Online Marketplace and Merchant-Centric Services As a Driver of the Platform Model

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Online Marketplace and Merchant-Centric Services As a Driver of the Platform Model Online Marketplace and Merchant-centric Services as a Driver of the Platform Model Part 1 - LANDSCAPE of best examples of platform approach using online marketplace and learnings for mobile money CONFIDENTIAL Acknowledgements GSMA GSMA Mobile Money Roland Berger The GSMA represents the interests of mobile The GSMA’s Mobile Money programme works to Roland Berger is a global strategy consulting firm with 50 operators worldwide, uniting more than 750 accelerate the development of the mobile money offices in 36 countries. We help our clients take decisions operators with over 350 companies in the broader ecosystem for the underserved. Our mission is to by exploring and proposing the best strategic options to mobile ecosystem, including handset and device support our members and industry stakeholders to face change and deliver tailored-made strategies and makers, software companies, equipment providers increase the utility and sustainability of mobile transformation plans. Our three corporate values, and internet companies, as well as organisations in money services and increase financial inclusion. Excellence, Entrepreneurship and Empathy, are the adjacent industry sectors. The GSMA also produces For more information, please contact us: foundation of our value proposition to our clients which the industry-leading MWC events held annually in Web: www.gsma.com/mobilemoney ranges from the analysis to the implementation. At Roland Barcelona, Los Angeles and Shanghai, as well as the Twitter: @GSMAMobileMoney Berger, we get things done. For more information, please Mobile 360 Series of regional conferences. Email: [email protected] visit: https://www.rolandberger.com/en/ For more information, please visit the GSMA Authors: Anant Nautiyal, Senior Manager Authors: Samer Sadek, Senior Consultant corporate website at www.gsma.com. Follow the Gunnar Camner, Director Santiago Castillo, Local Partner GSMA on Twitter: @GSMA. Kushal Shah, Senior Partner THE GSMA MOBILE MONEY PROGRAMME IS SUPPORTED BT THE BILL & MELINDA GATES FOUNDATION, THE MASTERCARD FOUNDATION AND OMIDYAR NETWORK CONFIDENTIAL Executive summary (1/2) Platform model for mobile money Many routes into platform model: providers: A need and an opportunity Marketplace the most relevant . Mobile money is a success, in particular in emerging . PaaP can evolve in various directions e.g. non- markets, and for some mobile operators represents a payment financial services, social media, product and significant share of the revenue. service marketplace, scoring services etc. Some mobile money providers have started adopting a . PaaP-based online marketplaces are one of the ‘Payments as a Platform’ (PaaP) approach, in which strategic options mobile money providers should mobile money is used as a platform to offer a plethora of consider. products and services. Payment providers, such as MPesa in Kenya (Mosoko), . This expansion towards PaaP addresses an opportunity have already created their own PaaP-based online to meet the underserved demand of customers in marketplaces. emerging markets as well as helps fending off the longer term potential threat to mobile operators of substitution of mobile money by alternative payment platforms, such as AliPay and PayTM. CONFIDENTIAL Executive summary (2/2) Best practices for creating online Operators’ assets for online marketplace: marketplace: How do the top-tier do it? A unique advantage . To succeed with an online marketplace, mobile money . E-commerce is still in its infancy in emerging markets providers need to start by defining a clear USP and because of a number of challenges. then developing a single business line (e.g. Mobile money providers should consider developing ecommerce). Proving success with this first business line PaaP-based online marketplaces because for e- is important. commerce to succeed in emerging markets, challenges in . Later, providers can gradually expand the business payments, logistics and customer reach and insights lines on the online marketplace. Trying to offer multiple need to be tackled. business lines from the start can be a recipe for failure. Mobile money providers are well placed to succeed . Business lines expansion does not need to be through a with online marketplaces because: They provide a single interface (so-called 'super app') but can also be widely accepted payment solution; with their delivered through different interfaces. extensive distribution network they can address the logistics challenges; and mobile operators have broad . Cracking logistics is critical, given the generally poor customer reach and deep customer insights. state of the logistics