Page 217 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

16 Smartphone-based interfaces

16.1 Overview

The first smartphone-based OTT apps for DFS in developing markets emerged around 2010 and have grown
243
in use as cheaper smartphones emerge. Compared to WAP, USSD, STK, and even Java apps, these apps provide
a rich-media user experience that utilize smartphone device features that include large color screens, touch
access, faster access through 3G, as well as more context-sensitive access to DFS services, including NFC-based
merchant payments. Most run on Google’s Android Operating System (OS).
There are, however, some caveats with OTT apps that are specific to the DFS ecosystem. For example, not all
smartphones being sold in developing markets have 3G capabilities, often because the manufacturer wants
to save on 3G chipset licensing costs in price-sensitive markets. Nor is 3G mobile coverage always available.
244
Another potentially limiting factor is that not all DFS apps are usable across all Android versions since design
changes across Android versions are not necessarily backwards compatible to previous versions.

Using OTT apps, SPs are not reliant on an MNO for access, since no special MNO gateways are required.
There may be ‘net neutrality’ issues that could arise where the app access is throttled. Similarly, integration
with APIs needed for the app to operate could be delayed or halted.

17 Mobile virtual network operators

17.1 Overview

A number of banks around the world have expanded their business models to become what are called Mobile
Virtual Network Operators (MVNOs).

The bank then provides (mostly) mobile telecommunications services to its customers by piggy backing off the
GSM infrastructure of a licensed MNO. This allows the bank to provide almost the same GSM-based facilities as
the ‘home’ MNO it uses. For the MNO – usually a smaller MNO in a market – it is often a guaranteed income
from the MVNO, usually in the form of a commitment by the MVNO to buy a set number of airtime minutes,
SMSs or megabytes of data. The MVNO may issue its own full-size SIM card to its customers, or may use a
Thin SIM which sticks on top of a customer’s own ‘home’ SIM. This allows the bank customer to use their
current MNO for voice calls, but automatically switch to cheaper USSD or STK access when accessing their
bank accounts via mobile access channels such as USSD or STK.

Although in the developed world the primary reason a bank may become an MVNO is to create ‘stickiness’
with its clients so as to prevent customer churn, for banks in the developing world it appears to have become
a matter of survival to compete on an almost equal footing against non-banks such as MNOs who may provide
cheaper bank-like services.

Simply, the bank may need a cheaper access channel to provide similar services to its customers, and so will
form a subsidiary to become an MVNO, a step often required by the telecommunications regulator.

243 Times of India (2010) Transfer Funds to Any Bank A/C Via Mobile App, available at https:// goo. gl/ KrZEIJ. See also GMA (2012)
Globe to launch GCash mobile app for iPhone, BlackBerry, available at https:// goo. gl/ FmdBeJ
244 Handsets supporting 3G and higher speeds invariably also require higher capacity batteries, and larger and more power-hungry
touch screen displays, all of which are incremental costs.

193