Who needs a bank?

12 Jan 2017

2017 is only weeks old and the deals are starting already.

One which caught my eye is in Vietnam. There, we see mobile payments company Fortumo partnering with mobile operator Vietnamobile to launch carrier billing on the Google Play app store.

What I like about this is the carrier billing cuts out the bank. In markets such as Vietnam, where credit card penetration is low – below 2% – its means that the 40% of the population who own a smartphone can still easily buy their mobile services.

Cutting out the bank is an interesting model, with tremendously powerful implications for telcos who have been rubbing their heads and wondering where new revenue streams can come from.

Sure, they are dealing with new monoliths – such as Google and Apple – and need vendors like Fortumo to make it happen, but two points to make are that the telcos are crucial to that ecosystem, while the banks have been cut out.

In emerging markets, it’s the classic leapfrog theory, the same one which is driving the uptake of smartphones and the conversion of those same phones into mobile wallets.

In markets where a vast number of people are underbanked, where affluence is growing and smartphones are proliferating rapidly, it is a no-brainer for payments to be a major part of the equation.

The world is talking about the march of the fintechs in one breath, and talking about the transformation of telcos in the next. Put the two together and telcos are transforming into fintechs.

A glance around the world shows that carrier billing is on the march everywhere. Note to self: you made a mistake in not including carrier billing in one of your predictions for 2017, because it clearly has significant momentum.

In India, Google Play added carrier billing options for Vodafone and Airtel postpaid users in the first week of January. This came after a similar 2016 deal with Idea Cellular.

Interestingly, Google has not made indication that it will introduce its Android Pay digital wallets into India any time soon.

This is good news for telcos, as are suggested reforms to India’s Payment and Settlement Systems Act, which would get telcos more involved in digital payments.

In a country where cash is being retired from service the government mandate is going to be a massive accelerator for digital payments, and this is clearly happening already.

In addition to apps, carrier billing is fast moving into the world of online gaming, a market which is also growing rapidly in India.

This week we also see that India rose two places in the world rankings and is now the world’s fifth largest market mobile gaming market.

Total mobile game revenue in India is forecast to reach $1.1 billion by 2020, according to San Francisco business intelligence firm App Annie.

Beyond India, it’s a good time to be a vendor in the carrier billing space. In the last couple of months, vendors such as Boku and Dimoco have joined Fortumo in announcing deals from France to Japan to the Gulf States.

That’s good news for them, but also for the telcos they are partnering with.

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