BMI View: Ooredoo has identified Myanmar as a potential mobile banking market with an estimated 60mn unbanked population. At present, Myanmar has less than 10% mobile penetration, a figure that is likely to increase sharply with the entry of Norway's Telenor and Qatar's Ooredoo (see 'Phones For The Masses: Too Much Too Soon', July 19). We believe that, with better market conditions, mobile banking could succeed in Myanmar, albeit only in the long term.
|Mobile Penetration To Reach 75% By 2017|
|Mobile Penetration Rate (RHS)|
BMI forecasts the number of mobile subscribers to increase to 52.4mn in 2017 following the issuance of new licences to Telenor and Ooredoo in July 2013. In line with the government's efforts to achieve 75% coverage within three years, the majority of citizens would have basic access to mobile phones. This provides the foremost condition needed for mobile banking to take root in the former military regime.
Mobile banking is not a new concept in emerging markets, where the bulk of the population has no direct access to banking facilities. However, mobile banking requires several conditions for it to reach mass market status. The most obvious is wide mobile coverage and penetration among the rural consumers - the main target segment for mobile banking. Second, regulators have to facilitate the development of electronic banking systems, by allowing telecoms firms to introduce these products without the hassle seen in the case of India. The Reserve Bank of India has labelled mobile money a banking - rather than telecoms - product, and therefore requires strict rules. Any mobile company wanting to enter must also partner with a bank. Third, a well-managed agent network - which can conduct cash-in and cash-out functions, enabling customers to convert cash into electronic money and back again in convenient locations - is essential. Because of the difficulties of performing all these requirements to perfection, only a handful of mobile banking deployments have reached a sustainable scale. These include M-Pesa in Kenya, MTN Uganda, Vodacom Tanzania, FNB in South Africa, and GCASH and Smart Money in the Philippines.
Ooredoo has estimated it will have a potential market of 60mn unbanked rural customers in Myanmar once its network is fully deployed. The operator currently offers mobile financial services including money transfers, account top-ups, and bill payment to subscribers in Qatar, Indonesia, and Tunisia. Despite Ooredoo's extensive experience, BMI believes Myanmar still has a long way to go before the concept of mobile banking sets in. This is because the country lacks all three necessary conditions needed for scalable mobile banking business, and the trickiest of the three could be the inadequate regulatory framework. Poorly-defined or continually revised regulatory frameworks are the most notorious barriers to the development of many promising mobile markets in Asia.