CUSTOMER PERCEPTION TOWARDS MTN MOBILE MONEY
Bachelors Degree in Marketing 2010
Reason for submitting this dissertation
Partial fulfillment to attain a degree in Finance
Department: Marketing, 2010
Abstract:
The days when you had to spend Rwf 10, 000 on bus fare just to deliver Rwf 20, 000 to a
relative in the village or join long queues in banking halls to pay bills are soon coming an end.
The advent of mobile money, a platform which allows people to use their phones to transfer
money, conduct banking services and pay for goods and services, has started to gather an
unexpected pace. MTN Rwanda joins this platform to serve its subscriber base of over 2 million.
This book aims at explaining the successes, customer perception and failure of Mobile Money.
Acknowledgements:
I am heartily thankful to my supervisor, Mrs. Ishuheli Bideri, whose encouragement, supervision
and support from the preliminary to the concluding level enabled me to develop and
understanding of the subject.
Lastly, I offer my regards and blessings to all of those who supported me in any respect during
the completion of the project.
Table of contents:
Introduction:
The thesis of the study is to understand how customers using the MTN mobile money product
perceive it in relation to their expectations.
There is obviously a strong link between customer satisfaction and customer retention.
Customer's perception of Service and Quality of product will determine the success of the
product or service in the market. Customer expectations are the customer-defined attributes of
your product or service you must meet or exceed to achieve customer satisfaction.
Customer Expectations are of two types - Expressed and Implied. Expressed Customer
Expectations are those requirements that are written down in the contract and agreed upon by
both parties, for example, product specifications and delivery requirements.
Supplier's performance against these requirements is most of the times directly measurable.
Implied Customer Expectations are not written or spoken but are the ones the customer would
expect the supplier to meet nevertheless.
For example, a customer would expect the service representative who calls on him to be
knowledgeable and competent to solve a problem on the spot
Major attributes of customer satisfaction can be summarized as:
Product Quality
Product Packaging
Keeping delivery commitments
Price
Responsiveness and ability to resolve complaints and reject reports
Overall communication, accessibility and attitude
Perception is a process by which an individual select, organize & Interpret stimuli in a
meaningful picture of the world Also, we can describe as “how we see the world around us”
Perception is the process of selecting, organizing, & Interpreting or attaching meaning to events
happening in environment
Dissertation overview:
MTN Rwanda is the leading telecommunication service provider in Rwanda and has been
Operating in the country since the year 1998; it was launched after its mother country South
Africa that was launched in 1994. MTN Group is currently operating in 21 one countries and
Rwanda is among them.
MTN offers a variety of unique services for mobile phone and data packages to ensure that
their
Customers never stay out touch. The functionality for mobile phones was expanded with
Services such as mobile Banking, this is a unique product offer allowing subscribers to send and
Receive to or from each other. MTN Rwanda continues to expand its network, offer new and
Innovative packages and services, and keep up with the latest trends in communication while
Maintaining affordability
MTN Mobile money
MTN Mobile money as the main focus of the study is a convenient secure and affordable way of
Sending money, buying airtime and making basic utility payments from your MTN mobile phone
This service is offered by MTN across its operations in partnership with local banks. This
service was officially launched in Rwanda on the 26.02.2010 in partnership with the one
Commercial bank of Rwanda (BCR) to allow Rwandese to perform a range of basic financial
transactions using their handsets.
MTN Mobile money services
MTN Mobile money services allows customers to make a range of transactions via their mobile
Phones, this service is not for only MTN subscribers even Non MTN subscribers can also
Benefit from MTN mobile money by going to an authorized MTN Mobile Money agent . Mobile
Phones hold great potential to become a common way of conducting financial transactions on a
global scale. Billions of people around the world use Mobile phones to communicate and the
technology has even become accessible to low income earners who currently do not have bank
Accounts, Mobile technology offers new means for them to access financial services at
Affordable. prices and more convenient.
The MTN Rwanda CEO Khaled Mikawi said “the introduction of MTN Mobile money which is
Convenient, accessible safe and easy demonstrates the company’s commitment to bring world
class Mobile services to its subscribers in all parts of the country. He also said that Mobile
Money Platform allows non MTN customers [even those without cell phones to transfer or
receive money by using the service of Authorized MTN mobile money merchants. The secured
system processes conforms to best practices.
