Bong - Boku & Zong

I have been looking at these guys since they began raising obscene amounts of money for what to me seemed like a repackaging of an old story - good for them.

Boku hit the streets with a $13m to primarily go on an acquisition spree (buying Paymo, Mobillcash etc.)
Zong raised $15m post a spin out - primarily to expand (into as many as 2 countries per month)

Obviously these guys have since then raised more money.

Quite frankly I was a little suprised, these guys are nothing but mblox, openmarket, singlepoint, Sybase365 etc. repacked in a different color palette primarily in striking or earth tones. The busness is Premium Rated SMS - PSMS. Which is a way to use a cell phone number as the primary account for purchases and then have the customers pay on their postpaid mobile bill at the end of the month. Same way  we where buying ringtones for $3.99 by sending a text to a 5 digit phone number.

Saying that in PSMS I need $15m to expand into 2 markets monthly seems like a stretch to me - the wireless operators have these services already exposed and ready to roll out. Granted the Bong's of the world need to position their services with the operators, but thats called salesman ship, somewhat similar to when they convinced the VC's to drop 10's of millions. No doubt they are good at that. Lets see if they can convince Google or Apple to spend 100's of millions buying them out, I will keep my fingers crossed for them.

I know that the Bong's are looking to pivot into other payments verticals and via other integrations, and so they should, digital sales wasn't sustainable 10 years ago and it wont be today.

Thats said I am totally impressed with their ability to raise funds - good on you.

The Carrier Imperative - JVL/ISIS and the road to eternal shame - a trilogy

I have been trying to formalize an opinion of the recently launched ISIS (formerly known as "JVL"), but I have failed in coming up with something on my own, so instead I thought "why don't I just start writing and lets see what happens" - so here goes - whatever comes to mind (I reserve the right to change my mind frequently on this topic :o) ).

Coalition of the willing could probably be applied to mean the "coalition of the folks with little choice"
The constellation may give it all away, 3 MNO's a struggling card network which primarily relies on others acceptance rails and a card issuer from the UK.

If I am to deduct strategy from the investor pool I would say that this is the objective of ISIS.
1. Mobilize the cards - MNO's
2. Drive brand awareness - Discover (Perhaps followed by a US acceptance network effort?)
3. Obtain a footprint in the largest card market in the world - BarclayCard

I guess the reason I am confused is that the JV is set up almost like a one off - unless they believe they can capture most of the market within the JV? In which case they need their heads checked. Why would CapitalOne be excited about joining as an issuer in ISIS knowing that their competitor Barclay would get dividends from their success? I wouldn't.

Isis is set up structurally almost as if the owners expect it to be a "one-of" and not a sustainable business long term in this ecosystem.

So some people around here knows that I used to be in a carrier JV heading up product development in Mobile Financial Services - The reality is that there is no need for interoperability for NFC on the carrier level. but rather on the consumer, service provider and issuer level - the MNO in most cases serve as storage and transport, which holds individual attributes for each operator.

I do however think its great that ISIS have appointed Michael Abbott, a guy who comes from the great company GE where he is used to managing hard partners, but I would guess that in 2 years from now ISIS will not be a driving force in NFC and each carrier will be doing their own things on the side. Fast forward 2 years I hope I am not chewing on my tongue.

ISIS would not make me concerned as an investor in Visa/MC, but what would make me concerned about being an investor in particularly Visa, would be their reactionary way of dealing with the JV.
The "day" after the ISIS announcement Visa ran out and did deals with BoA and WF a move that is diametrically opposite their GSMA announcement 2 years ago in Barcelona, where Pam Z told the world that Visa and the GSM operators where going to take over the world of mcommerce - really Visa? One pre-doomed JV makes you panic? in the meantime you guys are neglecting all the real growth opportunities in Latam and MEA because you all just sit around Foster City Starbucks completely unaware of how the world looks - see that makes me nervous as an investor.

In any case - I guess I went on a Visa rant, it happens to me sometime Visa is such an easy target :o)

Bling Bling Nation

Ok - sorry I have been gone for 2 weeks, I went across the hemisphere and settled for a week in Singapore, what a magnificent experience.
I have travelled a lot but my Asian experience is not good enough yet - must change in the new year.

Now to the real story, Bling Nation, Verifone..... whats happening?

