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If You Can’t Beat Them, Join Them:  How Banks Can Better Tap into the Market for Digital Financial Services

By Felix Polianski, Vice President, Mobile & Digital Financial Services, CreditPilot

According to McKinsey, there are two billion individuals and 200 million small businesses in emerging economies lacking access to formal savings and credit, forcing them to transact exclusively in cash (1). At the same time, smartphone and mobile phone ownership in such areas is exploding. Recent surveys conducted in emerging and developing countries show the vast majority of adults in these areas own, or have access to, a mobile phone (2).

Felix Polianski
Felix Polianski

These two converging trends – large numbers of unbanked and underbanked persons combined with greater mobile phone access – creates a perfect storm for the rise of digital financial services, particularly mobile financial services. Suddenly, companies with billions of subscribers and broad distribution channels – namely mobile carriers –have an opportunity to participate in high-margin financial services. Traditional banks may be inclined to view these mobile carriers as an emerging threat, but they actually represent a gateway to a golden opportunity if they are approached the right way.  For example:

Banks Should Focus on Collaborating Vs. Competing

As noted, unbanked and underbanked segments of society present a huge market opportunity for mobile carriers and banks alike. But for mobile carriers specifically, there can be substantial risks associated with entering this market, including a steep learning curve and severe penalties for regulatory non-compliance.

Here is where banks can leverage their unique strengths, particularly regulatory compliance and operations, as a means of attracting top mobile carriers as partners. Both sides have different attributes needed to address the market, but both must also be willing to play nice when it comes to revenue sharing. This can be a technologically challenging process and often enlisting an intermediary can help.

 Offer Incentives and Value-Added Services to Increase Engagement

Banks and mobile carriers engaged in such partnerships must work together to increase subscribers’ use of mobile financial services. Offering incentives can be a key way of doing this – for example, free minutes when a subscriber signs up for a mobile financial service. Remember, not everyone has a smartphone so text messaging and SMS services should also be prioritized for enhancing engagement and ultimately, generating new revenue streams. An example may be a free text message when an account falls below a certain level, prompting the subscriber to sign up for overdraft protection.

With their deep development expertise, banks can focus on creating easy-to-use apps that go beyond checking account balance checking to functions like account transfers, bill pay and mobile proximity payments. Offering more apps and functionality will only serve to increase use, but there needs to be complete integration of the mobile carrier’s and financial institution’s infrastructure so subscribers can complete all possible transactions via their mobile phones.

 Leverage Data to Upsell, But Avoid Becoming Intrusive

Together, banks and mobile carriers can work together to leverage vast amounts of subscriber and behavioral data in order to upsell services. An example may be identifying subscribers who are running low on minutes and proactively prompting them to top-up using funds in their available account balance. For the bank, this provides another channel for engagement; for the mobile service provider, it’s a chance to sell more airtime and increase revenues.

 But the key to such approaches is to alert subscribers to offers in a manner perceived as additive, not intrusive. This makes the mode of alert an important consideration. Many consider push notifications to be less intrusive than text messaging, since the subscriber’s activity in the moment is not interrupted. Banks and their mobile carrier partners should collaborate to discern what kinds of interactions tend to work best for different types of upsell offers.


Gartner predicts that by 2030, 80 percent of heritage financial services firms will either go out of business, become commoditized or exist only formally,not competing effectively as fintech companies and other non-traditional players gain greater market share (3). Financial services firms face dramatic disruption from upstart competitors and their ability to survive and thrive will require them to dramatically change their approach.

More specifically, banks should look at the huge market for unbanked and underbanked persons through a different lens. They must be willing to collaborate and compromise in order to take advantage of mobile carriers’ scale, while bringing their own unique strengths (regulatory acumen and operations) to the equation. Partnering with non-traditional players in this way will help banks solidify and build their global presence at a time when their long-established business model is being challenged from all sides.

  1. https://www.mckinsey.com/industries/financial-services/our-insights/mobile-money-in-emerging-markets-the-business-case-for-financial-inclusion
  2. https://www.pewinternet.org/2019/03/07/mobile-connectivity-in-emerging-economies/
  3. https://www.gartner.com/en/newsroom/press-releases/2018-10-29-gartner-says-digitalization-will-make-most-heritage-financial-firms-irrelevant-by-2030