Purpose of the study
The purpose of the study is to ascertain and analyze why there was quick growth in Mobile
Money services and to find out those factors that have led to the increase of Subscription of
MTN’s Mobile Money services
3. OBJECTIVE OF THE STUDY.
General
The study will investigate MTN’s core success factors that have influenced customer decision to
use mobile money services
Specific Objectives
1. To examine whether MTN’s increased GSM net work coverage has influenced Customer’s
decision to use mobile Money services.
2. To assess whether introduction of cheaper and affordable mobile money tariff in the market
has influenced Customers to use mobile money
3. To measure the impact of increased MTN distribution outlets country wide and increased
number of mobile money Merchants has led to the increase of mobile money subscriber
growth
4. To assess whether the reliability of MTN‘s network has contributed to the growth of
customers using mobile money service.
5. To find out whether MTN’s excellent customer services has influenced the rapid growth of
mobile money services and its Subscriber growth.
6. To find out the influence of the government policy on mobile telecommunications and
mobile money services has led to an increase in transactions performed by mobile money
clients
7. To find out the influence of MTN’s corporate social activities to the growth of MTN’s
subscriber using mobile money.
8. To find out if customers are well equipped on how to use the service and fully enjoying its
benefits.
9. To measure the level at which Mobile money has penetrated in the country for both rural
and urban areas in order for MTN to know where to focus most
10. Will be able to find out the method MTN should use most in order to promote the mobile
money product depending on the type of customers using it.
11. Will be able to find out the method MTN should use most in order to promote the mobile
money product depending on the type of customers using it.
Significance of the study
The research is intended to gain a deeper understanding of MTN Rwanda’s real success factors
Influencing customer’s decisions to use mobile money services The study results
will provide useful information to strategic planners in the telecommunication sector to better
Focus their corporate strategies to those factors which greatly influence customer’s decisions to
use mobile .
Scope of the study
The study will focus on the MTN’s success factors that have influenced customer’s decisions to
use MTN mobile money in Rwanda. It will be conducted in Remera Tax Park, National university
of Rwanda and onatraco offices
Significance of the study
The research is intended to gain a deeper understanding of how Customers perceive MTN
Mobile money services, Will also have a clear understanding of the level at which mobile money
has penetrated Rwanda and the factors that are leading to its rapid growth
Literature review:
The days when you had to spend Rwf 10, 000 on bus fare just to deliver Rwf 20, 000 to a
relative in the village or join long queues in banking halls to pay bills are soon coming an end.
The advent of mobile money, a platform which allows people to use their phones to transfer
money, conduct banking services and pay for goods and services, has started to gather an
unexpected pace.
The massive uptake of the mobile commerce platform as opposed to traditional banks can be
explained by the rapid growth of mobile phone penetration.
With a population of about 11 million people, Rwanda has over 3 million mobile phone
subscribers and only about 1.8 million bank account holders.
Telecom companies have taken advantage of mobile penetration to improve financial access
and bring a good number of people into the formal banking system.
The convenient, flexible, low cost and instantaneous nature of the platform has led to its swift
popularity among Rwanda’s underserved and unbanked population.
Using the mobile phone as a bank account reduces the need to carry cash and enables users to
purchase airtime, pay bills including water, electricity, cable TV services, school fees,
merchandise.
The platform has been taken up by many people, especially the unbanked, as a substitute of a
savings account, which enables them to deal with unexpected expenses such as medical
treatment.
Much cheaper
Thus, sending money using mobile money is much cheaper and faster compared to the slow
and costly transfers via banks and traditional money sending agents.
In other East African & world markets, the service rides on Zain’s Zap, Uganda telecom’s M-
sente and MTN’s Mobile money and possibly Tigo Rwanda with its entry into the Rwandan
Market.
Regulatory Frameworks - "Stability before Inclusion"
Unlike many base of the pyramid business models that are defined at the community,
municipal, regional, or international level because they are reaching customers who are almost
by definition not integrated into formal markets, mobile money is being defined squarely at the
national level, even where mobile operators are working across borders. Telecom regulators
and central bankers define, country by country; exactly what role mobile operators can play in
providing financial services, how banks can and must be involved, and more.
