Ericsson targets new segments for MFS growth

In recent years, Ericsson has begun to establish itself as a key player in the mobile financial services (MFS) space, providing the underlying technology that powers major fintech brands like MTN Mobile Money (MoMo), and now the Swedish company is targeting growth into new segments.

The Ericsson Wallet Platform already has 457 million registered mobile wallets, with around 114 million active users in 24 countries, 16 of which are in Africa. Ericsson MFS processes 36 billion transactions each year – $501 billion in transaction value annually.

Ericsson's Wallet Platform currently touches around 10% of the market, and the group previously said it aimed to grow that to 50%.

However, Global Head of Ericsson Mobile Financial Services, Michael Wallis-Brown, told Connecting Africa that the company has even bigger aspirations and is targeting new segments.

"I want to move away from talking about just mobile money and the wallet platform. We are a financial services platform and that's a really key thing. [The platform] is very robust and very scalable, and it's built with that critical infrastructure in mind," he said in an interview.

"It's not just about mobile carriers anymore. It's about multiple partners – large banks, large corporates, and then most importantly of all, the ecosystem. Off the back of a robust platform and the open API environment. We've already got thousands of third parties integrated into our platform, it's now about taking that to a whole other level, and creating an ecosystem," he added.

Ericsson has 3,000 third-party partners integrated into its application programming interface (API) which developers use to launch their services.

Wallis-Brown believes it's important to have an innovative, open developer environment to enable the flow of money.

"We want to be open, we want to work with everyone, the large mobile carriers, the large banks, the large enterprises, and then that ecosystem – whether it be the fintech ecosystem or the developer ecosystem – and really drive innovation off the back of the very robust, secure environment that we've already built and which is already working really well in Africa – which is quite a complex environment," Wallis-Brown added.

Enabling digital payments

Ericsson is probably best known as a networking and telecommunications company, but for the past ten years it has also been providing the underlying technology that powers payment rails for banking and fintech services.

"[Africa] is a cash economy, 90% is in the cash economy and then we are only touching 10% today," Wallis-Brown said of the potential for growth.

He believes Ericsson provides a key banking-as-a-service platform for Africa.

"We are the leader because one in five transactions in a mobile wallet happens on an Ericsson platform and Ericsson infrastructure globally. In Africa, we are the main rail that this is happening on, and we are going to build off that. We want to see not just 10% but we want to lift another whole section of the market out of poverty and give them access to basic financial services," he said.

He said that Ericsson's MFS business had mostly grown organically over the past ten years and had benefited from key partnerships like the MTN collaboration.

MTN MoMo now has 72.5 million users across Africa and MTN's fintech business is valued at $5.2 billion, with Mastercard investing $200 million into it as a minority shareholder.

African fintech evolutions

The MFS market in Africa has evolved from basic peer-to-peer (P2P) transactions and now also covers diverse financial services offerings like bill payments, lending, buy-now-pay-later (BNPL) services, savings products and cross-border remittances.

"We white label our platform into the market with big partners, like MTN MoMo, then we orchestrate the ecosystem, to connect the banks, to connect the developer ecosystem, the enterprises to offer all these services. At the end of the day, it all boils down to people from a cash economy now for the first time – with a trusted simple device like a mobile phone – doing a very simple transaction," Wallis-Brown said.

Global Head of Ericsson Mobile Financial Services Michael Wallis-Brown. (Source: Ericsson)

He explained that it may start with a P2P transfer or electricity bill payment, but then users find they can apply for a small loan or use a BNPL service.

"All of a sudden, you get this explosion of basic financial services that powers the economy, and the more the money flows in the economy, the more people join, the more you build trust," he continued.

"I think it boils down to KYC (know-your-customer) and digital identity. We know who the customer is, we know that they are good actors, and the more you act as a good actor the more financial services you can access, the more that economic engine drives forward and the more people are drawn to the network," he added.

Wallis-Brown said it's important to have a robust platform with sophisticated technology on the back-end but a very simple user interface on the front-end.

"I always say, yes, we are a global technology provider, but we want to provide African solutions to Africa's problems, for Africa's people. What we want is to have Africa as a strong partner in that global economic community, driving that economic growth locally also," he added.

Telecoms & banking convergence

Wallis-Brown said he has witnessed a huge shift from how traditional banks previously viewed fintech and digital payments. There has also been a convergence in recent years between telecoms and banking companies – with banks launching telecoms services and operators launching mobile financial services.

"What you are seeing now is this convergence and it's not stopping. I'm seeing it in every major market around the world because mobile networks play such an important role in the latest security, anti-money laundering, fraud and providing a robust infrastructure from a connectivity perspective," he explained.

"Then also on the fact that [your phone] is now your bank in your pocket, you're making a payment with your mobile wallet or banking on your app and it's all happening on the mobile device," he added.

Wallis-Brown said the success of integrations between telcos and financial services often boils down to regulation.

"We operate in 16 different markets in Africa and they've all got different institutions, and [regulations]. We need a really good regulatory environment, not just in each country, but also pan-African," he said.

"What you want to see is this money flow and this creation of commerce, not just between on-the-ground communities in Ghana, but we want to see that overflow to Nigeria, Cameroon, Rwanda, and basically have a pan-African economy where large corporates and small businesses can grow, do business, and really power the engine of economic growth," he said.

"What we want to do is engage with those stakeholders to say we've got this really stable, secure platform, on top of which you can build that regulatory environment in a really clear, safe way. That's what we're doing in Ghana, for example, and we're doing that in Uganda and Rwanda as well," Wallis-Brown concluded.

— Paula Gilbert, Editor, Connecting Africa