In Africa, there is going to be a lot of disintermediation in the banking sector: many providers would be cut-out as companies reach end consumers. And that disintermediation will be enabled and anchored by the internet. So, if that is the case, winning the game of future banking would be driven by the quality of digital service experiences, and internet is going to become the ecosystem where that will happen. Like the disruption of Kenyan banking via MPESA which happened through mobile telephony, South Africa expects fintech to cause massive dislocation in the banking order.
Then with that knowledge, what do you do as a bank? You go and protect the flanks: you get a mobile virtual network operator (MVNO) license – “A mobile virtual network operator, virtual network operator, or mobile other licensed operator, is a wireless communications services provider that does not own the wireless network infrastructure over which it provides services to its customers”. Yes, you become a telecom company without physical assets. That is what Standard Bank has done, becoming the second bank in South Africa that has acquired MVNO license.
Standard Bank has finally confirmed one of the telecommunications industry’s worst-kept secrets: it will launch a mobile virtual network operator (MVNO), becoming the second major bank in South Africa to do so.
TechCentral first reported in February that Standard Bank is building an MVNO, revealing at the time that it had hired former Virgin Mobile South Africa CEO Steve Bailey to its executive team.
Standard Bank spokesman Ross Linstrom said in an e-mail in response to questions from TechCentral: “Yes, we are launching an MVNO. We expect to launch soon.”
Standard Bank joins FNB which unveiled FNB Connect in 2015 making it possible to serve its customers at scale without them spending any money on telecom charges. When I put these questions in LinkedIn based on the strategy that FNB has deployed, I got good feedbacks that a bank could technically win by delivering unmetered services to its customers.
1. If you know that a bank in Nigeria makes it possible that you can use its digital banking services (including web app, mobile apps, etc) even when you do not have mobile browsing credit, would it be a factor to open an account in that bank?
2. Then, you come to the bank for a problem, and it offers free WIFI to make it easier for you to deal with some issues you may be having, would that be a factor to open an account?
From the comments on LinkedIn, many people do believe that removing the mobile cost friction on top of delivery at par service quality would make them flip to use a specific banking institution. So, Standard Bank must have seen some movements for FNB to have responded by getting its own MNVO license. It is possible we would be seeing more banks going for MNVO. This is a typical case of moving towards the upstream to deliver unmatched value while your competitors are left in the downstream. When you do that, you would rewire the architecture of the industry competition. Provided the MNVO cost is well managed, this is a clear new basis of competition in the industry and could potentially help nip many fintech challenges.
The Accumulation of Capability Construct teaches you how to separate from everyone by going upstream when most are operating at downstream. You get more value because you are handling bigger frictions and targeting severe pain points.