Mobile banking using a smartphone

Expanding mobile banking - navigating international complexities

Legal research at UWE Bristol has helped a multinational telecoms business in expanding the availability of mobile banking in emerging markets. It has guided them through the complex legal regulations that apply in the relevant countries, enabling business expansion and the launch of new mobile banking services especially in Africa and the Middle East.

Telecommunications companies see mobile banking as a potential growth area. One of these, the multinational France Telecom Group (FTG, which later rebranded as Orange), was interested in expanding its mobile money business. This raised some key questions for them about international banking regulations and the extent to which these applied to mobile banking. In 2007, they turned to Professor Nic Ryder and Dr Umut Turksen of Bristol Law School at UWE Bristol for some answers.

UWE Bristol expertise meets industry needs

Ryder already had a long-standing research record in banking regulation and white-collar crime in the UK and the EU. This had yielded insights in areas that were directly relevant to FTG’s concerns. These included findings relevant to the creation and development of global anti-money-laundering policy, strategies to tackle white-collar crime in the US and UK, and the scope of UK regulatory agencies’ powers.

FTG’s Fraud and Revenue Assurance team therefore commissioned Ryder and Turksen to carry out further research into its specific questions. FTG was already active in Jordan, Egypt and the Ivory Coast, but it had yet to launch mobile banking. To what extent were its proposed activities there subject to banking regulations? If so, which ones? To what extent did the regulations differ between these three countries? What levels of compliance were required, and what were the associated risks?

Successful business expansion

The UWE Bristol team broke new ground in answering these questions. It also established the extent to which US and UK banking regulations and white-collar crime legislation applied to FTG’s activities in the territories it had identified. Since France Telecom was listed on the US stock exchange, US laws were applicable to them. Similarly, FTG also operated in the UK, so English Law also applied in addition to international and local laws. This was therefore quite a complex undertaking for Ryder and Turksen. However, the project was completed successfully and their findings gave FTG the confidence to expand their business in these territories, helping them gain new contracts together worth more than €5 million.

FTG’s then Knowledge Management Director has confirmed that “France Telecom realised a considerable competitive advantage with expert knowledge when negotiating with telecom operators in the [relevant] territories”.

Realising opportunities, containing risks

The research gave FTG a rigorous understanding of the risks associated with money laundering and banking operations in Jordan, Egypt and the Ivory Coast. The models identified in the UWE Bristol case studies were applied as a template for other territories, helping FTG to see that there were opportunities to launch new mobile money services in Tunisia, Niger, Armenia and Uganda.

The findings helped them find ways to improve compliance with obligations imposed by the then Financial Services Authority in the UK and the relevant authorities within these jurisdictions. They identified banking, anti-money-laundering and fraud regulations, both global and local, that FTG needed to comply with, and advised them on best practice. This enabled them to comply fully with the relevant regulations, which also gave FTG a competitive advantage in realising new business opportunities.

FTG’s resulting corporate strategy was then applied in their subsidiaries over the period from 2008 to 2010.

FTG have successfully launched mobile money operations in the Ivory Coast, providing banking services to a growing population there. They have also launched subsidiaries in many other countries across the continent of Africa, bringing mobile banking services to these populations for the first time.

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