Mobile money, a technological innovation that has brought access to financial services to many who previously lacked them in emerging economies, reached a significant global milestone in 2019: one billion registered mobile money accounts.

Each day, more than $1.9 billion is processed by the mobile money industry, the Global System for Mobile Communications Association (GSMA) reports. There are now 290 mobile money services live in 95 countries.

As the latest GSMA State of the Industry Report on Mobile Money puts it: “More women are using financial services, low-income households are accessing essential utility services and smallholder farmers are getting paid more quickly and conveniently. Meanwhile, millions of migrants and their families are experiencing the life-changing benefits of faster, safer and cheaper international remittances and humanitarian cash assistance is being delivered more thoughtfully to those in crisis situations.”

As the mobile money industry has grown tremendously in just over a decade, so have the number of value-added services offered by mobile network operators to attract consumers—from basic person-to-person (P2P) payments to a variety of options that include paying bills, such as utilities; making person-to-business (P2B) payments; receiving government-to-person (G2P) payments; or using insurance and credit services, among others.

At the same time, mobile technology has evolved from 1G to 2G to 3G to 4G, with exponential growth in capacity and functionality. And to complicate matters further, those different generations of technology co-exist in the market.

The question for mobile network operators that provide mobile money services is whether that growth is sustainable if businesses don’t understand how consumers make their choices.

A Bundle of Joy

Along with my colleagues Yan Dong of the University of South Carolina, Sining Song of the University of Tennessee, and Sriram Venkataraman of the University of South Carolina, I set out to discover how consumers choose mobile technologies and mobile money services given different generations of mobile technologies. We also studied how the bundling of different mobile money services and different generations of mobile technologies affect each other in consumer demand.

We examined patterns using a dataset on mobile money services and mobile network operations in the emerging markets compiled from multiple data sources. What we found is that bundling mobile money services with mobile wireless communication services increased the odds that customers would remain with a company even if the company raised the price of its wireless service. That was especially true with 3G technology, which was the current technology during most of the period included in our dataset.

If a company does not bundle mobile money services with its wireless network, customers will jump to another company as soon as the price goes up. It’s hardly surprising that customers are sensitive to price. But our research suggests that price is less of a factor in consumer demand when value-added mobile money services are included.

As we wrote in our study, “Mobile Technology and Financial Service Bundling: A Structural Estimation of Mobile Money,” which is forthcoming in the special issue on FinTech at Information Systems Research: “The  findings suggest that [mobile network operators] may avoid depending solely on price competition, and consumers can choose service providers based on service as well as price.”

Three Key Takeaways

Our study offers three important managerial implications for the mobile money industry. They are:

  • Managers should understand that mobile money offers the opportunity to promote social good and make a profit. It’s not an either/or proposition. By promoting financial inclusion for underserved populations, mobile money empowers people in emerging economies while also providing a competitive advantage to mobile network operators, our findings show.
  • While mobile money continues to offer a competitive advantage as mobile platform technology evolves and mobile capacity increases, mobile networks that adopt the latest technology have the most to gain because they can offer a substantially larger set of mobile money options to differentiate themselves from those that do not offer mobile money. As our study states, “mobile money implemented with 3G and 4G leads to larger market shares than that with 1G and 2G.”
  • There may be an “optimal” level of service bundling in offering mobile money services. For example, we found that bundling mobile money with G2P and micro-insurance may actually trim the benefit of mobile money. The takeaway: Services without a clear value proposition for customers—whether it’s too costly or complex to use—may cause diminishing returns for mobile networks when they continue to add options.

Further research is needed in this area, but this much seems clear: By bundling mobile money services with mobile technology, wireless carriers can help raise their bottom line by helping to level the playing field for people living in low-income countries.