Mobile financial services and knowledge-based apps hit the market

Myanmar’s telecoms developments will undoubtedly transform the social and economic fabric of the country, but beyond basic voice, data and SMS services a host of other products are being developed, including one of the most successful and transformative services of recent years: mobile money.

The developments in the telecoms and financial services industries have been some of the most radical changes since President U Thein Sein’s government began the reform process in 2011. But where these two sectors merge is an area that has the potential to spark a whole new level of benefits for the country’s 51m citizens. The advent of mobile financial services over the past few years has challenged traditional banks across the world, and can offer a level of convenience and service not available in Myanmar two years ago.

“If we can prove that mobile financial services work, everyone will use them,” U Min Zeyar Hlaing, managing director of the Myanmar Millennium Group, a local ICT-focused services company, told OBG.

At the beginning of October 2014 Myanmar invited nine foreign banks to establish operations in the country with a licence that allows limited lending. Within two months, two new international mobile network operators (MNOs) had launched their services in the country to compete with the state’s monopoly. These two moves from the Myanmar government show a willingness to open up the economy, and with a green light other players have moved in to take advantage of the liberalisation process.

Mobile Money

Over 2.5bn people in developing countries lack access to financial services, but 1.7bn of them have mobile phones. Given the advancements in technology and the increasing ease of access to financial services, companies can now provide these services to the underbanked through existing mobile infrastructure. By the end of 2013 there were 219 mobile money services in 84 countries, processing $600bn from 60m accounts. With smartphone handsets becoming ever cheaper, analysts expect the advent of mobile money to spread fast. For countries such as Myanmar, where traditional financial services are lacking, there is an opportunity to leapfrog traditional banking straight to the most modern transaction methods.

The GSM Association estimates that global smartphone penetration as a percentage of the population is expected to rise from 19% in 2012 to 32% in 2017, meaning more people across the world will be able to switch to mobile payment systems. In Myanmar 95% of users are already on Android smartphone devices, and with prices falling to just $40 for a handset, more are expected to join the club.

Experience

As of November 2014 the only fully functional mobile money platform in Myanmar was run in partnership with a military-linked bank, Innwa Bank. The service, Myanmar Mobile Money (MMM), was launched in January 2014 with France’s Oberthur Technologies and allows person-to-person transfers, withdrawals and deposits, salary disbursements and merchant payments across network bank branches and agents in more remote areas.

MMM aims to provide these services to 80% of Myanmar’s population that do not yet have access to brick-and-mortar banks, but by August 2014 the company had a network of only 200 agents and was not as widely used as had been hoped.

Other operators include MyKyat, a telco-agnostic provider looking to roll out in the final months of 2014, targeting young, tech-savvy students and professionals who are already familiar with mobile phones and financial services. Red Dot Network, another mobile payment platform in Myanmar, is looking to focus purely on top-up and bill payments for its launch, but also aims to include loyalty services for its agents and distributors.

Telcos

However, some of the most successful mobile money platforms have been run by the launch nation’s leading network operator. Kenya’s M-Pesa, considered a successful example of mobile financial services systems, was launched by Safaricom in 2007 and signed up over 1m customers in the first eight months of operations. By 2014 the service had over 20m customers and had boosted financial service access to 70% of the country, up from 40% in 2007.

In Myanmar the new entrant MNOs, Ooredoo and Telenor, are both rumoured to be working on a mobile money platform for their subscribers and have the experience from other markets to bring to the country to compete with the sole existing platform.

Ooredoo has a rich history of mobile money services, now managing over a million transactions per month in Qatar, Tunisia and Indonesia as part of its push to expand the innovative service. In Myanmar the company has made a partnership with CB Bank, the country’s second-largest financial institution, but no official statements have been made with regards to a mobile money launch.

Telenor, on the other hand, announced in November 2014 its partnership with Yoma Bank, one of the country’s top banks and a subsidiary of the Singapore-listed Yoma Strategic Holdings group, in preparation for its mobile money launch, but details on the timing and exact services are unclear given that guidelines for operator-led mobile money services have not yet been issued by the Central Bank.

Law

As with many new operations in Myanmar, the ability to act hinges on updates to legislation. In December 2013 Myanmar passed the Mobile Banking Directive, allowing banks to roll out mobile banking services with a telecoms partner. While mobile banking is a different definition to the mobile money services used in Kenya’s M-Pesa, for example, there are some overlaps that companies and customers are beginning to enjoy.

The country’s Mobile Banking Directive is based on a bank-led model for mobile financial services, making banks an integral partner in all mobile financial services transactions. Rather than allowing the MNOs to independently perform financial services, they must first partner with a bank and allow that bank to lead decisions in the partnership. This model is designed to allow banks to use more than one network operator should they choose, and prevents the MNOs from excluding competitors’ customers from their mobile banking services.

Once the partnership is made, however, there is a wide range of services allowed by Myanmar law for operators such as MMM, including a lending facility within the boundaries of microfinance that is capped at $500 per transfer.

Banks

As such, Myanmar’s banks have also been preparing themselves for the rush of mobile phone access and new services. Ayeyarwady Bank’s AYA iBanking service has been marketed in recent months as part of the institution’s rebranding and move to a centralised core banking system.

First Private Bank, one of the country’s oldest lenders, is also gearing up for mobile financial services, while military-run Myawaddy Bank is rolling out its M Banking 360 platform for customers.

Other Services

Alongside financial services there are some more innovative products being developed for mobile customers in Myanmar to entice more users towards one of the two international providers.

Ooredoo’s MayMay (“mother” in Myanmar) service is designed to help new mothers understand the different stages of pregnancy by sending three messages a week providing subscribers with health advice. The service can also direct mothers to the nearest health professional using GPS and adapt to the user’s specific needs through a profiling system. The MayMay service has received a grant from the Irish-based Women Innovation Fund and is based on a similar service from Mobile Alliance for Maternal Action based in the US.

On a similar social development vein, mEducation, mAgriculture, mHealth and mWoman services aim to inform subscribers who may not have access to traditional forms of information. The Farmer app helps farmers decide which products are best to use for their crops, and a partnership with the British Council allows students to learn English by leveraging the features of a mobile phone.

Ooredoo’s Zone service also offers a number of other products, including horoscope alerts, celebrity updates, gaming news and music downloads, and a BallOne service allows football fans to keep up-to-date with Myanmar’s most popular sport.

Myanmar’s current business and political environment is ripe for additional services to roll out alongside the basic products every phone user will enjoy. For decades the country has been closed to the outside world; however, in 2015 millions of new customers will have access to the world’s information at their fingertips. Furthermore, with little formal banking exposure to date and a sudden influx of telecoms connectivity, mobile financial services also have the potential to flourish as the next big thing.