Have Cell Phone, Need Bank: Nokia Makes Mobile Play for Unbanked

Targeting the unbanked in emerging markets, mobile device manufacturing giant Nokia (Espoo, Finland) introduced Nokia Money, a new offering that will deliver basic financial services capabilities to cell phone users. The service, which was announced in August, is set to be gradually rolled out in select markets in early 2010, according to the company.

At the core of the Nokia Money service is peer-to-peer money transfer capabilities. Essentially, the service will allow individuals to send money via their cell phone to other mobile users in markets that are otherwise cash-based. Via a simple interface, users can send money, view transactions, pay bills and add money to their accounts. The service, which is based on a mobile payment platform developed by Redwood City, Calif.-based Obopay, also can be used to "top up," or recharge, a mobile user's prepaid SIM card account. Nokia plans to make the service open and interoperable with other payments systems, according to a press release.

Integrated Experience

According to Gerhard Romen, director of Nokia's mobile financial services unit and head of global alliances, Nokia aims to make money transfer an integrated part of the mobile experience. "That is where [Nokia] can add value, ... by making the payment functionality part of your phone in the same way that you make a call or send a text message," he says.

Nokia is seeking bank partners in target markets as part of the Nokia Money service. "We are not actually becoming a bank. That is not our competency," Romen acknowledges. "We're working with the banking community."

An individual's money would be stored in a prepaid account tied to the phone, Romen adds. "The money is credited to that account, while the actual money is held by our banking partners," he explains.

Central to the Nokia Money business case is that roughly 4 billion people across the globe have mobile devices while only 1.6 billion have bank accounts, the company claims. "There's a gap of [nearly 2.5 billion] people," Romen says. "We feel that with the development of the technology and the availability of the services, there needs to be a step forward in connecting these worlds. Our approach is initially in emerging countries. Most people there now [have] only a mobile phone, their economies are mainly cash-based and people don't have PCs, so the phone is their Internet access."

Perhaps a key value proposition to potential Nokia Money account holders is that the service provides a safe place to keep their cash. "There are a whole range of daily payment needs, and what we're adding is actually a very important feature. A lot of these economies are cash-based, and security is a key for people," Romen relates.

Nokia Money also could offer value to city workers in emerging markets who otherwise would have difficulty sending money to family members in rural areas. In addition an overwhelming majority of merchants in emerging markets do not have payment terminals, limiting their businesses to cash transactions, Romen says, adding that the Nokia Money service would enable customers to pay small merchants with their cell phones.

"In developing countries there is a lot of microfinancing going on," Romen continues. "It's not us doing the microfinance, but Nokia Money can help those on the issuing, crediting or repayments side of a microloan."

The key to developing critical mass for a mobile banking initiative such as Nokia Money could be cross-platform integration, suggests Romen. Text messaging, for example, was a relatively little-used function until several years ago, when roaming agreements between mobile carriers allowed messages to be sent out of network, he notes.

A Mobile Ecosystem

"For mobile money, or mobile transactions, the same thing needs to happen. Nokia Money is positioned as an ecosystem for the various players to interact with one another and where each of them brings a core competence," says Romen, who adds that the company plans to partner with mobile network operators.

Regarding go-to-market strategy, Nokia Money capabilities will come preinstalled on new Nokia phones in emerging markets, Romen reports. Mobile users also can go to a phone store and request that the functionality be loaded onto their current phones, and the service can be downloaded onto phones with Internet access. "With the life cycle of a phone being somewhere around two to three years, adding this functionality over that time frame in various markets will give us a broad consumer base," Romen comments.

Details on Nokia's plan are still developing, according to Romen, who declines to identify specific countries or markets that are being targeted. The company has not yet announced any of its banking partners.