Transformational banking from transformational relationships: Case study of a bank and mobile network operator partnership

There have been many attempts to bring mobile payments and banking services to the unbanked in emerging markets, some provided by banks and others by non-banks, typically mobile network operators. This has led to a constant stream of criticism and concern that, on one side, the mobile network operators are not sufficiently competent or skilled to provide such services and, on the other, that banks are not sufficiently innovative or motivated to provide these services themselves. An antagonistic environment of ‘banks vs others’ in mobile payments is being created in many minds by these critics. This paper examines a different way of working towards transformational banking, with a bank and a mobile network operator working in partnership to leverage each other’s skills and provide solutions that benefit both sectors and, most critically, serve those customers most in need of banking transformation. Nedbank and Vodacom in South Africa are working together to provide M-PESA, the world’s most successful mobile payments service, in South Africa. This partnership has involved many hard lessons learned by both companies. Before even tackling the challenges presented by the technology and its operation in market segments not normally served by formal banking, the cultures and preconceptions of the people tasked with delivering the service needed to be transformed. Then, the processes and operations in both companies needed to be transformed to meet the needs of a product that does not fit comfortably into either organisation’s portfolio. These fundamental changes touch nearly every part of each business and have had to be embraced from the top to bottom of both organisations. The result has been the creation of a synergy where both companies’ strengths have complemented each other to provide a superior service to that which either one could have provided alone. The combination of different areas of expertise and the dynamic tension as each challenges the other’s assumptions and deeply held beliefs on ‘how things must be’ has led to some interesting, often infuriating, debates, but has resulted in the successful launch of the M-PESA service into its first ‘mixed economy’. This has also led to challenges for the M-PESA service and the need for it to be transformed, as it was originally designed for emerging markets, which do not have the sophisticated infrastructure enjoyed by many urban areas of South Africa. The journey is far from over, but many lessons have been learned to the benefit of all.