Mobile Money Feasibility - Case Study Example

Mobile Money Transfer Student’s Name Subject Professor University/Institution Location Date Executive Summary (250) Innovation opportunities in the business world are infinite. Telecommunication industry has also grown in most countries and still has multiple opportunities for more growth. The trend of technological growth has left most companies struggling as they embark to meet customer satisfaction goals, sustain growth and remain profitable. Australia economic growth has been witnessed through its financial services sector in recent years. This remarkable growth has been enabled by the transactions rate customers assume in the global enterprising era. An innovative mobile money payment will provide a solution to the fastest growing service in Australia. It will augment the existing conventional systems of money transactions, depositing and usage. Customers are highly demanding services that are match with their day-to-day activities and using the available technology, of which M-Money responds to. The service is strategically relevant and will further use strategic approach in its launching and development to promote high adoption. The customers will find it useful as it reduces the complex transactions actions that have for long been involved with most financial institutions. M-Money current relevant capabilities will promote competitive advantages as it is presently successful and innovative solution that customers will find friendly and efficient. The process for its success will immensely be shaped by launch program, technology management as well as the organization operations in client management and service development. The service will target some key highlighted goals such as having active customers, enlarged market share, strong service with millions of registered users, high revenue market share and profit turnover. Services Description Mobile Money transfer is a recent mobile payment system which is extensively being used for fast money transfer through the use of mobile phones. It has been successfully used in East and South Africa, India among others. The service provides quick money sending, withdraw, airtime top up, bill payment, paying for goods and real time access to personal account. The service provider, primarily, a telecommunication company activates an account for the customers after providing the personal details. A personal identification number (P.I.N.) is then given to secure transactions. The company then operates through established outlets in various parts where one can deposit money, withdraws or sends to another person through agents. These agents may be independent people operating different business like pharmacies, foodstuffs and other business but alongside they offer the mobile money transaction with agreed terms with the company (Mas & Morawczynski 2009, p.78). As Pickens (2009, p.1) argues, the service then provides the customers with timely access to money when in need and promotes an efficient way to pay bills like electricity, water and other services offered by multiple company. The service is also used by shops, malls, transport services companies and restaurants to allow their customers deposit the money to their mobile money accounts. Media houses, employers and other temporal business operators also use it for sending promotional rewards, payment and other monetary transactions. Network coverage allows the service to be quick as within less than a minute a transactions carried out and both the sender and the receiver updated. A person can deposit as much money as allowed by the company. The person carrying out a transaction, whether withdrawal, deposit and sending of money then produces the Identification Number, usually the national ID for to confirm the account details with the person. Market feasibility Market Australia as a probable market for Mobile Money Transfer (referred as M-Money for this task). As Jordan & Jain (2009, p.1) argues, the vastness of Australia has limited widespread of baking services to most parts of the country. In the remote places, people experience delay and take longer to reach the possible town where they can access the banking services. Millions of people currently have access to mobile phones. The service is mobile as long as one has money in the account and can be sending of money can be done everywhere and at any time. M-Money will fill the gap and the need of the Australians both in urban and remote areas. The cost of establishment for money transaction sectors is high due to the need of facilities, security issues and operational cost which is demanding. However, M-Money requires identifying possible agents who use a mobile phone to connect with the company network and help in operations. The cost of establishment is low and therefore possibility of fast launch and development. The need for sending money by urban residents to their rural people and vice versa for parents who send their children to urban areas for studies will be an effective one. Most people own a mobile phone and there is a growing need for fast and effective day-to-day working. Its efficient services allow people to pay bills across multiple services. Market research Market research on Australia market for the new service, M-Money will take four aspects including information about demand, consumer profile and pricing. The purpose is to strategically launch the service with critical forecasts and knowledge of the market challenges. The information will then necessitate management and the way to plan for breakthroughs for the service. It will also allow a rational recommendation for pricing, service recommendations and generally weigh the market potential. Australia has had a strong, sophisticated financial sector in Asia-Pacific region. This was shown by its resilience and stability during financial crisis. It was the most resilient in the region in 2009 among other four in the world as per IMD World Competiveness report-May 2009 (Schwab, et al 2009, p.2). Australian banks are also among the strongest and most profitable. This is encountered through the efforts of the government in regulating the market. Australia has high skilled, multilingual workforce and stable political system which makes it an ideal location for M-Money financial service. Market Segments According to Lowe (2013, p. 12), the broad Australian market will be divided into subsets depending on consumers needs. The implementation process will target specific segments, desires and needs that are common in mobile usage. M-Money will imagine as many segments as possible to exploit most segments. This will merge with general and life insurance services, building societies and credit unions and payments systems. The market segments for M-Money are wide as it brings customer desired services in use. The service sector like water, electricity, education and health service sectors will efficiently be used for the day-to-day transactions. The monthly constant bills will be remitted on timely manner without the tiresome