Forget airtime, Vodacom’s biggest business is funerals
... and life insurance, with a payments platform and loans and savings products still in the pipeline
Vodacom CEO Shameel Joosub says the network operator wants to take its mobile money offering to new African markets while building its financial services units in South Africa and other existing markets.
Vodacom had “a slightly different plan” for its financial services business in SA, where, like MTN, it scrapped its person-to-person money transfer service in 2016.
Insurance and airtime advances are Vodacom’s biggest financial products in its home market. The company has granted more than a million life, funeral and device insurance policies to date. It underwrites its own products but takes out reinsurance contracts for large policies.
“We’re starting to scale the life and funeral [insurance business]. Now we’ve got the right platforms in place to ensure we can take it to the next level.“We’ll also be using technology a lot more going forward – artificial intelligence, machine learning and those types of things” – to boost sales of financial products, Joosub said.
Vodacom would introduce a payments platform in SA while “loans and savings will come down the line”.
At last count, Vodacom had 33.3 million M-Pesa customers in Kenya (through its stake in Safaricom), Tanzania, Mozambique, Lesotho and the Democratic Republic of the Congo.
Joosub said the mobile money unit’s growth would come from “deepening the penetration in the existing markets as well as opening up new markets”.
Vodacom’s mobile money service, which was facilitating more than R100-billion worth of payments each month, was becoming “a more material part of our business”, he said.Mobile operators are increasingly wading into the financial services arena in an effort to diversify revenues. MTN, which had 22 million mobile money customers in 14 markets at the end of 2017, has said it wants to introduce more sophisticated financial products in the countries where it operates, partially through a tie-up with Ecobank.
Joosub said Vodacom would focus on getting each of its mobile money markets to the same level of sophistication. The Kenyan and Tanzanian operations had the most advanced and deeply entrenched financial services offerings in the group.
In Kenya, Safaricom’s services include person-to-person money transfers, merchant payments, international remittances, utility payments, salary payments and loan and savings products.
Safaricom had also recently launched an e-commerce platform, Masoko. “It’s still in its infancy but I think that should also be very encouraging moving forward,” Joosub said.Joosub said the group would add new services to M-Pesa to keep money “in the system”. “Already, more people are accepting M-Pesa, more merchants are accepting M-Pesa, staff are being paid with M-Pesa.”
M-Pesa would be increasingly app-based and products would be integrated, he said. For instance, a customer who walked into a shopping centre at lunch time, and who liked a particular restaurant, could be sent offers from that restaurant via the Vodacom app based on their location.
“We’d have a relationship with the merchant, who accepts M-Pesa. You could go there and scan your code and get a discount. But at the same time, if you don’t have money in your purse, we’d lend you money to have a burger, and then you pay later. Those things are already happening today in M-Pesa – we [lend] you money and so on, but now if you link it to a particular service, it becomes a lot more exciting,” Joosub said.