The mobile phone has changed all our lives. In the rich countries of the West, the revolution has largely been one of convenience. Services that were once only available in homes, offices and high streets can now be carried around in your pocket, accessible at a whim.
In much of Africa, however, its impact has been much more profound. There, mobile communications didn't act as a substitute for other offerings, they introduced those services to millions of people for the first time. The impact of that change has been truly transformative, allowing people to talk, text and trade in real time over long distances.
The region's telecoms players grew rapidly on the back of their compelling offering. The largest of them, Johannesburg-based MTN, has 16,000 employees and 240 million customers in 23 countries. To grow from nothing into a $12 billion multinational in just over two decades is a formidable achievement, but by 2010, MTN had to face an uncomfortable truth: Its basic business model was not growing as fast as previously.
"We built our business on airtime and text, now airtime was exhibiting slower growth and texting was challenged by Instant messaging apps like WhatsApp [and other messaging apps]," says Herman Singh, the company's Group Chief Digital Officer. "Looking around the world, it became clear that there was a very major digital transformation underway. So, as an organization, we made some tough decisions, and one of those decisions was to explore adjacent domains."
The first step in that process, says Singh, was for MTN to review its strengths. "We sat back and asked, 'what competencies do we have that would allow us to go into a new industry?' And we realized that we had several things, including information on a quarter of a billion customers." That information has huge potential value in MTN's main markets, he notes, where many countries have no national identity system. "The only people in the country that have the full identity of the entire population are the telecommunications players, because we have to identify you before we give you a SIM card."
The second key attribute, says Singh, was a payments system. While many of its customer's don't have conventional bank accounts, they all have access to an online "wallet" that they use to buy airtime for their devices. When MTN started the search for new services that could be enabled by those attributes, it found no shortage of ideas.