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Authored by:Philip Osafo-KwaakoMarc SingerOlivia White Yassir Zouaoui

Mobile money inemerging markets: The business case forfinancial inclusion

Global Banking March 2018

1Mobile money in emerging markets: The business case for financial inclusion

In brief

Mobile money systems offer a dual promise, as anengine for financial inclusion, and as an emergingmarkets business opportunity for providers. Twobillion individuals and 200 million small businesses inemerging economies today lack access to savingsand credit. Success in financial inclusion entailsreaching these users with products that go beyondpayments and can significantly improve people’sfinancial lives. Providers who can do so profitablycan tap into huge and largely untouched markets.To uncover how digital payments providers cancapture these opportunities while benefiting peoplecurrently without access to financial services, wehave examined the actual financial and transactiondata of a sample of mobile money providers, all on ablinded basis. The main findings from this researchare summarized below:

Scale enables ultimate profitability but■requires significant up-front spend.Payments systems realize significant scalebenefits when network effects kick in andfixed costs becomes small on a relativebasis—both for individual providers and at themarket level. We estimate that above-scalemobile money can be a 35 percent-marginbusiness, but small providers may need tospend over two times what they earn just tomaintain their size. To get people to usemobile money, however, providers must investheavily in marketing to customers, acquiringand training agents, and investing in businessand distribution infrastructure. In fact, per-customer spend may need to be as much astwo times higher for a small provider than forone that has attained scale.

Regulation can accelerate or hinder ability■to grow—or make scale a prize not worthattaining. Regulations can influence a mobilemoney provider’s ability to grow and maintain acustomer base build and sustain an agent

network, develop critical capabilities andinfrastructure, and offer products beyond basicpayments. For example, caps on fees chargedto consumers for cash-out services can makethe difference between a profitable and money-losing business; for the business models onwhich we focused, capping such tariffs at $0.25per cash out would shift overall providermargins from 35 percent to roughly -5 percent.

Opportunities for providers will increase as■mobile money business models evolve.Though cash-in-cash-out (CICO) will remainnecessary, there is large opportunity to reduceuse of cash in favor of digital payments,increasing frequency of electronic transactions.Providers will benefit. We find that digitaltransactions have margins of 95 percentcompared to CICO margins of 30 percent.Beyond standard digital payments, mobilemoney can help providers enhance existingbusiness models and develop new ones—ranging from micropayments, new forms ofdata-based financial services, and entirely newdigital business models. However, ultimately,providers should tighten their focus on thosemobile money services that deliver higher returnsthan the other opportunities that they have togrow their businesses.

To seize current and future opportunities,■providers will need to partner or acquirenew skills. Growing and sustaining a profitablemobile money system requires a set of diverseand hard-to-develop capabilities, includingbroad marketing and distribution, managementof an agent sales force, systems and analytics,rapid product development, and financialintermediation. Today, no single type ofprovider—banks, mobile network operators(MNOs), or Internet providers—has all of theseskills. For example, MNOs can leverage their

2 Mobile money in emerging markets: The business case for financial inclusion

existing agent and cash distribution networks toachieve costs for cash-in-cash-out that areroughly 40 percent lower than those of banks,comparing growing but still subscale mobilemoney services. On the other hand, MNOshave no experience or existing capacity holdingdeposits as part of financial intermediation.Recipes for overall success could include bank-MNO partnership or an established Internetplayer acquiring an agent distribution network.

■ ■ ■

The mobile money opportunity for providers is bothsignificant and attainable, but incremental action willnot unlock the potential. Providers will need to investfor the long term and be prepared to work in newways, including through partnerships with othertypes of firms. And because success is ineveryone’s best interest, providers and regulatorsshould consider constructive collaboration.

1 All figures in the paragraph from Digital finance for all: Powering inclusive growth in emerging economies, McKinsey Global Insti-tute, September 2016.


Mobile money systems offer a dual promise, as anengine for financial inclusion, and as an emergingmarkets business opportunity for providers. Mostpeople and small businesses in emergingeconomies today do not fully participate in theformal financial system. Two billion individualsand 200 million small businesses in these regionstoday lack access to formal savings and credit.They transact exclusively in cash, have no safeway to save and invest their money, and must relyon informal lenders and personal networks forcredit. Even those with access can pay dearly fora limited range of products. Success in financialinclusion entails reaching these individuals andsmall businesses with products that go beyondpayments and can significantly improve theirfinancial lives.

