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“This competence fits well with our future ambitions for developing mobile services in emerging markets. Having recently travelled to Pakistan, I see the huge potential mobile operators have in developing mobile, Internet and financial services in these markets”, says Rolv-Erik Spilling, EVP and Head of Telenor Digital Services. He adds, ”Through our financial initiatives, the Telenor Group plays an important role in driving financial inclusion in these markets.”
New banking models
Few of us link Telenor to banking services. The truth however is that Telenor has been part of the financial services industry since 1998. The industry has a highly interesting potential. Both in developing markets, where the banking industry has limited access to the population, and in offering more convenient services over the mobile in more mature markets. Telenor’s Easypaisa is already a successful business model for financial services via mobile. Next potential step for Telenor is developing lending, insurance and saving products.
Abraham Foss is responsible for Financial Services in Telenor Digital Services and works with the development of new banking models for the Telenor Group. “We are currently developing the opportunities of capitalizing on a lending position, where we would focus on providing small short term loans to those with no previous banking relationships in emerging markets,” adds Foss.
Foss believes Telenor’s competencies within this area will be developed through two main initiatives: building banking partnerships in each market and the recruitment of experienced bankers.
Welcomes bank experts to the team
“The Telenor Group already has a considerable infrastructure in these emerging markets, and we see an interesting potential to leverage our Telco assets. However, this also means we will need to build new bank specific competencies. In order to do this we have recruited some of the best heads, that will play a central role in developing Telenor’s position in financial services,” adds Foss.
This includes new recruits from some of the leading banks in Telenor’s markets such as SEB, Ikano bank and the KBC bank in Serbia. In addition to bank experts joining financial services in DS, several of Telenor’s business units have already, or are also in the process of, recruiting more bank competence. The new banking competence will be important in ensuring a sustainable business model and long-term profitability for the Telenor Group within this area.
Balancing risk with automation
A growing part of the population in these high potential markets, already has a relationship to Telenor as a mobile operator, and look upon Telco’s in general are as a trusted partner. However, risk management will be important in the development of these services, as a large part of the population that will use these services, do not have a credit history and hence is a new form of risk.
“To control risk, financial services are currently seeing in which ways we can use our Telco information for credit history scoring. Also, building these products takes time due to regulatory constraints and time-consuming partner relationship building. In the future however we aim for a high level of automation and mass market approach,” Foss finishes off.