Confronted with increasing competition and more restrictive regulations, operators in Africa, Asia and the Middle East are seeking new revenue sources. They have a valuable asset – their customer knowledge – which can be leveraged to develop innovative mobile financial services.
Smartphone uptake and 3G/4G network development are exacerbating competition in emerging markets. New operators are appearing while OTT players propose free or paid services delivered over the Internet and poach telcos’ voice and data market shares. Operators have little choice to win the loyalty of multi-equipped consumers: they must exploit their three principal monetizable assets to create value through innovation.
Network operators’ three competitive advantages
Their first advantage is the customer base (mostly prepaid in the AMEA zone) which the operator must animate constantly to keep it active and to grow his business. However, this base is the preferred hunting ground for rivals selling new services.
Secondly, operators have the advantage of a dense distribution network working close to consumers with the reactivity needed to push new offers. This sales structure, if well managed, often brings in over three quarters of an operator’s revenues.
The third key advantage is customer knowledge that operators already exploit essentially to segment their clientele and ensure well-targeted sales actions. Yet customer data hides rich and useful information that could be put to much more profitable use in this part of the world where bank accounts are rare. For instance, operators are among the very few enterprises capable of assessing the financial status and solvency of their customers. This is precious information indeed when launching innovative mobile financial services – loans, insurance, etc. – much appreciated by small business and individuals.
From customer knowledge to smart scoring
Operators have a wide range of indicators enabling them to evaluate customer solvency, almost in real time, in the same way that financial establishments check out people’s credit rating before granting them credit or fixing insurance premiums. Examples of pertinent information include the frequency of mobile talktime top-ups, their geographic footprint as revealed by the number of outgoing and incoming local and international calls, data consumption on social networks, subscription to an Orange Money offer, and timely reimbursement of micro-credits. Armed with this fine, up-to-the-minute knowledge of customer behavior, the operator can propose compelling mobile financial services without running serious risk of unpaid bills. He can even commercialize his unique customer scoring data to banks, insurers and other finance players who would appreciate such information but lack detailed customer knowledge.
Smart scoring: a ‘virtuous loop’ that creates value
Operators’ airtime credit services are an interesting starting point for customer scoring. As a customer’s solvency rating progressively increases, the operator will be inclined to propose more sophisticated services, for example encouraging him to switch from prepay mobile to a postpaid plan, to buy a smartphone on installments, or to accept credit.
With e-commerce and new mobile usages developing rapidly, customer scoring is become must-have for operators, since it secures transactions and avoids bad debts. It is very definitely a good tool to support growth.