{"id":28185,"date":"2022-01-16T16:19:20","date_gmt":"2022-01-16T15:19:20","guid":{"rendered":"https:\/\/www.intellias.com\/?p=28185"},"modified":"2024-04-25T15:24:45","modified_gmt":"2024-04-25T13:24:45","slug":"telecom-mobile-payments-why-should-fintech-partner-with-telcos","status":"publish","type":"blog","link":"https:\/\/intellias.com\/telecom-mobile-payments-why-should-fintech-partner-with-telcos\/","title":{"rendered":"Telecom Mobile Payments: Why Should FinTechs Partner With Telcos"},"content":{"rendered":"

The banking and telecommunications industries have always been mighty forces to be reckoned with. Addressing the essential needs for universal communications and accessible financial services, each has had a wide customer base and offered an ever-growing variety of life-improving, money-saving, and money-making products.<\/p>\n

With time, however, it became apparent that as the demand for financial services grew, banks were not able to scale their presence accordingly. To a larger degree, the issue affected the markets of South-East Asia, Africa, and a fair number of developing countries with a large fraction of the population living in remote areas and having problems accessing traditional banking services in full.<\/p>\n

At the same time, telecommunications companies had been expanding rapidly over the years to reach the farthest corners of the world. Having hit a certain saturation point, they faced two major issues: plummeting revenues from voice calls and a new strong competitor in the form of rapidly spawning OTT services. Telcos found themselves in a very unusual position, where over 80% of their business<\/a> was suddenly selling video traffic from streaming services like Netflix and YouTube.<\/p>\n

All of that, combined, made telecommunications companies \u2014 and banks as well \u2014 seek new, unconventional sources of revenue and business models that would let them grow and diversify their service portfolios. As surprising as it may seem, financial services and mobile payments as a telecom VAS<\/a> turned out to be the potential next big thing for both.<\/p>\n

FinTech & Telcos Partnership: Integrating Digital Payments in Telecom<\/h2>\n

Looking at the two industries, what\u2019s immediately noticeable is the number of similarities on the operational side:<\/p>\n

Banks vs Telcos: comparing operational similarities between the two<\/b><\/p>\n

\"Telecom<\/p>\n

Source: Medium<\/a><\/em><\/p>\n

Telcos have one huge advantage over banks: universal accessibility, including in rural and remote areas. According to trusted sources<\/a>, global GSM coverage was as high as 95% in 2020, followed by LTE with an impressive 83%. With so much potential for reaching out to everyone, it was only natural for telcos to leverage this competitive edge for purposes other than just communications.<\/p>\n

Throwing banking and FinTech functionality on top of the vast existing telecommunications network opens a multitude of doors on both business and consumer sides. The ability to use a regular feature phone as a telecom mobile wallet<\/a> for paying utility bills and rent has proven to be truly invaluable for people with limited physical access to banks and those unwilling to deal with their complex processes.<\/p>\n

Telecommunications companies can use this model of mobile payments to make money on processing fees, currency conversion, and accurate geo-targeted ads thanks to their inherent ability to capture user location and other relevant details. In addition to digital payments for telcos, some more complex revenue-generation scenarios may involve such financial instruments as deposits of mobile money backed by real-money collaterals in a partner bank, for example.<\/p>\n

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Find out what features, trends, and services really drive the FinTech market in 2022<\/p>\n

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<\/div>\n <\/div>\n <\/div>\n Read more<\/span>\n\t\t <\/a><\/div>\n

The fusion of the two industries (or mergers or individual companies, or emergence of hybrid organizations) would bring a number of mutual advantages to the table.<\/p>\n

Banks would enjoy:<\/p>\n