Analytics  |  Expertise   |   13.03.2019

Should Mobile Operators Enter the Banking Market?

The average revenue per user (ARPU) in Telecom and Banking industry

According to GSMA Intelligence data, in the Telecom industry, the average revenue per user (ARPU) is $9.49 per month. Banking market showing revenue per customer much higher.

JP Morgan Chase, the largest American Bank shows $844 per customer annual revenue in 2018. The Bank serves 61.7 million retail customers Worldwide. AT&T the leader of the American mobile market had postpaid ARPU of $58. AT&T provide telecommunications services to 77.8 million postpaid subscribers and 15 million prepaid subscribers.

JP Morgan Chase’s revenue per customer exceeded AT&T by 21%. In addition, the Bank, while not being a distributor of mobile devices and services, was able to grow its own base of mobile customers. 33 million of JP Morgan Chase customers used the Bank’s mobile solutions.

Mobile operators are missing out on the potential income from financial services

The illustrative case of JP Morgan Chase and AT&T is typical for the banking and telecommunications industries. Mobile operators, having a client base comparable in size to the customer base of banks, are missing out on their potential income.

Telecom companies can earn additional revenue by providing mobile financial services

Consumer expenses on mobile communications are not significant compared with the expenses on banking services, transportation, purchase of goods and services. Banks, retailers, logistics operators and e-commerce companies are beating telecommunications companies to the share of expenses in the Customers’ wallet. At the same time, mobile operators have everything ready for providing services themselves. Telecommunication companies have their own retail consumer base, low customer acquisition costs, a mobile interface for selling goods and services, as well as the necessary customer information for bank scoring. Mobile operators can earn additional revenue per customer and increase customer loyalty, by providing them with additional services.

Mobile financial services

Nowadays, the trend for the provision of mobile financial services by telecom operator is becoming mainstream. African mobile operator Safaricom has offered its subscribers financial service M-PESA. 28 million subscribers have become users of mobile money and mobile transfers M-PESA. In Asia, Chinese telecom giant China Telecom has launched Bestpay mobile wallet. 300 million subscribers used wallet payment functionality. In Europe, French operator Orange has opened the mobile bank – Orange Bank.

Mobile payment services

Many global Telecommunication players are considering or have already launched mobile payment services. Payment functionality is just a part of all possible financial services. Mobile operators can expand the list of financial services. Telecommunication companies, alone or in partnership with financial companies, can offer loans, card products, deposits and insurances to the client.

Upcoming years, we shall be seeing this scenario taking place among mobile operators aiming to boost profits. It remains only to observe how gradually the subscribers in the operator’s app will be able to obtain a loan, pay for goods and services, or buy a transport ticket.

About Wallet Factory

Wallet Factory is a mobile financial services enabler (MFSE) and acting as a mediator between Telecom operators and financial institutions (banks, payment service providers, insurance companies). Wallet Factory provides planning, implementation and management of MFS services for telecommunications companies.

The article “Should mobile operators enter the banking market?” as part of the Wallet Factory series on mobile financial services.

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WF Team
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