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Ringing the changes: mobile financial services are at home on the frontier
Hand holding money

Ringing the changes: mobile financial services are at home on the frontier

by AJ Hanna

Over the course of the past ten years, the financial services industry has experienced a series of profound shocks that have impacted how the industry is regulated and managed. With the rise of the mobile phone, the opportunity to develop alternatives to the traditional banking model has never been greater.

As VimpelCom transforms itself from being a traditional telecoms company to a digital services provider, the opportunity to develop pioneering Mobile Financial Services (MFS) adapted to the needs of our customers in frontier markets will be an important part of our future. New and innovative products and services designed for our customers have the potential to drive productivity gains and economic growth. A report by Advisor Perspectives argues that 80% of the unbanked mobile phone owners in Kenya, Nigeria, Bangladesh and Pakistan are “bankable,” and these services could more than double the number of banking customers in those four nations.

Last year, Jazz Cash (the MFS division of Mobilink, VimpelCom’s operating company in Pakistan) handled over 52 million transactions for a total value of USD $1.4bn. It’s an exciting development that leads to a broader question about what’s possible: can the rise of mobile and digital services disrupt the financial services industry and unlock banking services for all?

Increasingly consumers are questioning the purpose, credibility and stability of banks and their role in modern society. A recent report from McKinsey & Company shows banks are feeling the weight of an infrastructure that is to a large extent antiquated. In one case, manual workarounds and a burgeoning volume of custom applications saw a European private bank run up an additional €100 million in IT spending. Their operations are expensive to run, and hard to maintain or justify in an increasingly digital world.

Legacy systems, expensive underused branch networks, and an almost monopolistic hold on customer uptake in many developed markets has led people to question whether the current retail banking model is something frontier markets should aspire to, or take steps to avoid. Even if it was desirable to replicate such systems in developed markets, we might question whether it would be feasible to recreate them in countries that are different geographically and economically from the West.

As VimpelCom transforms to meet the changing needs of our customers, mobile financial services (MFS) will become an increasingly important component of our business.

Already in Pakistan, Jazz Cash, Mobilink’s MFS division, has tailored a number of products aimed at mobile phone users. Customers can securely transfer money in a matter of seconds to relatives anywhere in the country, avoiding the need to visit bank branches or wait several working days for transactions to process. The recipient can directly receive the funds into their mobile wallet or at one of the 60,000 convenient Jazz Cash agents across the country.  Transactions are secured and regulated through an extensive process that includes real-time due diligence tools such as Know Your Customer, fraud detection and compliance, providing peace of mind to customers who in many cases will be conducting mobile financial transactions for the first time in their lives.

As internet access becomes more mainstream, customers in frontier markets will become both more receptive and more empowered to use their mobile phones in their daily lives, including financial transactions. On average, just under 40% of the population in VimpelCom’s frontier markets has access to a financial institution, due in large part to the limited availability of bank branches in remote rural areas. A report from GSMA stated that doubling mobile data use leads to an increase in GDP per capital growth of 0.5 percentage points. This creates a huge opportunity to unleash economic development and productivity gains that took decades to achieve in western markets.

Cash transactions are already on the decline in western markets as card transfers, online and mobile payments from digital wallets become the normal means of buying and selling. Cryptocurrencies and the supporting digital ledger infrastructure of blockchain technology will only hasten the demise of cash transfers and the reform of financial services transactions.

The last ten years have been tumultuous for the financial services industry in western markets, and MFS remains at a nascent stage in its development, subject to regulatory regimes and market maturity as it is to the technology that supports it.

Even so, the role and purpose of banks in our daily lives is called into question as technology offers a viable alternative to the traditional means of carrying out transactions. Frontier markets have a unique opportunity to adopt these new technologies and be pioneers of faster, more effective financial services that serve the needs of rapidly changing societies. As VimpelCom moves from being a telecoms business to a digital technology and communications company, we are in a unique position to open up mobile financial services and smartphone technology to hundreds of millions of people, spearheading economic growth and contributing to a stronger economic system – starting with the frontier.


  1. Farrukh
    Posted 2 years ago - 1 reply

    HI AJ

    For targeting the Un-banked Population especially living in Pakistan and Bangladesh, there is an immediate need of starting the Shariah Based Mode of MFS.


    • AJ Hanna
      Posted 1 year ago - 0 reply

      We are certainly aware that sharia compliance is a need for many of our customers in the countries you mention, and others as well.

      Indeed, we are looking into this issue, bearing in mind that the solutions we develop would need to serve our customers well, deliver adequate profitability for the company, and provide suitably stringent compliance to sharia requirements.

      Thanks very much for your interest – this is on our radar screen.