Case study | Standard Bank Connect South Africa demonstrates why and how businesses should embrace MVNO opportunities
Standard Bank is the largest bank on the African continent, and their mission is to help drive growth for the people of Africa. They’ve been an MVNO for over five years, and they’ve since grown to acquire over 300,000 customers since getting started in 2018.
Standard Bank is an excellent case study for why and how African businesses should embrace MVNO opportunities.
But why exactly did Standard Bank decide to become an MVNO in the first place, and what can other businesses learn from their story?
Kartik Mistry, Head of Standard Bank Connect, has provided helpful advice from his experience relaunching an MVNO and working towards scaling its offering.
Have a clear purpose for entering the MVNO space
First and foremost, the prospect of entering the MVNO market needed to align with Standard Bank’s mission. It’s wise to have a clear, meaningful purpose for becoming an MVNO, and then use
that to drive strategic decision-making.
Kartik said, “Africa is our home, and we drive her growth. That’s Standard Bank’s mission. This is really the passion behind our organisation. If you think about growth, it includes the growth of individuals, through their access to data and technology, which is a key component of driving Africa's growth.”
Build a clear business case for becoming an MVNO
For any organisation considering entering the MVNO space, Kartik advised businesses must first understand what core capabilities to leverage, and whether or not they can help reach a strong position for success.
Standard Bank was well positioned to capitalise on the opportunities offered by an MVNO, due to:
A strong and trusted brand
The existing reach of a wide customer base
Market insights
Core capabilities of payments, lending, risk management, and other financial services capabilities
Strong technical capabilities and a skilled workforce
A wide distribution network.
Timing was another important factor, in terms of how the overall telecoms industry has been evolving in South Africa.
The opportunities that MVNOs can bring to an organisation like Standard Bank are:
Revenue diversification
Increased customer engagement
Improved customer loyalty
Commercial growth.
Manage your risk
As part of their strategy, the decision-making process was informed by a robust business case, governance, and risk processes as well.
Any business looking to embrace the MVNO model should first conduct a thorough risk assessment and develop a risk mitigation plan.
But Kartik advised that this shouldn't only include what could go wrong.
He explained, “You need to look at it both ways. Not only do you understand the risk of becoming an MVNO, but also the risk of not doing it, which would include lost opportunity, competitor differentiation, and so on.”
“A risk of becoming an MVNO could be that now you're adding additional non-core services for your customers, are you able to manage and deliver on your promise?”
Use your strengths to find points of differentiation
As has been a key theme throughout this report, it’s crucial to establish a unique value proposition based
on competitive differentiation before taking steps into the realm of MVNOs.
Kartik, like many of our other experts, strongly advised against trying to use price as a differentiator.
“We wanted to stay away from the price game,” said Kartik. “Because trying to compete on
price is a race to zero.”
In terms of finding a compelling value proposition, Kartik recommended organisations look deeper into the values of the business and align the MVNO offering with the core mission and services.
He said, “For Standard Bank, we thought about our overall vision and mission. As mentioned earlier, Africa is our home, we drive her growth. We felt our alignment is to ensure that we keep our customers and their communities always connected.”
“That was the premise of our design principle for our MVNO consumer strategy. How do we keep our customers always connected, even when they don’t necessarily have paid connectivity? For example, we've made access to unlimited calling available to various price-sensitive customers. Depending on your plan, you can have one, three, or five unlimited calls to anyone in your community, on any network, keeping to our promise that even without airtime or data you still remain connected.”
Partner, then build
In practical terms, how did Standard Bank get started as an MVNO?
Initially, they entered into a partnership with a mobile virtual network enabler (MVNE), and leveraged that model to establish themselves in the MVNO market. For businesses looking for a low investment model to assess the viability of becoming an MVNO, Kartik recommended working with an MVNE to enter quickly and test product-market fit.
“Working with an enabler, and then building ourselves, worked for us,” said Kartik. “We used a build, operate, and transfer model, so once we felt we had enough insight into the opportunity, we invested to bring the full platform capabilities in-house and leverage other rails within the bank, essentially making us an MVNE.”
Standard Bank has since evolved with their full capabilities being in-house, no longer using the services of an MVNE.
What key lesson should others consider before following this path?
When asked what challenges he would warn other businesses of, Kartik shared advice specifically for other larger businesses, highlighting the need for adapting quickly to new ways of working.
For instance, when moving into the MVNO market, and establishing partnerships for delivery, it’s important to anticipate the differences in ways of work between your organisation and a typical telco.
Kartik said, “You have a way of working and your partners have a way of working. You have to find a middle ground. That took us a bit of time to figure out.”
“So, one thing I would say is, be prepared to navigate those differences, ensure that there’s a shared vision and goal that everyone is aligned to, pivot quickly, then try to launch an MVP and continue to iterate.”