Nokia Breaks through Banking Barriers

August 27, 2009

The mobile phone giant Nokia has a new offering that could help break down barriers that keep billions of consumers around the globe from availing themselves of financial services.

Nokia Money has been designed as a simple and convenient offering that can be used for sending money to another person, paying for services at the checkout and even topping up prepaid SIM cards, any time, anywhere. In a statement released yesterday, Nokia said it is building a worldwide network of Nokia Money agents, where consumers can make in-person deposit and withdrawals from their accounts.

Nokia said it believes mobile payments is a logical step in reaching out to “hundreds of millions people,” many in emerging economies, that are under-served by existing payment systems. Plans are to officially introduce the new service in early September during a Nokia event in Stuttgart, Germany, followed by gradual roll-outs in selected markets beginning early next year.

"Rural consumers will particularly benefit from money transfers and, for urban consumers used to online services, we are enabling services such as payment of utility bills, purchase of train and movie tickets, top-ups, all through their mobile phones, explained Teppo Paavola, VP and Head of Corporate Business Development at Nokia.

“Nokia Money is simple to use, secure and available across different operator networks and on virtually any mobile phone. This means millions of new consumers will soon be able to manage all their financial needs from their mobile phone,” Paavola continued.                                                                              

Nokia has been working with Obopay to develop Nokia Money, but the service will be interoperable with other service providers as well. Obopay, headquartered in Redwood City, CA, has been leader in the push for mobile payments in America, and has been working on the global front as well. In March, Nokia made a major investment in Obopay. Obopay's mobile payment platform will be made to interoperate with other systems as well.

“Obopay shared Nokia's vision for bring mobile financial services to millions of people worldwide,” said Carol Realini, Founder and CEO of Obopay. “Nokia's leading market position, strong brand recognition and global distribution channel, using the Obopay platform with uniquely developed mobile elements, means the Nokia Money service is well-positioned to bring the next generation of mobile payment services to the world.”

Nokia Money is the result of collaboration with partners from various parts of the world, explained Nokia. It's supposed to work in partnership with other mobile networks and financial institutions, “involving distributors and merchants in a dynamic ecosystem to seamless provide the new services,” according to company execs.

"We believe mobile financial services offer a market opportunity with long term growth potential,” said Mary McDowell, EVP and Chief Development Officer at Nokia. “With more than 4 billion mobile phone users [globally] and only 1.6 billion bank accounts, global demand for access to financial services presents a strong opportunity to combine mobile devices with simple but powerful financial services such as Nokia Money", McDowell added.

"Mobile financial services present a high growth sector for Nokia,” observed Bob Egan, Global Head of Research and Chief Analyst at TowerGroup,” a Needham, MA-based consultancy. “Nokia's asset strengths, including consumer brand awareness, distribution capabilities and global relationships should serve as logical and necessary extensions to drive innovation in the mobile payments and banking sector.”

In a report issued in May, TowerGroup, and independent subsidiary of MasterCard Worldwide, predicted mobile banking usage will grow in the U.S. at a 51.8% compound annual rate between now and 2013, when users should top 53 million.

Charul Vyas, a TowerGroup Analyst and author of a research note titled From Niche Play to Mainstream Delivery Chanel: U.S. Mobile Banking Forecast, 2008-13, urged bankers based in the U.S. to take fuller advantage of the mobile delivery channel and use mobile banking services to sway the unbanked.

In 2009, 8% of North American adults were unbanked, compared to 80% of adults in Sub-Saharan Africa

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