For providers of digital financial services, mobilemoney can be a gateway into huge and largelyuntouched markets. Digital finance has thepotential to reach over 1.6 billion new retailcustomers in emerging economies and toincrease the volume of loans extended toindividuals and businesses by $2.1 trillion. Theproviders of these products stand to gain byaccess to potential new revenue streams and toincrease their balance sheets by as much as$4.2 trillion, in aggregate. By building digitalfinance capabilities, companies will gain theopportunity to develop new business modelsranging across new forms of more data-basedfinancial services, micropayments, and entirelynew digital businesses. Existing financialservices providers also stand to reduce thedirect costs of their current businesses by $400billion annually.1

The scale of the opportunity is clearlyunderstood; however, firms seeking to tap themobile money opportunity are faced with alandscape of unknowns. How will the mobilemoney value chain work in practice? What do weknow about consumer behavior? Mobile money’sunderpinning structure, with its combination offinancial and telecom industry firms, and aheterogeneous regulatory landscape, is complexand unique. And there are few examples of firmsthat have achieved scale.

To answer some of these questions, andunderstand how digital payments providers cancapture the opportunities while benefiting thosewithout access to financial services, we haveexamined the actual financial data of a sample ofmobile money providers, all on a blinded basis.This work is the first to our knowledge thatattempts to look systematically at the economicsof mobile money in this way. We relied onproprietary data from six institutions for detailedbenchmarking analysis, and also drew onpublicly available data. The benchmarkinganalysis focused most heavily in East Africa, butalso included representative companies fromboth West Africa and Southeast Asia. It includedbanks, mobile network operators (MNOs), as wellas other third-party providers of mobile moneyservices. Some of the providers we studied weresubscale, capturing under 25 percent of theirmarkets and only a small amount of transactionvolume; others were operating at scale as thedominant players in their markets. Thecompanies we examined also ranged in degreeof maturity, from under five years in operation toover ten years.

Introduction


Our analysis of mobile money economics, casestudies, and observation of industry trendsindicate that while the opportunity for providersis both significant and attainable, someproviders will need to shift their mindsets tosucceed. They will need to invest for the longterm and be prepared to work in new ways,including through partnerships with other typesof firms. Providers will not be able to unlock the

mobile money opportunity through incrementalaction or by doing more of what they havealways done. Regulation can serve as eitherhelp or hindrance. Because success is ineveryone’s best interest, providers andregulators should consider constructivecollaboration. The remainder of this paperoutlines our conclusions in greater detail.

2 Based on analysis of providers in countries with populations ranging between 50 million and 100 million. The break-even point maybe larger in more populous countries.


Payments systems realize significant benefits ofscale when fixed costs become small on a relativebasis and when network effects kick in—both forindividual providers and at the market level. Weestimate that above scale, mobile money can be a35 percent-margin business; but small providersmay need to spend over two times what they earnjust to maintain their size. Providers will breakeven once they see sufficient value flowingthrough their systems. For the providers weobserved, the break-even point occurred at $2billion to $3 billion in annual transaction value and

corresponded to total system revenue of roughly$20 million to $30 million (Exhibit 1).2

Since mobile money requires fixed investment, unitcosts decrease as more value flows through thesystem. The most significant fixed-costcomponent is the IT backbone required fortransactions processing, which can includesoftware licensing fees. Overall, our benchmarkingindicates that IT represents roughly $1.5 million inannual cost—significant for a smaller provider butrelatively minimal once a system has more than

Scale enables profitability but requires significant up-front spend

~$1.5million

Illustrative growing-to-scale provider ~$2-$3billion

~$20-$30million

Fixed cost

Total cost

Revenue

Loss

Pro�t

Illustrative at-scale provider

Transaction value $ billion

Cost/revenue $ million

Exhibit 1

Provider cost and revenue with scale

1 Transactions include both CICO + digital counterparty transactions. Source: Aggregated provider data; McKinsey analysis

Mobile money providers must achieve scale to be profitable.

3 In our benchmarking average transaction fees were roughly [1%] of value, though fees charged by mobile money providers for indi-vidual transactions typically are defined by bands of transaction value rather than as a straight percentage of amount transacted.


several hundred million dollars of annual flow,generating well in excess of $1 million dollars inannual revenues.3 Personnel and real-estate costsalso contribute to the fixed-cost base ofcompanies exclusively devoted to mobile money.On the other hand, providers who support manylines of business—like MNOs and banks—leverage existing staff and buildings as they growtheir mobile money offering, effectivelymarginalizing these spend components.

