Financial services are one of Vodacom’s fastest-growing revenue streams, and it is betting big on its VodaPay super app to further drive this growth.
Mobile operators across the globe are looking for new revenue streams, and they are exploring many different options.
For Vodacom, it is pinning its hopes on geographic expansions, acquisitions in the fibre and IoT market, and financial services.
Vodacom’s strategy in the financial services sector is based on the VodaPay super app launched last year.
The app was built in partnership with China’s Alibaba Group and offers users access to digital financial services, online shopping, and lifestyle tools.
The VodaPay app allows customers to take out loans, shop online, and make standard mobile payments.
Apart from rolling all its financial services in the app – like M-Pesa and Airtime Advance – it also allows Vodacom to expand its ecosystem of products to thousands of service providers.
Vodacom said expanding its super-apps into the rest of Africa is a key enabler to scaling its financial services ecosystem.
Vodacom financial services growth
Vodacom launched its Vodapay super-app in October of 2021, and by March 2022, it notched up 2.2 million downloads and 1.6 million wallet registrations.
The company’s Q1 2023 earnings results indicated that the VodaPay app’s downloads have increased to 2.8 million with 1.9 million wallet registrations.
Vodacom has also integrated many mini-apps from retailers on its platform, including Makro, Clicks, Hirsch’s, OneDayOnly, iStore, Netflorist, and Builders.
The uptake of these eCommerce services has been slow, but for Vodacom it is a long play to create a comprehensive fintech and eCommerce platform.
Vodacom has also launched the Kwika mobile point of sale (POS) device allowing SMEs to process card payments.
These POS devices also have access to Vodacom’s financial services and will be integrated into the Vodapay super-app.
At the end of the 2022 financial year, Vodacom reported that over R240 million per month was processed through these devices.
M-Pesa is the biggest success story. In Q1 2023, Vodacom reported that $340 billion were processed by M-Pesa in the trailing 12 months.
Vodacom will prioritise the scaling of both Vodapay and M-Pesa in the 2023 financial period.
These services have helped Vodacom grow its financial services customer base by 8.5% and 10.9% in the 2021 and the 2022 financial periods, respectively.
The chart below shows the total customer base for Vodacom’s financial services segment over the past three years.
The revenue generated by Vodacom’s financial services segment has also been performing well over the past three years.
It grew by 6.1% in the 2021 financial year and 15.6% in the 2022 financial year, as shown in the graphs below.
The last word
Vodacom is already a prominent player in the financial services market with millions of users and billions in revenue.
The operator is upbeat about its prospects in the financial services market, but it relies heavily on the success of the VodaPay super app.
Similar apps, like Tencent’s WeChat and Alibaba’s Alipay, have performed well in China and generated a high average revenue per user (ARPU).
Vodacom is using the same strategy as in China, including zero-rating it for Vodacom customers, but it is unclear whether it will be a similar drawcard for African consumers.