infrastructure in emerging markets. CONFIDENTIAL Contents 1. Platform model for mobile money providers: Need and opportunity 6 2. Routes into platform model: Marketplace the most relevant 15 3. Best practices for creating online marketplace 20 4. Operators’ assets for online marketplace: A unique advantage 45 5. Conclusion / key takeaways 50 6. Benchmarks of leading online marketplaces 52 5 CONFIDENTIAL 1. Platform model for mobile money providers: A need and an opportunity CONFIDENTIAL Mobile money has witnessed rapid growth across the globe in recent years Evolution of the global mobile money landscape, Five year growth of registered and active (90-day) 2001 to 2016 mobile money accounts # mobile money services 300 Million 700 270 277 36% 254 250 600 230 34% 500 200 33% 177 400 34% 150 32% 26% 117 300 100 69 200 50 38 100 17 1 3 3 4 6 7 7 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Europe and Central Asia MENA East Asia and Pacific Regd accounts Active (90-day) accounts Activity rate Latin America and Caribbean South Asia Sub-Saharan African 7 Source: GSMA CONFIDENTIAL Adoption, usage and accessibility of mobile money has increased significantly in Africa and SE Asia Pakistan . Approx. 10% of population is actively using mobile money account . Only 16% of population has bank account Bangladesh . Share of population with access to bank/non-bank FI has been decreasing1) . In 2018, approx. 13% of Bangladeshi adults are registered mobile money users, vs. 3% in 2013 Sub Saharan Africa “Over the last decade, mobile money has done more to . Approx. 35% of adults have a mobile money account, with at least 10% active users extend the reach of financial services than traditional bricks . Penetration is highest in Kenya, with 58% of adults actively using account and mortar banking were able to do over the last century.” . At least 19 markets with more mobile money accounts than bank accounts 7 1) Due to closing of microfinance institutions Source: Global Findex Database, GSMA, Ericsson, Tribune, Bkash, Roland Berger CONFIDENTIAL Simultaneously, mobile money has evolved from simple P2P transfers to more sophisticated use cases Global product mix by value, Dec-11 – Dec 16 [%] Global product mix by volume , Dec-11 – Dec 16 [%] 2.3% 5% 4.8% 5.1% 6% 5.9% 1.1% 1% 1.9% 2.2% 2.8% 7% 1.0% 11.4% 0.1% 6.2% 0.1% 30.7% 2011 13% 2016 2011 2016 19.9% 61.5% 61.3% 69% 81.7% Airtime top-up P2P transfer Bill payment Merchant payment Bulk disbursement International remittance 9 Source: GSMA CONFIDENTIAL Today, the mobile money industry is poised to evolve to a ‘Payments as a Platform’ approach Evolution of mobile money Having successfully offered and scaled payments as Focus on Allow others Build agent Reach scale Build Find a hook single use- to build your the initial ‘hook’ product, network (1m+) ecosystem case ecosystem operators are now in position to offer themselves Customer centric Operational excellence Industry influence as a ‘platform’ to other providers of products and Single-sided business Multi-sided platforms services i.e. adopt as Payments as a Platform MOBILE MONEY INDUSTRY IS HERE (PaaP) approach. 10 Source: GSMA CONFIDENTIAL GSMA defines PaaP as a model whereby mobile money providers build new capabilities in a multi-sided approach Platform model core attributes In the mobile money context, a PaaP model may be defined Multi-sided model as one where an MMP expands its value proposition Built upon numerous partnerships with producers on the supply side by building new capabilities that transform its activity in a Providing access to mass user base on the demand side multi-sided model, enabling third parties to deliver And officially matching supply and demand side using data analytics products / services through a digital platform that eventually Establish plug- Manage the Optimise user Enable 3rd Adopt a addresses a broadened user and-play organisational experience parties to personalised access to change and (UX) & user develop new approach to base. (For more details on the mobile money introduce new interface (UI) relationships product design system business via front end PaaP business model, please Platform model distinctivePlatform characteristics models see GSMA’s report and blog) 10 Source: GSMA CONFIDENTIAL Operators have already started testing the platform space by launching several new ventures Launched music streaming, ride hailing and ecommerce platforms Launched music, video and games platforms Launched music and video streaming and gaming platforms Launched music streaming and downloads platform Launched music and video streaming, chat and more under Lifecell digital arm 12 Source: Roland Berger, GSMA CONFIDENTIAL Adopting PaaP will significantly improve the mobile money value proposition for merchants and customers NON-EXHAUSTIVE
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