As providers grow, they also can reap networkeffects that lower their marginal costs, particularlyin sales and marketing, agent acquisition andmanagement, and cash distribution. Once thesystem is established, at least some newcustomers will join based on word of mouth or totransact with others already on the system.Similarly, agents may sign up because theydirectly observe the business opportunity andhow it works. Active cash distributionrequirements can also become less intense asindividual agents are more likely to collect anddisperse cash in equal measure on any given day.For example, our analysis indicates that subscale

providers spend roughly 40 percent more onabove-the-line marketing compared to at-scaleproviders and that overall smaller providers canspend up to two times more per customer.

To gain the benefits of scale, however, providersmust invest heavily and with long time horizons.This holds true across the world for Internetplayers in network businesses—firms such asAlibaba and Google have invested significantly inlong-term growth and market capture, even whenthis means immediate losses. Since a rosy end-state business model means little without theability and appetite to foot the initial bill,successful providers will draw on their ownreserves, find long-term investors, or look topartner. International plays may be required. Forexample, MNOs may look to group-level mobilemoney strategies and resource sharing for theircountry-level businesses to succeed. Individualproviders or partnerships that already have thecapabilities needed to grow will have an easiertime attracting investment than those that need tobuild competencies.


Regulatory decisions can impact mobile moneyprovider profitability and ability to scale.Regulation has potential to influence the abilityto grow and maintain a customer base, buildand sustain a high-quality agent network,develop critical capabilities and infrastructure,and offer products beyond basic payments(Exhibit 2). Since large-scale digital finance bothpromotes financial inclusion and boosts GDP,financial regulators should consider the impactof regulation on mobile money providereconomics as part of the balance amongmultiple factors including financial systemstability, customer interests, broader policyaims, and macroeconomic considerations.

A few examples demonstrate how regulationcan impact the economics of mobile moneyproviders. First, tariff caps intended to makeservices affordable to poorer users can hinderprofitability and make growing the customerbase more difficult. Caps on fees reduce howmuch a provider earns from an individualtransaction or cash withdrawal and, in somecases, can make the difference between aprofitable business and a money-losing one. Forthe business models we studied, for instance,capping cash-out tariffs at $0.25 each wouldshift overall provider margins from 35 percent toroughly -5 percent. Even when tariff caps do notmake a type of transaction unprofitable, they

Regulation can accelerate or hinderability to scale

Success factors Example types of regulation

Potential to…

Reduce pro�tability

Slow growth

Exhibit 2

Tariff caps on cash-out transactions

Arduous KYC requirements or process

Transaction and account balance limits

Grow and maintain customer base

Agent fees

Onerous agent registry requirements

Restrictions on who can be an agent

Build and sustain agent network

Requirements that deposit funds be held in trust, escrow, or similarly restricted manner

Required Þrewalling of mobile money and other business IT systems

SpeciÞc and complex licensing for each product

✓✓

✓✓

✓

✓

✓✓

✓✓

✓

✓

Develop basic infrastructure and products beyond payments

Source: McKinsey interviews and analysis

Regulation can impact provider pro�tability and ability to scale.


increase the transaction value required throughthe system for a provider to be profitableoverall. They may also make some customersegments unappealing for providers to serve, ifthe expense to reach them outweighs thebenefit from gaining more users.

As another example, restrictions on who canserve as an agent can hinder providers fromgrowing widespread CICO networks. Forinstance, when providers can only sign up agentswho are already registered legal entities theycannot work with airtime distributors or smallinformal shops. Motivating factors behind thissort of restriction can include controlling illicitfinancial activity and easing the burden on limitedstaffs of supervisors by having fewer types ofagents providing financial services. However,such restrictions can block providers from signing

up those agents that might make most businesssense—for example, airtime distributors forMNOs—or are most likely to be located wherecurrently underserved people live.

Finally, required firewalling of mobile money andother business IT systems can discourage growthand add cost, thereby reducing profitability. Severalcountries require such a firewall to protect mobilemoney customers against control failures outsideof the mobile money business—in the voice anddata business of an MNO, for example—wherefinancial services regulators typically do not haveoversight. Controls might fail to protect against riskevents including cyber breaches, external identitytheft, or illicit activity on the part of employees.However, such IT requirements can be costly toimplement overall and contribute to fixed costs thatare hard for small providers to shoulder.


