The rise of mobile money services has revolutionized the way people access and transfer funds, especially in regions with limited banking infrastructure. Mobile Money (MoMo) Operators play a pivotal role in enabling financial inclusion and empowering communities by providing convenient digital financial services. However, as these operators facilitate the exchange between electronic value (“float”) and physical cash, they face a unique set of liquidity management challenges.

Float: 💰

In the context of mobile money, “float” refers to the total amount of electronic value (digital funds) held by a MoMo Operator at any given time. Float represents the funds that are available for customer transactions, such as money transfers, bill payments, mobile top-ups, and other financial services provided through the mobile money platform. Float is a critical component of liquidity management for mobile money operators, as it ensures that there are sufficient funds to facilitate transactions and meet customer demand. Mobile money agents, who act as intermediaries between the mobile money operator and the customers, hold a certain amount of electronic value in their agent wallets. This agent float is used to facilitate transactions on behalf of customers. Agents manage this float to conduct transactions such as cash deposits, withdrawals, and transfers for customers who may not have direct access to the mobile money platform. Since float is an electronic value, it can be managed remotely.

Physical Cash: 💸

Other the other hand, maintaining sufficient physical cash balances for agents presents a multifaceted challenge for mobile money operators (MMOs) as this cannot be managed remotely. The dynamic nature of agent transactions, coupled with the need to ensure liquidity across an extensive agent network, complicates the task of balancing physical cash reserves. Agents require an optimal amount of cash to facilitate customer withdrawals and cash-ins, aligning with the on-the-ground demand. However, factors such as unpredictable customer behavior, uneven transaction patterns, and geographically dispersed agent locations can lead to difficulties in accurately estimating cash requirements. Ensuring timely and secure cash collection and distribution processes, particularly in regions with limited banking infrastructure, adds logistical complexities. Moreover, adhering to regulatory compliance and anti-money laundering measures further intensifies the challenge of maintaining physical cash balances while delivering accessible and efficient financial services through the mobile money ecosystem.

The Impact: 🎯

In some countries, approximately 80% of agents run out of physical cash at least 1X per week!

Sufficient balance in agent wallets (for both float and physical cash) is needed to ensure smooth operators, timely transactions, and customer satisfaction. If not managed closely, MoMo Agents are unable to perform transactions causing poor customer experience, loss of business, and inevitably an increase in customer churn. One of the biggest challenges with this is the lack of visibility into Agent wallets for MoMo Operators, which further increases complexities in preventing balance depletion.

Liquidity Management through Data Analytics: 📊

To overcome Liquidity Management challenges Data Analytics can be applied to effectively:

  1. Predict Cash Needs before agent balances are depleted.
  2. Forecast Cash Funds at the start of day and end of day for different agents to enhance operational efficiency and enable precise allocation of resources.
  3. Optimize & Prioritize Delivery Routes to manage delivery schedules of physical cash using limited courier resources to reduce costs and enhance cash distribution effectiveness.
  4. Provide a recommendation engine for customers to redirect customers to nearby cash-rich agents, streamlining their transactions.
  5. Identify high-usage zones where additional store locations are needed to support cash delivery demands.

Leveraging Data Analytics presents a transformative solution to the complex Liquidity Management challenges faced by MoMo operators. By harnessing the power of predictive modeling and real-time analysis, operators can proactively predict and address agent cash needs before they reach critical levels, ensuring uninterrupted service delivery. When applied, Data Analytics facilitates strategic decision-making and enables MoMo Operators to foster a robust and responsive ecosystem that meets the evolving demands of agents and customers alike.

Contact us today to find out more about our Data Analytics offering, Versalytics Intelligence™, for Mobile Money Operators, click here to download the brochure, request a demo or connect with us via the contact form.