In Rwanda, the Central Bank played a key enabling role in setting the stage for Mobile Money,
the integration of this mobile service with banking services by BCR. Having seen this working,
RURA seems inclined to support the growth of mobile services in with other operators, but the
devil is in the details.
An example is "Know Your Customer" (KYC) regulations that determine whether ID cards for
new subscribers to such services must be Xeroxed and kept on file by remote agents (a high
hurdle in the places where mobile services may be most valuable), and whether such agents
must each obtain a license for their involvement in financial services, or whether a single
license can cover them all. For example, G-CASH in the Philippines expressed relief that all of
the 18,000 agents who work with their service can be covered by a single license, rather than
having to obtain them individually.
Even where there is enthusiasm for providing services to the unbanked, there is danger in
unintended consequences. For example, a requirement for providing low-cost bank accounts
for the poor in Rwanda meant that banks lost existing customers to less-profitable products,
dampening their enthusiasm for banking products for the poor.
Organizations like EFInA, a Gates-funded effort to enhance access to financial services in
Nigeria, have been working to ensure that mobile money isn't nipped in the bud by uninformed
regulatory approaches. Look to cases like Nigeria, with ten times the population of Rwanda, to
see if regulators get on board to enthusiastically support mobile money, or if regulation
remains a checkerboard across Africa.
Markets Structure
While mobile money services are a hot topic, mobile operators may only prioritize them in
certain market conditions, while going down-market to unbanked consumers may or may not
be an outcome that can be expected by banks in every market.
On the mobile network operator side in Rwanda, in places where operators are in hardscrabble
competition for market share, we should not expect them to focus nearly as quickly on mobile
money services - which enhance revenue but may not attract new customers. Rather, the
market structure in a place like Rwanda - with a dominant operator - is where operators would
be expected to look for services to add revenue per customer.
After some questions about whether Mobile Financial services were truly a commercial
success, it's now becoming clear that it is as Safaricom Kenya’s M-PESA has generated more
revenue than other Value Added Services (VAS).
On the flip side, strong competition in the banking sector is exactly what may drive certain
banks to prioritize reaching out to new customers through mobile money and branchless
banking.
However, the role of mobile money in the product offerings and market strategies of mobile
operators is still being defined.
Business Model Structure
Mobile Money has grown to scale on the back of peer-to-peer (P2P) mobile payments that
expedited remittances from cities to villages and the like. Analogous services in different East
African countries have taken very different forms. In Kenya, an expansive "branchless banking"
infrastructure has grown up in the form of a network of agents that are used by small
businesses for banking but through which people can also access social welfare payments from
the government - government to citizen (G2C).
The permutations of what can form the backbone of a mobile payments system can go in any
number of directions and mobile operators are actively evaluating where to start so that a new
service offering will be useful for their subscribers and reach a critical level of network density.
Any combination of government, businesses, financial institutions, community organizations,
and consumers could be involved.
This is perhaps the key question where new mobile money services will either replicate or
depart from mobile Money, and indicate how creative operators and their partners are ready to
be in creating payment platforms that a full range of entities will jump onto.
Going from transactions that simply involve moving money to ones that facilitate the exchange
of money for offline goods and services are a significant step up in complexity - but they are
also where some of the biggest potential lies. For every heart-warming story of web-enabled
medical diagnosis from a health clinic in a village to a big-city doctor, at some stage cash will
have to go back the other direction. Mobile payments simplify that entire half of the equation
dramatically.
Innovating in Mobile Money
Beyond the core architecture of mobile money platforms designed by operators and banks, in
many ways it is up to other players to determine how widely and how quickly mobile money
and the possibilities it can open up will reach the poor.
Before the poor in Rwanda can directly use mobile transfers, e-wallets, and the like to do more
than send and receive remittances, other institutions need to start accepting mobile
payments. For example some institutions have to accept payments for school fees via mobile
phone - which may not create the ability to pay for school out of thin air, but can certainly
smooth the way. If linked to savings products and e-wallets that store money electronically, it
could help parents save and store money for school fees, just as specialized college savings
accounts help people do the same in the U.S.
But this can be more than a convenient way to pay for things - this may even be a way to bring
whole new products to the poor using mobile phones, rather than an extensive on-the-ground
collection system, to provide consumer finance. Or to use (as Equity Bank is doing through M-
KESHO) money transfer histories associated with a SIM card to build a credit profiles for people
who otherwise lack them in order to provide microloans. SIM cards are thus becoming an
electronic anchor for people who lack an address, a bank account, other forms of modern
electronic identity, or perhaps even legal existence in the first place.
