What operators need

In every country, mechanisms for bill payment, money transfer, and storing money have existed long before the advent of mobile money. When mobile money services are introduced customers compare the new option with existing alternatives . There are five key attributes that customers consider when evaluating a new money transfer service: its convenience, speed, safety/reliability, ease of use, and cost. Importantly,customers rank these attributes in different ways : some care a lot about one feature, others about another.

Operators need to be sure that their money transfer service will be superior to existing options in the marketplace along at least one of these dimensions:it should be more convenient,or cheaper,or faster ,or more reliable,or easier to use . A new offering doesn’t need to beat the competition along all of these dimensions in order to be successful: given that not all customers value the same thing, simply offering a service that is superior along one dimension will inspire customers for whom that feature is most important to switch. And indeed, since the design process for any service usually involves making tradeoffs between these attributes, companies usually have to pick and choose which attributes they will optimize and which they won’t.

Operators need to realistically assess whether they can offer a service that will beat the competition in all key attribute areas.Our experience suggests that it will not always be possible to beat all competitors along every dimension as Safaricom did in Kenya: in some markets, pre-existing money transfer options are better than they were in Kenya. But this need not deter operators. What’s important is to design a service that does beat the competition on the attributes that will resonate with target customers.

If, say, the national postal service offers a popular money transfer service in its branches that is cheap—i.e., so cheap that a mobile operator would be unable to match the price while still turning a profit—but slow and inconvenient, operators should try to find a service design that optimizes for speed (which is one of the natural features of mobile money transfer) and convenience (by focusing on a large agent network).Operators need to understand the preferences of their target customers. In the scenario described above, it would be important for an operator to make sure that there is a critical mass of consumers who would value speed and convenience enough to pay a bit more before going to market—lest they be unhappily surprised to find no such willingness to pay.

The last thing to note is that this methodology applies as well to bill payments and other mobile money services as it does to money transfer. For any service that can be offered on a mobile money platform, there will be competition—and understanding that competition is the first step to beating it.

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