Vodacom targets financial services as 4th revenue cycle

Vodacom says it will target a “fourth revenue cycle” – namely financial services.

In May, Vodacom was awarded a long-term insurance licence by the Financial Services Board (FSB). This licence, along with the short-term licence granted earlier this year, enables Vodacom to underwrite and sell insurance products, including funeral cover and life cover.

Speaking at a roundtable event in Sandton on Friday (28 September), Vodacom CEO Shameel Joosub said: “Another opportunity that exists is what we call the fourth revenue cycle, and one we are putting a lot of emphasis on is the whole mobile money, m-commerce area.”

In March 2010, Vodacom, in partnership with Nedbank, launched M-Pesa in South Africa. M-Pesa enables unbanked customers to transfer money from person to person using their mobile phone.

“I’d say it (M-Pesa) has not been as successful in South Africa as it has been in our (other) African countries,” said Joosub.

He said further that a distribution issue had hampered the group’s initiatives in the past.

“In Tanzania now, 15% of our revenue is coming from M-Pesa, which is quite impressive. In Kenya, M-Pesa is now the preferred method of transacting for most people.”

“I think that provides us (South Africa) with an opportunity to do something similar. There are some improvements we can make in the South African market to try to get the product to work. We have about a million registered customers, but I think we need to push faster in terms of distribution to get that to work,” Joosub said.

He said that, for the more developed market, Vodacom would focus on the virtualisation of the wallet, and near-field communications (NFC) technology.

He said that in Spain and the UK, parent company Vodafone had created joint ventures with other operators.

“The competition when it comes to mobile commerce, if we really want to be a serious player, is not the operators, it’s the Googles and the Apples, and it’s a different competitor that we need to deal with.”

“We would like to do something similar in South Africa,” he said, referring to a possible joint partnership.

The chief executive said that he had already approached some local operators. He described his engagement with the other operators as “a little bit” with “some initial discussion”.

“What they have said is that there is some excitement…but come back with a proposal.”

“Also, what we are doing now – and we’ve launched it in South Africa already – is insurance. I think the insurance part is something that we have already seen some success, and something that we want to grow,” Joosub said.

“We have set ourselves up as a financial services broker. We are starting to provide funeral cover…and that seems to be taking off quite well. We want to expand our financial services offerings,” Joosub said.

“The idea is not to become a bank, but to provide the financial capability,” he said.

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Vodacom targets financial services as 4th revenue cycle