 'Over the past 150 years, Nokia has evolved from a riverside paper mill in south-western Finland to a global telecommunications leader connecting over 1.3 billion people. During that time, we've made rubber boots and car tyres. We've generated electricity. We've even manufactured TVs. Changing with the times, disrupting the status quo - it's what we've always done. And we fully intend to keep doing it.' The decision to shutter its mobile money business would seem to fly in the face of that final sentence. Perhaps it's time for a rewrite.