I am one of the believers that Bling Nation has done a truly amazing job in getting 2 things achieved above all else, incl. their great fundraising efforts, they managed to close PayPal on a deal which allows PayPal customers to utilize their PayPal funds via a contactless sticker on the proprietary Bling Nation POS, seen around Palo Alto - especially my favorite place University Cafe, but now also part of the PayPal mobile wallet. As if that feat was not enough they also managed to convince Verifone that their Bling Nation framework should be incorporated into the Verifone POS systems - the largest in the world.... what happened? I am still stunned over the fact that they managed to convince PayPal that they should bet on a company called Bling Nation from Latin America. My real question is "will Visa and MasterCard accept sharing POS real estate with a small timer from the Valley or will they take them out when/if they get traction?" I dont know if they care, but I think that with the speed that Bling Nation managed to close distribution deals with 2 mastodons they should watch out.

This is the beautiful thing about mobile as a channel - the bag has been reshuffled and the old guard is no longer invincible, but rather under threat. A good friend of mine said the other day "the big companies have outsourced innovation" and that statement holds so very true - so guys and gals this is the time to make a change.

Poll - Would James Bond ever use Mobile Payments

I am not sure that Bond, James Bond would ever sit and touch screen his way through an iphone in order to buy wine from Acme vineyards - what do you say?

Please vote ->

Bond paying by Mobile

Another "crack-me-up" commercial from Allstate

Another one of those random commercials - Another Allstate commercial

For the record, I am not in any way financed by Allstate, I just think that guy is really delivering these commercials really well :)

Happiness is a 3 party ecosystem as sung by John Lennon

Despite everybody's excitement about the opportunity to disintermediate Visa & MC, its funny how they never get any credit for the amount of work and leather soles they have worn thin trying to build the famed 4 party ecosystem as we know it. Think about the pain they had to go through to create a proper acceptance network incl. a properly defined and operational merchant acquiring side of their business, as if the issuing side of the equation wasn't hard enough.

That said, I am sure that in the emerging markets we (ed. you and I) have all reason and opportunity in the world to, on certain types of payments, create perfectly humming 3 party systems. A great example is to create applications and platforms for turning handsets into receiver and sender of credentials and then have settlement occur via stored value platforms or to use MC/Visa speak, prepaid platforms. This would aliminate the larger scale deployment of both an issuing and acquiring side of the ecosystem, and rather create a petite 3 party system.

I am not sure this will ever happen, but I think the model is plausible, yet hard to execute on - if you know the guys or teams that can, you let me know right away.....

Totally Random - I just like this commercial Series

Allstate Commercial

That guy is funny

Somali MMT service shut down by radicals

As a friend of mine said earlier "I know there is a joke here"

Al Shabaab shuts down MMT Service in unbanked Somalia

Ipad vs. mobile

I have been noting that recently more and more mbank/mpay companies are touting their ipad deployments - I am not sure I understand why ipad is being put in the same category as mobile devices, its a wireless device I agree, but so is my Mac - has a 6hour lifespan is as long as my Blackberry.
S1 Ipad hype (as a matter of courtesy, I would like to say that I have had the pleasure of working with many S1 employees and they are a smart bunch)

I am afraid that we may, once again, start a hype spiral which will only take mobile financial services out on yet another tangent and this time, as before, some will perish in the process.

What am I missing?

Cool breezes I am sure......

Dumb Visa article

I keep seeing these dumb articles written by people who obviously does not understand where the ecosystem players fit in - check this VISA Cards

Visa is not in the card business, they are in the payments authorizing and routing business - they use a 16 digit number to identify the origination of the actual payment for settlement etc.  Merchant networks tie into VISAnet in order to have the no. acceptance network process their payments (most often the merchants dont tie in directly but through an ISO), the cards are issued by the bank whose brand is on the card, and they are the ones that issue the payments to the merchants as well (reconciled by the ISO and delivered to the merchant acquirer)

Visa role in NFC is to create the software that the NFC chip emits and mwallet activates in order to make the POS understand that its a Visa credential.

No wonder that the stakeholders are confused when the journalists cant even make sense of roles and responsibilities.

Safaricom & M-Pesa - Can they kill retail banking?

So I read that Michael Joseph said "Unless banks change and adopt this technology, there will not be anything like retail banking in 10 years" - you have to love Safaricom for being so aggressive AND successful in their approach - I think that similarly to Vodacom M-Pesa SA, that Safaricom has managed to turn the banks into super M-Pesa agents (read "dumb pipes") what a turn of events eh?

Side note:
I can understand how this can happen in Kenya where M-Pesa has majority of "accounts" but in SA where M-Pesa essentially is a new, albeit respected, brand with no traction is a total cluster.... for me.

So whats next for M-Pesa and where to from here?