It is companies and organizations operating in disparate communities and market niches that
will know best the potential applications of mobile money in those places. By the same token,
mobile network operators in Rwanda are not going to build the applications for these niches - it
will need to depend on the initiative taken by the companies and organizations that see the
opportunity reach the base of the pyramid via this new medium.
MTN’s recipe for mobile banking success
1. MTN has teamed up with two prominent banks in Rwanda, BCR and KCB. The National
Bank of Rwanda (the central bank) has issued guidelines which require that branchless banking
initiatives must be bank based to protect the consumer. Mobile network operators (MNOs)
must partner with a minimum of two banks who in turn recruit merchants (where cash-in and
cash-out take place). MTN has taken this even further by engaging in serious discussions to take
the third. This may prove to be a shrewd business move in ensuring that MTN retains control
over pricing (at the moment MTN is the only operator in Rwanda that has launched an effective
mobile banking solution). The banks confirm the requirements; expand their networks by
enrolling the Merchants, get access to the float that backs the electronic value issued, and from
right outside MTN’s office they ensure that the accounts are settled every evening.
2. Customer sign-up is done anywhere that customers can be found. A network of foot-
soldiers has all the right incentives to go and find prospective customers at their homes, at
work or anywhere they are likely to have their ID with them. MTN makes this even easier by
offering Rwandan francs (Rwf1.40) of free credit (which can be easily used to buy airtime) to
customers of any network who signs up for the service
3. They have built a completely independent network of cash-in/cash-out agents. Because
their airtime distributors were reluctant to take an active part in Mobile Money roll out, MTN
Rwanda decided at the time not to use those dealers to form their core Mobile Money
Merchants network (unlike many other MNOs who see this as part of their competitive
advantage). So far, MTN has signed up 2,400 Merchants, very few of whom come from their
regular airtime distribution network which has over 200,000 points of presence in Rwanda. But
this gives MTN greater control over the roll out of the service. Banks compete to sign up agents
so that they can get a bigger float and offer their own services through the Merchants.
It’s early days for MTN Mobile Money, but they have first-mover advantage and by far the
largest market share of customers in Rwanda. If their model looks like it will take off over the
next year then other operators, in Rwanda, will want to take note of some of these unique
characteristics.
In developed countries, there were a lot of mobile banking services and they failed,” says
Ignacio Mas, an economist who works for the Bill and Melinda Gates Foundation. The reason,
he believes, is that for people who already have access to banks, as most people in the
developed world do, it’s difficult for such services to compete.
For poor people in the developing world, however, banking facilities are limited, and almost all
transactions are carried out with cash. “There’s no business case for banks to build banks and
ATMs where poor people live,” says Mas. Typical transactions in such places would be so small
that it’s not cost-effective for banks to operate there. With no way to store or send their money
electronically, people who want to give money to family in another village have to bring it
themselves. Mobile phones offer banks a way to tap into existing infrastructure to deliver these
services inexpensively. In the last 10 years, a bevy of mobile service providers, banks, and
independent organizations have launched mobile money transfer facilities in the Philippines,
India, Pakistan, and Rwanda.
“In terms of strategic fit, you see Africa as the place where this has a lot of potential,” says Mas.
“That has to do with the magnitude of the need [for financial services] and the fact that
connectivity is available for the first time.”
MTN’s Mobile Money is by far the most successful example of a mobile money transfer service
anywhere, says Mas. Launched by the mobile provider MTN in 2009, it started as a way for
people to send money home to their families. The service quickly evolved to let people transfer
money to business partners, pay bills, and create savings accounts. In just 11 months it has
grown to include more than one million users, representing about 7 percent of the country’s
adult population.
"A few challenges"
MTN, the largest mobile operator, has acknowledged that its mobile money service has run into
a "few challenges" in Rwanda. "In countries like Rwanda there is a high prevalence of ATMs in
the urban areas which does not make mobile payments or mobile transfers so attractive."
To be sure, MTN's mobile money service is faring much better in some other rural parts of the
country, where the financial services sector is less developed, and MTN is hopeful that mobile
money could account for more than 5% of revenue in a few years time, while also reducing
churn.