Mobile money providers make money by chargingcustomers for some combination of four types ofactivities: those associated with opening andmaintaining the account, CICO services,transactions between two accounts, andadjacent activities tied to the mobile money walletor services (see sidebar, “The ACTA framework”).A provider is profitable as long as total revenuesfrom the underlying activities exceed totalassociated costs. Looking ahead, even moresignificant opportunities await; increases in digital

transactions will boost the bottom line and newbusiness models will give payments providersaccess to entirely new revenue streams.

In today’s mobile money business models, CICOdrives provider economics (Exhibit 3). For at-scale providers, it represents roughly 60 percentof profits and accounts for the largest share ofboth revenues (70 percent) and costs (80percent). Since margins on CICO are relativelyslim, at 20 to 30 percent, even small cost

Opportunities for providers will increase as mobile money businessmodels evolve

10

35

15

20

-10

65

<5

10

50

<5

10

70

100

20

0

Accounts

CICO

Transactions

Adjacencies1

Total

Revenue Cost Pro!t

Exhibit 3

Growing-to-scale providerAt-scale provider

Breakdown of mobile money economics% of total baseline revenue (rounded to nearest 5%)

1 Costs includes those associated with deposit insurance; revenues includes those associated with net interest margin. Source: Aggregated provider data; McKinsey analysis

Cash-in-cash-out dominates the economics as providers grow to scale.

3 McKinsey Global Payments Map.


reductions can impact overall economics andcost increases can make players unprofitable.While innovation on CICO cost structure could begame-changing, caution is critical; since agentsplay a central role in acquiring and maintainingcustomers, changes in CICO structure couldrequire meaningful increases to customeracquisition costs.

Account-related activities are the second-largestcontributor to mobile money system costs, atroughly 15 percent of the total outlay (or 10percent of total revenues). These costs areassociated with opening and maintaining accountsand stem primarily from marketing. They are asmall contributor in models where MNOs run theagent network, totaling between $2 to $5 annuallyper customer. MNO marketing spend, whichwould occur anyway, can indirectly contribute tocustomer acquisition but is not counted ineconomic models. Regardless of model, marketingcosts may need to be higher than this average foracquiring down-market customers who are moredifficult to reach and who may be less prone toswitching behavior quickly.

Transactions are currently the second-largestcontributor to mobile money revenue but holdsignificantly greater promise. Today, transactionsrepresent roughly 20 percent of total revenues.Appealingly, margins on transactions can exceed75 percent thanks to fees that are largecompared to the low costs to the provider, due toautomated systems and digital user interfaces.As a result, providers stand to improveprofitability meaningfully by increasing thenumber of digital transactions for every time cashis put into the system (Exhibit 4). That said, allevidence indicates that cash and thus CICO will

not disappear anytime soon. Even in Norway, forexample, the country with the largest share ofdigital payments globally, 17 percent of allpayments are transacted in cash.3 Thus, toimprove profits, providers should look to growdigital transactions even if it means alsoincreasing the number of CICO transactions.

Finally, adjacencies remain a largely untappedopportunity, contributing no more than 10percent to both total revenue and total profit atmost providers. New economic models thatleverage payments offer huge potential. Mobilemoney offers providers the opportunity toenhance existing business models and todevelop new ones beyond standard digitalpayments—including new forms of more data-based financial services, micropayments, andentirely new digital business models.

As the network of mobile payments grows, newtypes of financial services are emerging.Companies are developing innovative productsand services by using risk datasets engenderedby digital payments. When people conductfinancial transactions with a mobile phone, theyleave a digital data trail that can transformproviders’ understanding of customer needs andinform assessment of credit risk, allowing forextension of credit to individuals and businesseswhose past transactions suggest they are lowrisk. Providers also can use mobile technologiesto issue, monitor, and collect payments on theloans they extend, reducing costs and thusenabling extension of smaller loans. A commonexample for consumers is peer-to-peer lending,which is growing across many markets fromplayers like WePay, Lufax, and Yirendai in Chinato Kubo Financiero in Mexico. Business models


directed toward micro, small, and mediumenterprises include supply-chain financing, cashmanagement, and digital salary payments.

