Nokia: Banking on financial services
Last November, on the day Barack Obama won the US Presidential elections, Nokia quietly lay their cards on the table and entered the ‘international development’ arena. The launch of Nokia Life Tools – initially a suite of education and agriculture-based tools aimed at the Indian market – was a significant step forward for the handset maker, which had for some time been positioning itself not just as a manufacturer, but also as something of a services provider. Early signs of any shift would have come as little surprise to those who know the history of the company. Nokia are masters of re-invention.
So, something else which shouldn’t have come as a big surprise was today’s news of Nokia’s big move into mobile financial services. There’s clearly a big market opportunity here, and Nokia have partnered with Obopay to take it on (a company they had already invested around $70 million in earlier this year). According to Nokia:
Nokia Money has been designed to be as simple and convenient as making a voice call or sending an SMS. It will enable consumers to send money to another person just by using the person’s mobile phone number, as well as to pay merchants for goods and services, pay their utility bills, or recharge their prepaid SIM cards (SIM top-up). The services can be accessed 24 hours a day from anywhere, meaning savings in travel costs and time. Nokia is building a wide network of Nokia Money agents, where consumers can deposit money in or withdraw cash from their accounts
Although on the surface the new service may sound a little M-Pesa-esque, there appear to be some crucial differences. Details remain a little sketchy, but Nokia Money appears to be operator-independent, meaning mobile owners on any network can send or receive payments to anyone else on any other network. This would be a direct challenge to many existing models which require users to switch networks, or to be on the same network as the mobile service they’re looking to use. In addition, it looks like Nokia Money users can sign-up without needing to swap out their SIM cards, making up-take of the service considerably more efficient logistically. If this thing were to grow, it could grow fast.
We may not know all the details quite yet – Nokia will reveal more at Nokia World next week – but it is safe to say that this could be pretty disruptive. Last year, during the Life Tools launch, I wrote:
It’s the addition of Nokia Life Tools – agricultural and educational services – which raises eyebrows almost as much as it raises the bar. How will Nokia’s move into providing agricultural data and advice to farmers effect, for example, the operations of Trade At Hand, DrumNet, Manobi or TradeNet? Will they be partners in any Africa-wide venture? (Nokia do seem to be developing a habit of going-it-alone – more recently with their release of Nokia Data Gathering – rather than working with established, existing open source tools)
Already the most active handset manufacturer in the developing world, today’s announcement well-and-truly places Nokia at the heart of the international development effort. As if (very) successfully designing and building low-cost handsets for emerging markets wasn’t enough, Nokia continue to increase their offering of emerging market-specific services through their low-cost phones. Last year it was agriculture and education. Today it’s financial services.
I’ve never been one for predictions, but this one has certainly come true. Again, writing last November:
So, what next? Nokia develop a mobile payments platform and embed the client into all of their emerging market handsets? Imagine, a single company controlling the entire mobile technology value chain would make interesting viewing. It could well be the answer to the age old fragmentation problems suffered by the “social mobile” and ICT4D space, but would this give the Finnish giant Google-esque powers?
So, should we be getting worried yet? At best, billions of the financially excluded finally get given a chance to enter the financial services market. At worst, M-Pesa’s monopoly in Kenya ends up looking like a minor distraction. Nokia really have taken this to a whole new level. Regulators, on your marks…