Mobile Decisioning (MODE) is a company that leverages technology to provide Airtime Credit Services (ACS) to mobile network subscribers and salary advance credit services to registered customers. It is an example of a product company that has converted its knowledge of software technology to a financial product that is available for use multiple times after the original transaction. The company’s proprietary technology enables qualified prepaid mobile subscribers to access airtime on credit. It extends small loans worth between (US$0.5 – US$10) to mobile phone users who repay these loans when next they top up their phone credit. The amount of airtime customers can borrow depends on their usage history and customers can borrow as many times as they wish, as long as they have repaid previous airtime advances. The company also provides salary advance credit services (US$20 – US$200) to registered customers in Kenya. It calls these salary advances “Nano” loans.

MODE was launched in May 2010 in Kenya. The company was created to capture a niche market in the lucrative mobile money industry. It partnered with Mobile Network Operators (MNOs) and offered its services, as value added services (VAS). According to Mr. Julian Kyula, founder of MODE, the partnership entailed MODE providing the platform to the telecoms companies and guaranteeing the risk of customers borrowing airtime. Due to the fact that some of these networks have operations in other African countries, MODE’s product quickly spread to other African countries.

In 2012, the company processed 225m transactions and loaned over $150m in airtime in Africa alone. MODE has a customer base of about 105m people. It has now extended its operations to Mexico, South-East Asia and Russia. In 2013, 3 years after launch, MODE’s founder was declared the IBM Global Entrepreneur of the year, beating hundreds of contestants from around the world.

MODE’s typical customers fall into two groups. The major group is mobile network subscribers who borrow airtime due to convenience. Though some in this group can afford to buy airtime, it may not always be convenient for them to purchase it.

The second group is those at the bottom of the pyramid. These are low-income earners who can access MODE’s Nano salary advance credit services.

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A dyadic transactional relationship where your good or service can be designed and delivered without prior interactions with the customer.

Engagement  — Value Creation Proposition
MODE creates value both to its customers and partners. To the mobile network customers, MODE offers convenience. It enables them borrow airtime (US$0.5 – US$10) when it isn’t convenient for them to buy it. For instance, it may be late at night; the customer may be in the middle of an important call, in traffic etc. On the other hand, Nano loans are available to the low-income customers, who are averse to significant debt. This group of customers can access between US$20 and US$200 via MODE’s Nano salary advance credit scheme.

MODE also creates value for its partners, the MNOs, by carrying all the credit risk associated with airtime advances. It bears the capital and implementation cost of the product and enhances revenue (emergency airtime advances are incremental revenue to the MNOs).

Delivery — Value Chain
MODE serves all its customers through its proprietary technology solution. This technology, which is primarily a business analytical engine, enables pre-qualified mobile subscribers access airtime on credit. MODE’s algorithms determine whether a customer is eligible for credit, and for how much. The technology uses past airtime purchase patterns of subscribers to determine how much airtime the subscriber can borrow.

MODE’s NANO salary advance credit service is only available to eligible customers in Kenya. Some of the criteria for eligibility are as follows:

Customer is an employee of an entity that has entered into a suitable salary advance service agreement with MODE
Customer has been in the same entity for a period of at least 6 months
Applicable service fee of 7% of requested advance amount
Customer gives unconditional authorization to employer to deduct from his/her salary, withhold and remit to MODE the advance amounts payable by customer for using the service.
Deductible amount shall not exceed two thirds of customers’ salary.
To request an advance, an eligible customer dials the short code *277# and follows the instructions. The advance is disbursed through mobile money.

Monetisation — Value Capture
MODE’s major source of money is from its flagship product, small loans on airtime, where customers borrow airtime and repay (with a small margin) at their next top-up. Through its Nano loan services, the company makes a 7% margin on each loan disbursed to customers. The company is currently branching out to offer microfinance facilities in other areas such as pre-paid utilities.




Interview with the Founder, Mr. Julian Kyula, by Africa Review – http://www.africareview.com/progress/Loans-through-phones-drives-Kenyanstart-up-to-global-market/-/1502374/1739028/-/7kt2d4z/-/index.html

IBM – http://ibmsmartcamp.com/2013/01/28/meet-the-global-finalists-mode/

Company website – http://mo-de.co/solutions/emergency-airtime-solutions

Disclaimer — Written by Eno Hanson and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016