Global Mobile Operators May Provide New Distribution Channels: Finaccord

July 12, 2012

New research from Finaccord, the London-based market research consultancy specializing in financial services, concludes that “mobile operators worldwide are actively selling many types of insurance and assistance products to their customers although, in most cases, these initiatives are still being organized at a national level rather than on a strategic or global basis.”

Edward Wilford, a Consultant at Finaccord, commented: “Mobile operator brands, which often boast tens of millions of customers, can make very attractive distribution partners for financial services companies.” These services have so far been most common for “mobile payments and banking,” he continued; “plus the obvious ‘affinity product’ of mobile phone insurance, it is clear that strategic alliances for the provision of other types of insurance and assistance are becoming increasingly widespread.”

Finaccord’s new global study covered 255 mobile brands across 70 countries, analyzing their provision of more than 20 financial products and services. It found that “mobile phone cover was the most common (available from 36.1 percent of mobile brands), followed by mobile gadget insurance (13.3 percent), medical assistance (10.2 percent) and travel insurance / assistance (9.4 percent).”

Wilford noted that in general, “insurance and assistance products associated either with owning a mobile phone, with travelling, or with needing to summon help are by far the most common areas for mobile operators to be engaged in. On the other hand, many significant forms of personal insurance have been largely ignored by this sector; household and motor policies were available, respectively, from just 2.0 percent and 0.8 percent of the mobile operator brands researched.”

Finaccord’s research also concluded that “the provision of particular types of insurance and assistance varies hugely between different parts of the world. For example, in Southern and Western Europe* mobile phone cover was found to be available from 71.4 percent of mobile operators (and such schemes were also relatively common in both North and Latin America), whereas only 20.3 percent of mobile operators in the Asia-Pacific region offered mobile phone insurance to their customers. Similarly, when it comes to providing assistance services (such as home, legal, medical and road assistance), mobile operators in Latin America are greatly ahead of the international competition.”

It also noted, however, that “whereas many of the world’s largest mobile groups have been relatively quick to develop multinational systems for mobile payments and banking (such as the Airtel Money and Vodafone M-PESA platforms), the same cannot be said for most mobile groups’ approach to providing insurance and assistance products. Most of this provision is instead organized on a seemingly ad hoc basis, at a country-specific level, and typically involves the use of one or more external partners.”

Wilford explained that beyond the large global insurance groups, “there are many specialist providers operating in these areas. Asurion, for example, was found to be responsible for administering each of the nine schemes for mobile phone insurance detected in Canada and the US. Similarly, specialist assistance firm American Assist was found to collaborate with a large number of Latin American mobile operators, and across a broad range of services.

Interestingly enough, Finaccord’s research found that “some mobile operator groups – including Telef√≥nica and Vodafone – have established their own captive insurance companies for use in one or more countries, and several country-specific mobile brands (such as Aircel in India and Telekomunikasi Indonesia) already make use of captive or joint venture assistance providers.

“As mobile operators begin to focus on developing co-ordinated, global strategies for the provision of insurance and assistance schemes,” Finaccord said it “anticipates that the use of captive and joint venture entities could also increase significantly.”

In conclusion Wilford pointed out that under the “general banner of ‘bancassurance’, banks and similar organizations have for many years been viewed as a key distribution channel for insurance and assistance products.

“As an increasing proportion of consumers seek to use their mobile phones to interact with financial services, it is natural to assume that distribution tie-ups with mobile operators could offer similarly lucrative possibilities.

“Furthermore, rapid growth in the global market for mobile payments means that possibilities are beginning to emerge for combining insurance and assistance products with these virtual forms of payment, just as they have traditionally been associated with physical payment instruments such as credit cards.”

Source: Finaccord

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