How many banks do you know that share their massive profits with their customers? None? Well now we can add one to that lonely list.
Tigo Pesa, a mobile money service of Tanzanian operator Tigo, is sharing its profits with individual customers as well as the agents who take money from customers and credit their accounts. For the July-September 2014 quarter, that amounts to a healthy $1.8 billion. This payout comes just a few months after Tigo Pesa shared a staggering $8.6 billion with its 3.6 million subscribers. The reason the first payout was so much larger was that it had a lot more time to accumulate in the fund that was held in trust (three years); by contrast, the more recent payment had only been accumulating for three months.
Regardless of how long money was sitting in a fund, the astonishing thing is the mere fact that what is in essence a bank is sharing the wealth, something a commercial bank would probably never be caught doing.
The payout is based on a customer’s average daily balance, which makes sense, but the good news is even the smallest accounts get rewarded.
This innovative way to instill a sense of loyalty in customers is unprecedented in the banking world, especially as traditional banks make money off credit card, ATM and overdraft fees. Probably the only time we’ll hear of a regular bank paying its customers is if there’s a clerical error in the customer’s favor.
Like Kenya, which pioneered mobile money with the M-Pesa service, Tanzania is a country with a rapidly growing mobile market as well as a significant percentage of ‘unbanked’ individuals. So what’s the incentive for Tigo Pesa to divide up its profits instead of keeping the cash for itself?
Tigo Pesa’s general manager said the scheme is part of Tigo’s ongoing commitment to improve the lives of Tanzanians, and while this all sounds very altruistic, there has to be a more business-oriented reason at play.
With a highly competitive mobile market involving multiple operators, each one has to come up with unique and interesting ways to grab onto fast-growing mobile market in the country. For example, Vodacom Tanzania has taken its M-Pesa mobile money offering to a new level with M-Pawa, which goes beyond letting people send and receive money through mobile phones and moves into serving as more of a bank. Customers can save money in an account and even earn interest and be eligible for micro loans as needed. There’s no minimum balance, and funds can be easily moved to an M-Pesa account and back again.
Tigo has gotten into a similar deal with Tanzanian bank NMB to allow customers of both entities to deposit and transfer funds from one account to the other.
Even with such stiff competition among mobile money players in the African country, three of them have banded together to allow payments among their services. Airtel Money, Tigo Pesa and Zantel EzyPesa customers can send money to each other regardless of their service or handset. All of these cooperative moves are great for customers, who have their pick of services and otherwise would have no reason to stay loyal to a single mobile money provider.
As for Tigo Pesa customers, they can expect their next payout in February 2015.
You can add USAA to that lonely list. The financial institution that consistently ranks top in JD Power surveys every year. They initially served the American military and have now expanded beyond. They are a non profit bank giving each member a end of year bonus based on annual profits and an extra bonus for senior citizens. A very special bank…one I’ll never switch from.