Interview: Konstantin Vaysman, chairman of Mobile Finance Group – financial inclusion
In an exclusive interview Konstantin Vaysman, chairman of Mobile Finance Group, talks to FinTech Futures about the role of mobile financial services (MFS) in speeding up financial inclusion and how they can be successfully launched.
FinTech Futures: Why is it important to make it easier for unbanked/underbanked consumers to access banking services?
Konstantin Vaysman: According to the most recent data from the World Bank, approximately 1.7 billion adults were unbanked in 2017. MFS have the capacity to bring financial products and services to large segments of this unbanked population.
Access to financial services reduces poverty and inequality at individual, community and even national level by helping people safeguard their savings, manage financial shocks via access to credit and even start businesses through funding from micro-finance loans. They can also make cheaper domestic and cross-border payments and receive social welfare payments more easily.
FF: Why is MFS the best option for boosting financial inclusion?
KV: The traditional bricks-and-mortar banking model is a costly solution to giving people access to financial services, especially in rural areas. As the number of bank branches declines, the number of people with access to a mobile phone continues to grow.
A report issued by the GSMA in February noted that the mobile money industry is already processing more than $1.3 billion of transactions every day across 866 million mobile money accounts worldwide. Mobile money supports digital identification (enabling consumers to open an account without having to visit a branch) and breaks the monopoly of banks on the provision of financial services.
MFS is also compatible with the open banking initiatives underway in many countries that allow third parties to access customer account information, enabling consumers to manage multiple accounts from a single digital wallet.
FF: What are the key elements of an MFS strategy?
KV: This will depend on which industry the prospective service provider operates in and the purpose of the service. For example, it might be a digital transformation play for a bank; a complimentary service to create an additional revenue stream; a service to replace lost revenue from other services (as we see with telecoms companies in particular); or a product for a new service provider.
The first step in rolling out MFS is understanding the opportunities that exist in the financial services sector in each market. The next factor is regulation – ensuring that the market framework is ready for remote identification/digital onboarding and checking whether a financial services licence is required.
The most successful application of mobile money to date is the M-Pesa service developed by mobile operator Safaricom in Kenya. Mobile money now generates 30% of Safaricom’s total revenues.
FF: What are the benefits to companies of partnering with an established provider such Mobile Finance Group rather than developing their own platform?
KV: There are various reasons why MFS providers fail, including insufficient resources and lack of commitment from senior management. Another common shortcoming is insufficient understanding of the products that should be included within the wallet and lack of experience in developing and monetising financial products.
MFS providers benefit from partnering with an established mobile wallet developer rather than developing their own platform by getting to market more quickly – typically within three to six months.
We see ourselves as a business development provider, delivering not only technical expertise but also the ability to connect market participants (such as merchants and financial institutions) and expertise across the financial services sector as well as marketing and data analytics support.
FF: What will be the next major development in mobile payments and digital wallets?
KV: Our vision for the future of mobile wallets is a one-stop-shop for financial and non-financial services.
A key trend for MFS launched by mobile network operators is cross-border and domestic interoperability, the ability to move money from traditional bank accounts to mobile-based accounts and vice versa.
Virtualisation of credit cards is another emerging trend, one we expect to lead to the disappearance of physical credit cards within the next five to seven years.
These developments are part of a wider trend towards the emergence of a digital ecosystem, which is already happening in China with WeChat and Alipay and has created a digital marketplace where customers can purchase a wide range of products. We have also seen merchants such as Walmart in the US creating their own mobile wallet platform.
FF: How has your background influenced the development of Mobile Finance Group?
KV: Before founding Mobile Finance Group, which works under Wallet Factory brand, I held various board and top executive positions in banks and financial institutions over more than 25 years. I increasingly realised that fintechs were the future of financial services and have used my management experience, industry knowledge and IT background to create an international MFS company.
In 2018 I moved to Cyprus to boost development of Mobile Finance Group on the global markets. The future potential of this sector is limitless.