GFG GROUP - NEWS ARCHIVES - 2007
NZ Firm Taps Cell Phone Love Affair
11 December 2007 - reprinted with the kind permission of NZPA
Mobile phones are changing the lives of people in the developing world. Grant Fleming of NZPA looks at a local firm tapping into their relentless spread. Asians love their cellphones - an open affair evident on street corners, in restaurants, cinemas and even during speeches and press conferences. Western etiquette is eschewed and the latest phones are flaunted with adolescent verve. New Zealander Peter Goldfinch has an explanation for the phenomenon.
"In Asia there are a lot of people in a very small space and I think what is personal to you is more valued than what it is for us. In New Zealand you can go and stand on a beach and not see another person, whereas in Asia that's not possible. But a handset is personal and it's probably a status symbol."
He says in Singapore, where he is based as New Zealand technology company GFG Group's South East Asia general manager, cellphones last only about six months because people lust after the latest model. But he says there is also a deeper logic behind the region's flirtation with the device - and it is relevant to the rest of the developing world. He says the Philippines is a typical example; there is just one fixed phone line for every 32 people, compared to a roughly one to one ratio in most developed countries.
"So having that handset allows you to communicate with people and them to communicate with you. The falling price and versatility of mobile phones means their growth has massively outstripped that of fixed lines. There's no way you could practically deliver a fixed line to someone living on the side of a railway line in a cardboard box."
It is that juggernaut that GFG - a company that sits at the interface of banking and telecommunications - has hitched its wagon to. It is blazing a trail in the field of cellphone commerce, creating software products that let people use their phone as a bank account, allowing them to buy goods and services ranging from petrol to McDonalds, pay bills and, in the case of foreign workers, remit money back to their home country. While in most Western countries such a system would slot in alongside the established banking channels of eftpos and credit cards, in emerging economies, where most people don't have a bank account, the potential market is huge.
"In the mobile area there's a great push to try and bank the unbanked. In a lot of countries you might have about 60 per cent of the population who will have a mobile handset and 30 per cent of the population with bank accounts. So there are 30 per cent that can be reached through mobile that the current banking industry does not reach out to. So the objective is to introduce banking to that 30 per cent."
GFG has done that in a world-leading joint venture with the Philippines' biggest mobile provider, Smart Communications. It began work with Smart in 1999 and now the full range of its mobile services are deployed in the country. People can go to one of 1.2 million retailers belonging to Smart's network and upload money to their phone e-money account. They can use their phones to purchase goods or get money out from 1.2 million participating retail outlets. They can also transfer funds from their e-money account to a friend's.
That project led to other telcos and financial institutions beating down their door. The company estimates its mobile products now have about 25 million subscribers - about a quarter of the global market for such services. The company also provides a range of software platforms for the more traditional credit card industry. Mr Goldfinch says a strategic focus now is the international remittance market. GFG has already set up a product that allows Filipino workers to walk into a Smart agent overseas and then send money back home to relatives' e-money accounts. It is hoping to push that business into countries such as India, where billions of dollars are sent back home every year. GFG has been held up by New Zealand Trade and Enterprise as a country that has used Asia to launch its products globally. Mr Goldfinch acknowledges Asia was important to its development and has some advice for people wanting to do business there.
"No one should actually look at Asia as being one market, it's a whole lot of countries and each country is somewhat unique and you really need to establish different relationships with local partners in each of those markets. One constant, however, is that people usually like to know who they are buying off, so having a presence in the market is important. You can't really do that from New Zealand very well. You need to have someone here to support the people who are reselling your products for you and even just building up a network of contacts."
Mr Goldfinch describes GFG as a $10 million plus company, but says there is ample room for growth. In the mobile market, he says there are about 23 similar companies operating globally, and about 700 potential clients. That large potential pool is illustrated by GFG's recent track record - its website says it grew by 52 per cent in the 2006 financial year and 34 per cent last year. Mr Goldfinch says the biggest barrier for GFG is its own capacity and the company could easily double the size of its business in the next few years. But he says the company's mobile applications are not just about making money. He says they actually improve lives.
He tells the story of a fisherman he met on a recent trip to the Maldives. A mobile phone enabled him to speak from shore to his crew so he could establish the exact size and makeup of their catch and start negotiating prices with buyers - instantly setting the wheels of the supply chain spinning. However, when it came to paying his workers, he had to bring back a large bag full of cash from a bank on a neighbouring island. It was difficult to work out how much to bring back as his workers were paid on the size of their catch - meaning left over money often had to sit around, resulting in it being skimmed by employees and in one instance, replaced with counterfeit cash. Workers also had to take time off to go to the neighbouring island to settle accounts and bills, resulting in less time for fishing.
"If you can turn all that into electronic money then you don't have the distribution problem, you don't have the counterfeiting problem and there's just more efficiency and people end up with their money safely in their bank accounts earning interest and that money can then be invested elsewhere. They can pay their bills electronically through a handphone and not have to go somewhere to do it, so they can save an enormous amount of time."
If GFG's vision is borne out then it seems that Asia's - and indeed much of the developed world's - love affair with the mobile phone could be a lasting one.
TOP OF PAGE