conventional depositing and payment. Product selling companies like foodstuff outlets which offer services in different places and towns can serve their customers fast. The service can also be combined with ATM transactions where bank account works along with mobile services to offer transactions for the customers. Any other sector such as transport, tourism and housing also is capable of using it according to the agreement settled with their customers. Service Potential M-Money have two functionalities which can be used by the customers. The registered customers are enabled to convert the deposited money to e-cash and real cash. E-cash is done through transfer of money to another person, who is then alerted by an SMS. Real cash is obtained at a physical premise operated by m-money agent. This service can be used to send money to friends and family members, pay a provider such as schools, taxi, goods and services. M-Money customers will access money deposit and withdrawal services through the network of agents who act as bank agents. The service will allow them to transfer money to user and non-users, pay bills and possibly transfer money from bank account using the mobile devices. Through the use of SIM toolkit, a menu will be provided for accessing the service. The customers and regulator are constantly for various developments in order to protect personal information and adhere to recognized best practices. The customer will find it possible to access to their account and carry out instant payment, money transfer at any time and at whichever place. The system is much compatible with public and private companies offering services and those customers served through various companies will find it necessary to use M-Money service (Tarazi & Breloff 2010, p.23). Potential Customers, number, location and buying patterns The number of service user will depend on network coverage. The extensive the network, the more the number of service customers. The bulk of customers will include small-scale transactions customers. Those who extensively buys from different locations, uses services from various outlets and sending money to different entities. Many customers are expected in major cities and towns who need fast services and due to provision of multiple agents due to existence of security. Others possible customers will be source from rural and remote areas where there are less money transactions. The total number of users is expected in millions, probably 12 millions by the third year of operation. Selling the Service Every transaction is carried out with a definite fee. In most cases, sending fee and withdrawal fee is charged by progression. This makes transaction possible as every amount is under a certain range of charges. The service will target individuals, organizations and this will be approached differently for different customers. The service will prioritize on presenting the company to build long-lasting relationship. The selling technique will be guided by the 6Ws and H- Who, What, Where, Which, When, Why and How to understand location, people, and verify that every effort is the right track. The service will critically major in listening to customers as professional service provider. The service will immensely use the benefits of linking and building networks for development. Competitors The major competitors are the conventional banking units which hold the most of Australian employed as well as high-income earners. The use of these conventional modes of money deposit, withdrawal and transfer is common with the middle aged and the old. The view of the banks as secure service providers may limit bulky transactions for M-Money in Australia. The banks also provide various payment systems unavailable with M-Money such as cheques, high-value payment, RTGS and EFTPOS. Building societies and credit unions are also common with lower income earners as well as middle class and therefore, they pose a critical completion to M-Money service. Competitive Business Advantage/s The competitive advantage of M-Money is derived from the going way of the need for fast, efficient and user friendly service. The fast growth of telecommunication services and use of mobile phones which has increased greatly influences the service adoption and growth. Existing network and the need for fast and efficient financial transactions is highly demanded in highly competitive market like Australia. M-Money is an ideal system which can be used alongside other conventional modes of transactions as it also connects with an individual’s bank account. Transaction rates are a major factor for its competiveness, as each category of money sent, withdrawn and payable bills are charged by the amount. It is easier to register, access and can be used in multiple outlets. The service offers optimized costs. It is agile to meet customer requirements and satisfaction. The created and centralized distribution warehouses have the capacity to support various location growths. The 24/7 consultation service allow service monitoring and customer queries reporting. Through partnership with multiple organizations both the bank and non-bank financial institutions, it will offer efficient services. Commercial feasibility Strengths, weaknesses, opportunities and threats M-Money will employ support activities of high quality to its customers. High quality services will be enabled through firm infrastructure. This includes network capabilities, provision of SIM cards, registering many customers through agents across the country and ensuring service upgrade. Technology upgrade will ensure that little is left to technological potential of ruling about the service provision. Money transactions are critical activities which will be promoted by backup systems to ensure quick service convenient to customers’ requirements. Human resource is another vital consideration for the service delivery. This spans the roles of agents, financial officers as well as facilities operators. Access to agents is possible as the service is compatible with most of other functions in the cities, shopping malls and towns. Shopkeepers, pharmacy outlets as well as independent M-Money business operates efficiently. The agents require minimal registration fee, identification details. These people will be contacted through presenting the service provision strategy as the service is efficiently carried. Technology development and procurement are other mechanism that proves the strength of the service (Merritt 2011, p.143). There are various other factors which the system will leverage as they currently exist. This will promote the service competitive advantage. Among them is the penetration of mobile phone in Australian market which is very high. There are no M-Money operators in the market and this will bring an advantage of authentic service to existing customers’ needs. There are lower and middle class with les access to formal financial institutions. The service will develop rapid banking service which will show high public demand. Another feature of its strength is the way