Because digital payments allow people totransact in small amounts, they create newopportunities based on micropayments. These

include consumer payments for services suchas school fees and health care, as well as thepotential for business salary payments, made asfrequently as daily. Digital payments also enablepay-per-service, or pay-as-you-go, models. Forexample, low-cost private schools like BridgeInternational Academies in Kenya, Uganda,

Volumes observed for at-scale provider

0

2

300 250 200

5

4

3

1

0 150 100 50

Digitaltransactions per CICO transaction1

1x (current pro�t)

2x

3x

Reducing CICO transactions hurts proÞtability…

…unless providers simultaneouslyincrease digital transactions

To improve proÞts, providers shouldgrow digital transactions, even if it means growing CICO transactions also

a

a

b

b

c

c0.5x

Annual volume of CICO transactionsMillion

Provider pro!t Multiple of current at-scale provider profit

Exhibit 4

1 Includes only revenue-generating transactions. Source: Aggregated provider data; McKinsey analysis

Providers can improve pro!tability by increasing the number of digital transactions, but decreasing CICO transactions will not help.

Nigeria, and India rely on receiving school feesand paying teacher salaries digitally as part oftheir cost-efficient business models. M-KopaSolar in East Africa enables consumers to pay asmall deposit on a solar panel and then pay peruse with mobile money.

Digital payments also enable e-commerce andnew “sharing economy” models, includingridesharing and employment matching. Suchbusiness models are increasingly appearing and

scaling quickly in the developing world. Onlinemarketplaces like Alibaba, the world’s largestretailer by gross merchandise value, aggregatelarge numbers of sellers to improve customerchoice and reduce prices. Ridesharing platformslike Didi Chuxing in China and Go-Jek inIndonesia match passengers with drivers of carsor motor bikes in real time. Didi Chuxing is nowthe world’s largest mobile transportationplatform, supporting more than 20 million rides aday in over 400 cities.


The four-part “ACTA framework” is a simple wayto understand payments system activities andthe underlying market dynamics andeconomics.

The first ‘A’ stands for accounts, and theassociated activities cover the primaryrelationship that a customer has with a provider,including opening new accounts andmaintaining existing ones. Accounts provide asecure, accessible store of value. Mobile moneyaccounts are an example, as are standardcurrent accounts (also known as checkingaccounts).

The ‘C’ stands for cash-in-cash-out (CICO). Touse the payments system, customers must beable to deposit and withdraw cash into andfrom their payments accounts. For mobilemoney, most CICO activities occur at individualagents. This is the activity in which mobilemoney most differs from traditional banking, for

which CICO occurs at more costly ATM andbranch channels.

‘T’ signifies transactions, or direct transfers offunds between accounts, including thoseinitiated by mobile phone as well as over-the-counter transfers initiated at individual agents.

The final ‘A’ stands for adjacencies, which areactivities, both financial and nonfinancial, thatgenerate nonpayments revenue for paymentssystem providers. Financial adjacencies includeinterest earned on balances held, and thespread between the interest that the institutionpays on savings accounts versus what itcharges for loans. Nonfinancial adjacenciesinclude strategies to help companies acquirenew customers, reduce customer attrition,cross-sell services, improve collections, orpower other businesses with consumer insights.These revenue streams are vital for overallpayments systems economics.

The ACTA framework

4 The deposit holder holds funds safe and, in most markets, runs the back-end of the cash-handling network. The e-money issuerguarantees e-money value. The payments service provider provides transaction processing and, in some markets, clearing andsettlement. The agent network manager oversees agents responsible for opening accounts and providing CICO services. In somemarkets, agents also provide over-the-counter transactions. Finally, the channel provider provides network access. Historically, thishas been over telecom networks but in the future could equally well occur over Internet networks.

5 "Mobile financial services in Africa: Winning the battle for the customer," McKinsey on Payments, September, 2017.


While a range of value chain models are possible,not all are equally well suited to foster profitablegrowth or to take advantage of evolving mobilemoney business models. While models differ,there are typically five main roles across the valuechain: deposit holder, e-money issuer, paymentsservice provider, agent network manager, andtelecommunications channel provider.4 Whichentity—bank, MNO, or other third-partyprovider—plays each of the five main roles variesby country, and sometimes even within a singlecountry. In all value chains of which we areaware, a bank or other depository institutionplays the role of deposit holder and an MNOplays the role of telecom provider. Banks, MNOs,or third-party providers can play each of theremaining three roles (Exhibit 5).