Well there is a battle happening on multiple fronts I guess:

1. retail banking going forward
2. global telecom outlook
3. Association (ex.) relevance

I agree with Joseph - new times are abound in emerging markets, not sure this scenario applies in the US or EU, and banks have to think outside the box to be relevant. Its hard to be a bank who relies on terminal access to service their customers (ATM, mobile, online), when the #1 terminal and the connecting tissue is owned by the operator, who is also the only entity in these markets that have an "on the street" network (airtime vendors).  If the banks can get access to the operator channels, then they still have to build agent networks and have relevant services for the end customers - yes being a regulated bank is not easy at the moment.

Wireless operators around the world are looking with keen eyes on what is happening in Kenya, because regardless of the market and cultural situation, operators are seeing that it can be done. To give you an idea, AT&T has a market cap of more than $165bn while Bank of America's Market cap is $133bn and the worlds largest retail bank Citibank is in at around $122bn!.
Giving these very cash flow wealthy wireless operators a taste for a "new" multi billion dollar opportunity ripe for refactoring may prove dangerous in the long term (see the joint Verizon, AT&T and T-Mobile payments release). So the more successful Joseph and his teams are at disinter-mediating the established FI ecosystem the more excited wireless operators get across the globe.

I actually think that the second place contenders here could be VISA/MasterCard because the issues that Joseph is trying to solve is that his M-Pesa system is closed loop (well not so much anymore nationally in Kenya) and closed loop systems (1-1 scenarios) are not sustainable long term in payments. Unfortunately for VISA/MasterCard is that they have shown in the past how poorly they capitalize on huge opportunities - I recall the VISA - GMSA announcement 2 years ago and I am still eager to see the output, in fact recently it seems like VISA has decided to fight some wireless operator initiatives jointly with the banks.

So I guess that I think in emerging markets retail banks are in danger of loosing out, globally wireless operators are excited about this Safaricom success and the associations have a shot at helping the mobile money services gain a global footprint - and thereby getting a new life, but will most likely fail. Comments Bill?

Mobile Money Rumors II

Everyone that saw this announcement - Digicel Haiti Mobile Money must have thought "I wonder who is the service provider and who will eventually win the first prize set out by "The Gates Foundation" and USAID?" - well rumor has it that its Yellowpepper (using the Fundamo next gen platform) - Anybody has anything to add?

Also a less reliable source tell me that a group of Mobile Money Executives/Experts are teaming up to do a startup with some serious potential.... Since there aren't that many real mobile money  executives who are also SME's the rooster is short, anybody has any guesses?

(Last time I had some rumors on here there were 100's who looked at the post, but nobody commented, please feel free to comment also anonymously)

Rumors in Mobile Money

I have decided to post a "Rumors in Mobile Money" section here.
We all hear about rumors all the time, most of the time there is some level of truth to the madness. I for one hear so many and I would say that over the years 75-80% of them have come true.

Feel free to drop rumors left and right - Either email me directly or drop them as "Anom" in the comments box.

Let me start with a left wing rumor, and most likely not true ;o).

Rumors have it that After many many years in the Mobile Money biz, with great commercial success, a very large mobile money provider is in talks with a payment network around either an acquisition or investment. Anybody dare to take a guess who that may be?

Lets see if we cant get some rumors put up here....

My good friend Menekse Gencer

Not that long ago, I think around a year or so, I met this woman at a Google event where she was hosting a presentation called "Is there a case for mobile payments in the US" (or something like that - I still believe that there isn't, but there is a case for credential provisioning in the US, but not mobile remote payments yet :o).

While I didn't know of Menekse prior to this event it turned out that our lives had intersected all the way back to late 2007/08 when Menekse and her then employer PayPal decided to throw a wrench in my KushCash launch when they decided to explain to Cingular the rules of competitive engagement - We got yanked from the Cingular network and PayPal was happy again, this was a $250k wrench - FYI (hrmf).

Despite this rocky start on the relationship, Menekse and I have become close friends over the last year and I love having late night talks about why she is wrong and I am right - in between the very casual debates there are always a lot of laughter and stories from around the world. I am very happy to call Menekse my friend (if you need to understand or get direction regarding anything around mobile and banking/payments, you need to talk to her - you can find her here www.mpayconnect.com)

Nedbank & Vodacom (Mpesa SA) who's the pipe?

It seems, read "the rumors are", that Nedbank decided to sell their soul to the devil in order to get the Mpesa deal with Vodacom South Africa. To those out there who doesnt know who Nedbank is http://en.wikipedia.org/wiki/Nedbank

Its hard to clearly articulate what is going on, because it seems wrong on so many levels:
1. Nedbank takes on KYC, but ONLY in branch (each registrant will have to visit a Nedbank branch)
2. Nedbank will co-own the float in trust with Vodacom
3. Mpesa/Vodacom makes all the system transaction fees
4. Mpesa/Vodacom owns the customer relationships

I am inviting some of my good friends from Nedbank to comment on this and give us some insight, because if what I am saying is true, Nedbank just turned into a pipe.