the service is convenience, low transaction fees and speed. For most of small businesses and constant customers who depend on many transactions, M-Money will reduce the time spent going to banks and concentrate on their business. Ever increasing people mobility makes the trend of this service to gain higher momentum. Mobile channel will soon become an indispensable component for the transfer of small sum of money in the country, regionally and internationally. Operation to the first sale There are various factors to consider as preliminaries and which will promote the base of operation. As mentioned earlier, money transactions require speed, convenience and particularly M-Money which basically entails quick transactions when needed for paying bills. The SMS alert is an important feature which the agent needs to confirm the amount withdrawn, the identification and confirmation for transaction. The sender and the receiver also require it for confirmation that a transaction has been carried out. Considering such cases will mean that the service has to be provided when all is ready and factors suitable for operation (Merritt 2011, p.144). It is worth noting that the preliminaries service of M-Money will be to offer micro-finance operations. Customers will be able to deposit money daily in their accounts. After a sizable number of customer have subscribed to the service, they will further network with their fellow customers and tradesmen. The massive need will then allow the service to operate minimally between the groups which are in really in need. This will then be expanded to meet the needs of simple payment to maintain customer retention. Users will then withdraw money. M-Money will further take more time in negotiations for collaboration of the services with existing banks. When such negotiations are through, customers will be able to withdraw money from ATM points when their accounts are linked with formal banking system. The service can become popular within the first three months of extensive promotion and marketing techniques. Generating awareness can be carried out through SMS alerts, which promote feedback and contacting of customers. The existing customers can also be used as referral mode of promotion. Money to set up the service Three streams of development including network technology, operational process and support systems are the main service building block. M-Money will require over $ 500 million for starting and operating effectively until it breaks even. Overall Risks The major risk forecast for M-Money is delayed early growth. As most services offered by the banks are common and stable, the fear of operations of the new service may challenge fast growth and adoption. Another major risk to M-Money is government legislations which are meant to protect the existing financial services sectors. This may negatively affect operations due to delayed agreement and substantial taxes. Collaboration with other financial institutions will also delay exploitation of multiple segments. Government legislations may adversely affect the service if they operate for the protection of the existing competitors. This will reduce the possibility of extensive adoption in Australian market. Delayed collaboration with other institutions is not a major risk as the service can be carried independently. The demand by the customers who are also customers with existing banks and non banks will however promote easier collaboration agreements. Through the proposed job creation, market expansion as well as promotion of faster and alternative banking for non-employed, self employed and business utilization, the government will evaluate its benefit to the wider community and probably lessen its protective agendas. The service will also ensure compliance with standards and support various business models. The transaction cost through collaborative services will be divided accordingly and shared between M-Money and the institutions in collaboration. M-Money will provide multiple solutions which will be interactive and according to customers’ demands and thus command attention of visibility and capabilities in its adoption and use (Jack & Suri 2011, p.3). Findings and Recommendations Mobile money transfer can be adopted and used in diverse target market where there are various subsets of consumers. The design and implementation suited according to customers’ needs, can give the service a competitive advantage due to effective match of the service and target customers. Service launch development will require immense understanding through evaluation of the experience of existing markets in other parts of the world. This will help to learn to avoid potential failures, risk and promote service priorities. Such comparison will augment marketing, management and service implementation (Mas & Morawczynski 2009, p.77). The service depends immensely on selling techniques used and more so with Australian market where people are different. All the subsets and market segments will apply different principles for the selling of the service. There are major elements to be considered for the success and development of the service in Australia which includes: Continuous service technology planning, implementation, development and evaluation to ensure predictable, efficient and timely transactions. The service strategy and plan including service launch, marketing, expansion and exploitation of different market segments. Consideration of different social economic factors in Australia like different income earners, business models as well as the target subset of the Australians. Dedication for service and monitoring service results. This includes the activities of customer care services to ensure feedback and satisfaction. Expansion to include close border collaboration for promotion of more customers’ transactions. The regional and international financial service institutions can successfully link with the service and create more possibilities. References Jack, W & Suri, T 2011, Risk sharing and transaction costs: Evidence from Kenya’s mobile money revolution’. Working paper. Jordan, C & Jain, A 2009, Diversity and resilience: lessons from the financial crisis. University New South Wales Law Journal, 32. Lowe, P 2013, Australia and the World. Labour Market Turnover and Mobility 1 Dwelling Prices and Household Income 13 Households’ Interest-bearing Assets 23 India’s Services Exports 33 Australian OTC Derivatives Markets, 97. Mas, I & Morawczynski, O 2009, Designing mobile money services lessons from M-PESA. Innovations: Technology, Governance, Globalization, 4(2), 77-91. Merritt, C 2011, Mobile money transfer services: The next phase in the evolution of person-to-person payments. Journal of Payments Strategy & Systems, 5(2), 143-160. Pickens, M 2009, Window on the unbanked: Mobile money in the Philippines. Schwab, K, et al 2009, The global competitiveness report 2009–2010. World Economic Forum. Tarazi, M & Breloff, P 2010, Nonbank e-money issuers: regulatory approaches to protecting customer funds. Focus Note, 63. Read More