In the rapidly changing fintech industry, who is the paradigm shifter?

A five-minute piece about Telcom's unique position in the digital financial services industry.

Various industries, each with unique cultures, structures, and business models, are converging to deliver innovative and secure financial solutions at scale.

Transcending industry differences: established banks bring licensing, expertise, infrastructure, and regulatory compliance to the table; fintech firms facilitate swift entry into new markets, accelerate the rollout of digital offerings, and enhance customer-centric experiences; and telecommunication companies strategically leverage their extensive market access, substantial databases, and robust distribution and marketing capabilities. Within this emerging landscape, traditional boundaries are being broken down and established financial institutions and new market entrants are collaborating, merging their expertise and resources, and together reshaping the financial realm.

This convergence expands access to banking and financial offerings, creates new revenue streams, and fosters brand loyalty for every entrant. It allows each partner to enrich their customer experience without the necessity of building an entire financial infrastructure from scratch.

This collaboration is particularly impactful for end users, especially underserved populations. Fintech solutions, known for accessibility and user-friendly interfaces, help overcome barriers in the financial sector. Furthermore, the combination of telecom 5G and emerging technologies promises faster, more affordable, and superior services for a broader segment of the population previously lacking access.

Who is the paradigm shifter?

For banks, the mounting competition with Fintech poses a considerable challenge. According to a calculation done by McKinsey, banks could lose 29 – 35 percent of their revenues to the new attackers via customer churn and shrinking margins. For fintech, despite notable strides made by some companies in addressing customer challenges in financial services, there are still obstacles to overcome. These include high customer acquisition costs and a lack of comprehensive data insights that limit these companies’ ability to offer personalized products and services. In this evolving landscape, telcos emerge as paradigm shifters.

Uniquely positioned:

The basis for introducing mobile banking services is the expansion of mobile connections. With more than 5.4 billion unique mobile customers globally—roughly 68% of the world's population—and more than 90% of people living in areas with 3G or higher network coverage, telecom companies are in a unique position to spearhead financial inclusion and leave a legacy. By harnessing mobile connectivity services and agent networks, telcos can extend financial services to underbanked and unbanked populations in rural areas.

Telcos are uniquely positioned to unlock economies of scale and provide accessible and affordable banking services to the masses worldwide. This capacity to achieve scalability stands out as a key element in telcos' value proposition to other partners in this emerging landscape. Telcos efficiently deliver banking and financial services to a large user base, facilitating a more inclusive, convenient, and cost-effective financial landscape for the massive, excluded population.

Naturally, telcos possess oil in their backyard, "Data" stands as one of their most valuable assets. Armed with massive customer databases, telcos data provides a solid foundation for accurately assessing creditworthiness and offering customized financial services aligned with consumer behaviors and preferences.

Telcos wield a transformative influence as paradigm shifters within the financial services landscape. They’re strategically diversifying to counteract falling revenue and get access to the growing market of mobile users seeking convenient and accessible financial solutions. Those who recognize and harness this power emerge as pioneers, adept at steering through the evolving challenges of the industry.

Pioneers in the telecom industry are not only venturing into the financial services landscape but also forging new partnership deals and leveraging unique business models for success.

Progressively, building on banks' infrastructure, and fintech innovation, telcos are now expanding their offerings to include a wider range of fintech products such as Savings & Deposits, Micro-Lending, Buy Now – Pay Later, and Micro-Insurance.

While every operator is tapping into the financial services landscape, true innovation lies in forging creative partnerships and adopting innovative business models. This approach ensures not only sustained growth but also positions telcos as dynamic contributors to the ever-evolving fintech ecosystem.

SOME, are embarking on transformative journeys through innovative partnership initiatives:

Safaricom M-PESA, in collaboration with Visa, unveiled the revolutionary GlobalPay solution in Kenya in 2022.

MTN MoMo, in its quest for digital innovation, joined forces with Mastercard to introduce virtual cards across its 16-country footprint in 2021. Building on this momentum, MTN Group recently disclosed a strategic partnership with Mastercard, with a $200 million minority investment aimed at propelling MTN Group Fintech to greater heights.

These partnerships underscore a shared vision among telcos and fintech giants to empower communities, foster economic growth, and redefine the future of finance.

OTHERS are innovating at the level of business models:

M-PESA stands as one of the most successful models, pioneer mobile phone-based service offering money storage, transfers, payments, and micro-lending.

NTT Docomo, a Japanese telecom company established in 1991, has successfully expanded its business with Smart Life offerings These include wearable devices, smart homes, healthcare solutions, and dCARD and dPAY to cover for banking and payment services.

The telco neobank is another model. Orange, one of the largest operators of mobile and internet services in Europe and Africa, seized the opportunity quickly and launched its first FS offering, back in 2008. Orange expands further with the acquisition of a neobank “Anytime”. Orange Bank offers a wide range of banking services through a mobile app or website, making banking with Orange Bank convenient and accessible from anywhere.

Leveraging decades of expertise and strategic affiliations with telcos worldwide, Monty Mobile stands as change enabler in the realm of digital financial servicing. MDBS Monty Mobile’s Mobile Digital Banking Services promises to turn telcos' apps into SUPER APPS, featuring a rich wallet extending beyond financial solutions to include in-app shopping, access to value-added services, and integration with online merchants and marketplaces. With cutting-edge technology solutions, a well-tailored framework spanning licensing advisory services, an ecosystem of partners, and a thoughtfully crafted go-to-market strategy, Monty Mobile offers the ultimate promise in this field.

As the digital landscape continues to evolve, the question remains: What will you do? Will you embrace the future, unlock new opportunities, and propel your telco business toward unparalleled success?