Growing and sustaining a profitable anddynamic mobile money system requires a set ofdiverse and hard-to-develop capabilities.Success requires broad marketing anddistribution, management of an agent salesforce, systems and analytics, rapid productdevelopment, and financial intermediation. Forexample, the ability to reduce costs byleveraging existing customer bases anddistribution networks will help promote growth.Driving transaction volumes through existing oremerging use cases, such as ecommerce, willalso help scale usage. Capabilities andexperience in offering adjacent products thatbuild on mobile wallets will generate additionallong-term revenue streams. Such productscould include both financial products—including

savings accounts, lending products, andinsurance—or nonfinancial products (e.g., e-commerce).

Today, no single type of provider—banks, MNOs,or Internet providers—has all of these skills(Exhibit 6). For example, MNOs can leverage theirexisting agent and cash distribution networks toachieve costs for CICO that are roughly 40percent lower than those of banks, comparinggrowing but still subscale mobile money services.On the other hand, MNOs have no experience orexisting capacity holding deposits as part offinancial intermediation. Recipes for overallsuccess could include a bank-MNO partnershipor an established Internet player acquiring anagent distribution network. Example includeEquity Bank’s partnership with Airtel andStandard Bank’s partnership with MTN.5

Ultimately, providers’ eagerness to providemobile money and adjacent products will dependon the benefits and tradeoffs doing so presentsto their core businesses. Companies will look toparticipate in mobile money only in those waysthat provide higher returns than the otheropportunities that they have to grow theirbusinesses.

■ ■ ■

For people in developed markets, mobile moneyis a convenience, one of the many digitaladvances that have made our lives easier. Forbillions of people, and millions of smallbusinesses, in emerging markets, mobile money

To seize current and future opportunities, providers will need to partner or acquire new skills


is much more than a “use case.” It is—or canbe—a lifeline, bringing the benefits of financialservices to those who currently lack access, andthus enabling them to take initial steps towardhealthier financial lives.

To understand how mobile money providers cantap into this opportunity in a sustainable way, weanalyzed mobile money economics and

proprietary real-world data from mobile moneyproviders, and conducted a study of industrytrends. The resulting conclusions led to severalsalient points for existing or aspiring mobilemoney providers. Firstly, the up-front investment issignificant; there is no avoiding the fact that scaleis the key determinant of ultimate profitability.Second, few current providers possess thecapabilities they need to fully seize current and

Most commonly observed modelsPotential emerging model

Exhibit 5

Deposit holder

Bank Bank Bank Bank Bank Bank Bank Bank

1 2 3 4 5 6 7 81

3rd party

3rd party

MNO Internet player

MNO3rd party

MNO

MNO MNO MNO MNO

IndonesiaNigeriaKenya

NigeriaBrazilBangladesh

UgandaIndia UgandaIndonesiaNigeria

IndonesiaKenyaTanzania

Pakistan

E-money issuer

Payments service provider

Agent network manager

Channel provider

Example markets

1 Bank might be a bank subsidiary; channel provision may be shared with MNO depending on data vs wireless usage; agent network manager might be outsourced to either an MNO or a third party.

Source: “Assessing risk in digital payments,” Bill & Melinda Gates Foundation, Financial Services for the Poor, February 2015; provider interviews

A range of mobile money value-chain models exist.


future opportunities—they will need develop thosecapabilities—quickly—or partner and acquire firmsthat have those skills. Finally, successful providerswill maintain a dual focus: a clear view on what

drives mobile money economics today, and aforward-looking perspective on the potential fornew, innovative financial services and productsand adjacent revenue streams.

Exhibit 6

Cost

Revenue

Accounts Customer acquisition and servicing

CICO Agent acquisition and commissions; cash management

Transactions Transaction processing

Adjacencies Product development and deployment

CICO/transactions

Driving and charging for transactions

Adjacencies Deposit deployment2

Financial product deployment

NonÞnancial product deployment

Key activities Bank MNO Internet1

Distribution is the outstanding challenge for Internet players

Banks and MNOs are natural

complements

Relative advantageRelative disadvantage

1 We assume large Internet players may be most relevant in the future.2 Net interest margin, encompassing the difference between net interest income and net interest expense. Source: Aggregated provider data; McKinsey analysis

At scale, different mobile money provider types have different advantages.

Philip Osafo-Kwaako is an associate partner in McKinsey’s Lagos office, Marc Singer is a seniorpartner and Olivia White is partner, both in the San Francisco office, and Yassir Zouaoui is a partnerin the Dubai office.


Global Banking Practice March 2018Copyright © McKinsey & Companywww.mckinsey.com/clientservice/financial_services

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