Mpesa

Why did Nick Hughes go to Signal Point? Really, its a question, I guess I am not versed enough in what Signal Point does, but it just seems strange to me the Guru of mobile money could have gone anywhere.

My time in Africa

I have been so lucky that I worked for the company Clickatell where I was responsible for creating the strategy that was to take Clickatell from being a transport (ed. SMS) company into "something else" (look out, news will probably come soon) :o). I remember the first time I was sent to South Africa to meet with clients and partners as part of my "work on the ground" it was a sunny Friday morning in January when I first saw the great table mountain out the right side of the plane. I even remember the song that was playing through my speakers on that Virgin Atlantic flight - "I'm yours" with Jason Mraz. Later that day, Llew Claasen, a great friend and then colleague showed me the Camps Bay nightlife, a place I would trade most things for.

I have travelled a lot in my life, I have lived and worked in more than 8 countries and have travelled in many more ranging from the far north to the southern most part of the world, from the west to the east but of all my experiences this one is the one that seems to stay with me the most.

Since my trip to South Africa I have been there many times and have even made a trip into darkest Africa to see the state of the nation at the equator.

Personally Africa taught me a lot about hope, resilience, desire, perseverance and heart. There is a lot that we in the western world can learn from these countries which all too often are tabled as being "not relevant".

Now that I have parted ways with Clickatell I will most likely not be going to Africa anytime soon, I will always think kindly about that place. I am welcoming African stories any day.....

Mobile Banking 101

So this is an interesting blog title, because I have always had a hard time explaining what seems to be second nature to me - "What is Mobile Banking?" I will try, despite of myself, to explain this in a clear and succinct manner.

Mobile Banking is the notion of using the mobile device as banking terminal for the end user, and thats about where the simplicity ends. In all fairness pure mobile banking is nothing but data transport from the banks infrastructure to a mobile device, the challenge really is fitting that data into a smaller form factor on as many phones as possible.

You all know the notion that not all children are born equal and the same applies for markets in mobile banking. I have had the pleasure of adding comfort to end users in the US and Canada, but I have had the great and fulfilling pleasure of seeing how my solutions have/are and will help people in Africa "get by" by offering them services that they would not otherwise have access to at all.

I would like to ask the question "How much value does a "car loan product" offer to a guy in DRC or Nicaragua who makes $2 a day?" - I am almost sure you will all agree that it has little to no value for the guy.

If that statement holds true then that means that western banking is shit out of luck in those emerging markets!! Because here at "home base" we only know about those types of services (and yes, I bundle sub prime creativity into that statement)

Let me as another question now "How great is the Iphone/Android/BB or even mobile web penetration in the DRC?" - very low... Again we are out of luck here in the west, because the extent of our "mobilization" efforts really stop at those 4 different mobile access types. In DRC, China, India, Brazil etc. etc. serving a couple of million iphone subscribers mean absolutely nothing, because the markets are so large that even if you have 2 million iphone customers in Chine, you have essentially lost, and somebody else will come in and find a way to serve the remaining 1 Billion people!!!

So needless to say, mobile banking is taking off in the US, but only because of advanced mobile SDK's for easy thick client development on iphone and the fact that the mobile is nothing but a service extension of the Internet banking we all know. In emerging markets they are picking up quickly and some banks out there have already cracked the code and are disinter-mediating VISA/MC and traditional payments schemes because they have found a way to serve near 100% of the markets cell phones (without breaking the backs of their end customers) and have ventured down the path less travelled by offering, not saving accounts as primary use case, but innovative payments types that actually appeal to the $2 a day guy....

In the coming years I am determined to help bank a continent (yes "A continent" I am not sure which one yet :o) ) and I need your help to do so.... I think I am well on my way, and luckily I am surrounded by smart people and my friends in the mobile money space who are always up for sharing "lessons learned".

Stay tuned.......

Welcome - and here we go again

Hi - this is not the first time I have dedicated a blog to my immense knowledge in the mobile banking sector, this is however the first time I am at least semi dedicated to writing on it at least a couple of times a day/week/month (see my level of commitment should convince you to follow me)

I have been following some of the other blogs about Mobile Financial Services, but I always find that they revolve more around what the media is dictating vs. how to actually move the needle. So this blog will be much more about moving the needle and answering all the hard questions that my employer doesn't want me to talk about. :o)

Stay tuned, I think that the next blog post is about to be written.