I just returned from meetings abroad where I was talking with numerous Mobile Network Operators.
There is common thread in these conversations. Over the last eight to ten years there have been no end of Telecom companies who are very keen to deliver financial services to their customer base and are actively pursuing innovations in the space. The phrases “mobile wallet” and “Mobile Financial Services” are echoing in the halls of Telecom companies like foots steps in a mountain canyon.
As an Executive with a background in the remittance industry, where I made some progress in cross-connecting remittance services to large Banks and alternative Financial Service businesses, I see some challenges in turning a phone company into a financial services company. Today’s hard-core compliance environment places some serious requirements on any company looking to enter the space and the word ‘fraud’ takes on a whole new meaning when you are able to move money instantly to some of the more “interesting” parts of the world.
Something I am fond of doing is turning situations on their end and looking at them from a different perspective.
It occurred to me that in the age of the MVNO, it would be pretty straightforward for a financial services company to create an MVNO, leveraging top players in various regions of the world to make sure they are offering quality service. The brand equity of a global FS company offering mobile services globally is a powerful concept. From that simple step, how difficult would it then be to include remittances and other financial services under that mobile brand. Licensing, compliance systems, fraud detection and understanding of the money movement business are already in place.
So who is in the running? Considering that in the late nineteenth century Western Union was considered to be the largest telecommunications company in the world, it really would be déjà vu to have them re-invent themselves in the form of a Telco, offering integrated Telecom & Financial Services. As this century hits its stride we might be entering an era where even large banks have to look at the Telecom space as a vertical integration play in a world where the mobile phone becomes the distribution path for everything.