A few days ago, my colleague Tinashe wrote an article about EcoCash and the Econet group’s need to innovate build compelling products. Today the RBZ announced that ZimSwitch is going to assume the role of the national switch and EcoCash will be required to be interoperable with this switch.
Given all this, I thought it might be worth looking at how this decision should be a wake-up call or worse a call-to-arms for EcoCash.
Goodbye network effects
The important thing to note from all this is the era of network effects is over. The national switch requires EcoCash to be interoperable with the new switch. What does this mean for the laymen? Well, where you normally needed an agent to send money from EcoCash to OneMoney/Telecash you can now do so directly.
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Not only is that super convenient, it also removes the need for everyone to have EcoCash which in and of itself is a big deal. You no longer need to have EcoCash because everyone else has EcoCash. We all know of at least 1 if not more people who have an Econet line because they need EcoCash.
How big of a deal with this be? Well, in the Kenyan mobile money market it didn’t bring about earth shattering change. M-Pesa who were the dominant player in that market went from 71.9% market share to 63.5% (-8.4%) in a year and a half. Devastating? Far from it, I think.
But that repeated decline is enough to wake up and force any organisation into action – worse more one that reports back to investors from time to time.
Who’s got a bad rep?
It’s hard to imagine that Econet and everything associated used to have public buy-in. Between Strive Masiyiwa saying “he believed ED is sincere” (something I believe he takes way too much stick for), EcoCash’s nightmare upgrade last year and a host of other issues, that goodwill is long gone and the underdog tag no longer applies to EcoCash.
It’s lonely at the top and at times it feels like everyone is rooting against Econet which could mean more people transitioning to OneMoney and Telecash just to spite the much maligned Econet group.
What advantages does EcoCash still have?
These two factors are enough to suggest that EcoCash will need to make their product more compelling than OneMoney and Telecash. The advantage they have is that they control the platform where their rivals are sitting on an existing platform.
Why is that important? Well, ZIPIT which enables most of the functionality is not controlled by Neither OneMoney nor Telecash. This presents a problem in that if either of the two wants to build a killer feature they are less flexible than EcoCash is.
EcoCash also has a gigantic headstart vs other mobile money operators -they have over 90% market share and volume of transactions- which I think affords them time to go to the drawing board.
Finally, the last advantage is simply the fact that EcoCash’s competitors are not notorious for innovating or coming up with compelling products. In fact many of the times, they’ve followed in EcoCash’s footsteps which makes for a pretty boring mobile money market where fierce competition is the stuff we relegate to our dreams.