Driven by the popularity of smartphones and new technologies (i.e. AI, IoT, Big Data, etc.), mobile financial services (MFS) are expanding beyond the e-wallet to encompass ecosystem payments and microfinance. The market size will reach $60 billion by 2025.
Mobile financial services are growing much faster in recent years. According to GSMA data, the industry took 10 years (from 2006 to 2016) to reach 100 million active users, however, in the last 5 years it reached 346 million active users. There is now a golden window of opportunity that MFS operators can seize to scale their Fintech businesses.
In this article, we examine the main operator challenges as well as the capabilities of the Huawei FinTech solution to enable operators to provide efficient financial services to consumers, in particular, how the platform can improve the financial life of customers. underserved in emerging global markets, enabling them to access comprehensive mobile fintech services simply, efficiently and securely.
Today, Mobile Fintech can put access to banking capabilities in the pocket of every end user. Service providers guarantee 24/7 access to these financial services through wireless networks and mobile applications integrating and complementing the capabilities of the formal banking system. Currently, there are 316 global mobile fintech operators and 191 of these providers are telecom operators with cross-border operations.
Successful operators provide connectivity to safe and open ecosystems for rapid onboarding of agents, merchants and partners. They provide wireless networks and elastic capacity to bridge the gap between mobile phone penetration and access to digital financial services. Although many companies have launched mobile Fintech services, only 22% of them are making a profit. Ultimately, there are 3 major challenges that operators need to overcome in order to be successful, these are; slow user development, low transaction activity, low monetization.
After years of development, the conversion rate/penetration rate of telecom users to mobile money adoption is still below 30%. Operators also struggle with poor transaction activity, such as customer money transfers occurring less than three times a month and loyalty being low. Along with this low frequency, the average revenue per account (ARPA) typically totals less than $20. Furthermore, in the future OTT competition environment, the traditional transaction fee-based business model may be subverted by the disintermediation of transactions by OTT wallets.
These challenges require a future-ready FinTech platform that delivers a frictionless customer experience to improve retention and increase monthly transaction counts and monetization capacity.
Huawei FinTech end-to-end solution
Huawei FinTech platforms incorporate advanced authentication and encryption to protect private transaction information. The platform’s open API architecture demonstrates the leadership and collaboration needed for rapid mobile money development and enabling customers to securely manage their money and finances.
The solution also incorporates features to improve user development by increasing penetration from 30% to 80% through online fission marketing and offline agent network. Online fission marketing features provide 10+ online fission marketing activity assets including: festival pocket money, member getting member, lottery, discount, instant elimination, cash back, coupon, card member, group, proximity, C2B customer service, chat, search, etc. For example, Huawei helped one carrier achieve nearly 100% penetration and helped another carrier grow to 18 million subscribers within a year of launch.
By providing a one-stop ecosystem platform, Huawei helps increase transaction activity from wallet only by an average of 3-15x/user/month. The platform allows operators to quickly create a complete lifestyle payment scenario while enabling partner services to go live within a week. In addition, Huawei can also introduce more than 100 partner integration models in more than 22 sectors derived from the successful digital ecosystem that already exists in China.
The one-stop ecosystem platform includes the ability to establish great apps for consumers. For businesses, these applications include store management, employee management, fund management, and operations dashboard. Apart from mini apps/official account and integrated H5 and payment clearing and settlement, the platform also offers 700+ open APIs with orchestration and the APPCUBE development platform.
In 2018, Huawei partnered with operator K to provide end-to-end platform and operation services. This platform now connects 9 million users and 300,000 traders across more than 10 industries, reaching an average monthly transaction frequency of over 15.
The operator’s final challenge is poor monetization capability – the ability to grow the average revenue per account (ARPA) from under $20 to $40 or more to counter this deficit, the Huawei platform provides. rich financial services integration and intelligent risk control to manage bad debt risk. The 10+ finance product includes overdraft, device loan, micro-loan, installment loan, consumer loan, insurance and savings. The solution’s intelligent risk control guarantees an identification accuracy rate of debtor users of up to 90%. For example, we have an operator whose ARPA is $32, a deployed financial service already contributes $5, or 15% of ARPA. In the future, more financial services will be added to further increase ARPA through increased monetization of partner financial services.
Huawei expands global mobile money services
Over the past decade, Huawei FinTech has grown and transformed the lives of 380 million unbanked people in more than 30 countries in Asia and Africa. In 2021, the platform completed more than US$350 billion in transactions. Huawei FinTech uniquely combines the strengths of agile business development, a rapidly scalable platform, financial-grade regulatory and security compliance, and finally, real-time granular risk control, to accelerate securely digital financial inclusion, enabling every person and organization to access the growing digital economies.