The concept of mobile money transfer originated from Vodafone Company of the UK. The idea was to create a platform where small borrowers in microfinance sector could easily receive and send money through Vodafone authorized airtime dealers.
Consequently, microfinance institutions (MFIs) would provide loans at competitive rates as the cost of handling cash would reduce considerably. Vodafone subscribers were to use their SIM card to access mobile banking services. The service would give users easy tracking of their financial affairs.
However, when the company launched the service in the year 2007, the focused changed as customers adopted mobile banking for other reasons. The service provided a platform in which subscribers could send and receive money across the country using Vodafone network.
Mobile money transfer acted as a branchless bank. Subscribers could perform basic transactions using their mobile phones without visiting their branches. At the same time, the service was available to both bank account holders and non-account holders. The service grew considerably due to its affordability and in most cases, not involving banks in transactions.
Mobile banking subscribers could deposit and withdraw money from any agent countrywide. However, Vodafone is a mobile service provider and not a bank (not a deposit-receiving institution). When banks realized that mobile banking was capturing their markets particularly majority who never had bank accounts, they challenged activities of the company. Meanwhile, smart banks decided to partner with Vodafone in order to offer robust banking services using mobile money transfer platform.
Mobile money transfer service has grown to offer users chances of depositing and withdrawing cash, transferring money across the country to both subscribers and non-subscribers, paying utility bills, purchasing airtime, and even receiving dividend payouts.
The service is still growing as other sectors adopt it to facilitate their transactions. Consequently, other countries have adopted the innovation and creativity in Vodafone’s mobile money transfer services to provide same services.
Innovation and creativity processes of mobile banking led to its success. Mobile banking aimed at creating value. Vodafone used the existing technology of short message service (SMS) to create new services. The service was available on any mobile phone handset.
The Vodafone team managed to keep mobile banking service simple to its users. Thus, innovation services do not rely on complex processes in order to deliver value. This is the basic step to innovation and success.
The processes also focused on delivering value. This is the most difficult step to innovation because of getting new users to test the platform and gather feedback for improvement. Vodafone used its existing subscribers and authorized distributors to test its mobile banking platform. Distributors recruited and registered users, and encouraged them to make cash deposits, transfers and withdrawals.
Therefore, Vodafone distributors and resellers of airtime soon recruited enough subscribers both for the study and full-fledge mobile banking services. Vodafone also engaged its distributors on training sessions to ensure that Mobile money transfer platform was effective.
Vodafone soon recruited mobile banking agents. However, the problem was convincing the tellers to issue cash based on a text message report. Mobile banking also did not require massive investments to start.
Since points of sale (POS) are expensive, Vodafone provided its agents with a basic, low-cost mobile handset with a customized SIM card consisting of mobile banking menu. The company also began to issue new mobile banking enabled SIM cards to its customers free of charge. This processes captured value. Soon mobile banking became a form of viral marketing and drove the growth of the company and its services.
Vodafone had to defend its value in mobile banking. Vodafone had to play the role of a bank and MNO company. This was a challenging task since no software was available to work on a banking platform and MNO basis in serving users without bank accounts, credit cards, or debit cards. The company did not engage in recruiting banks’ customers, but rather its mobile phone users.
Initially, the company’s airtime function as currency as users could buy and send airtime to other subscribers. Subscribers used mobile banking services to send money countrywide. This is how Vodafone innovation and creativity transformed financial sector in the whole world using the mobile phone handsets.
The subsequent mobile banking innovations aimed at sustaining value. The functional architecture, design, and implementation of transfer services were innovation meant to sustain its value. However, the project lacked a roadmap and guidance during its early years.
The company also had to adjust its operations to both requirements of Communication Services and Central Bank regulations. The challenge was handling the unexpected growth realized within a limited time span. Technical innovation became the driver of Vodafone’s mobile banking service.
Mobile banking success also resulted from a near-real time money transfer service. Users could send and receive money at the speed of a text message. Financial institutions could not achieve such rapid transactions using their existing traditional infrastructure. Creativity and innovation of mobile banking transactions checked several aspects of transactions almost instantly.
For instance, the system checked whether users have authority to make any transaction through the use of PIN, whether users have sufficient balance in their accounts to make such requests, whether the transfers have exceeded the maximum numbers allowed each day. These are complex processes but Vodafone creativity and innovation allowed its customers to experience them almost instantly.
Vodafone project team configured different mobile banking SIM cards with different menus to satisfy different categories of users. For instance, subscribers had to manage their accounts from their mobile phone handsets while agents had to recruit new users and manage their cash transactions.
There were various aspects of innovation and creativity in developing mobile banking service. For instance, there were individuals, teams, and organizations performing different tasks to ensure success of money transfer. There was a Vodafone project technical team responsible for creation of the mobile banking platform.
The team had focus and an entrepreneurial spirit in order to provide a basis for service development. This team had to multitask and offered services on demand. This is a technical process, which requires a high level of innovation.
There were also Vodafone retailers and distributors. Later, the company recruited agents. This category was responsible for driving mobile banking services at the ground level. They registered users and acted as points of sale or branch outlets. Vodafone had to motivate its agents through training actively to engage in cash management.
Finally, there were also mobile phone subscribers. This group provided an opportunity for development of the mobile banking platform during a pilot stage and subsequently became the drivers of mobile banking success. The company also carried out media campaigns to ensure that its mobile service customers adopted mobile banking services. This stage also extended to nonusers in order to add value to the service.