Trustonic and Mobile World Live Survey Highlights Device Financing as a Growth Engine and Digital Inclusion Tool
Device locking is an effective solution to the challenge of safely financing devices to the vast majority of any population. By placing more control over the handset, it gives telcos the ability to consider traditionally high risk customers, and to limit non-performing loans.
A reader survey by Mobile World Live together with Trustonic , the world’s largest smartphone locking company, has evidenced the overwhelming effectiveness of secure device financing as a powerful tool for growth in both emerging and developed markets.
Around 3.1 billion people are still offline, despite living in areas with coverage, but not able to gain access mainly due to handset affordability barriers. Making entry-level internet-enabled handsets affordable via device financing models, buy-now, pay-later (BNPL) and pay-as-you-go (PAYGO), give underserved populations the ability to participate in the digital economy with manageable regular payments. However many customers in developing markets cannot be credit scored, or rely on cash and are unbanked. To finally include them in device financing, MNOs use device-locking technology to mitigate the risk of defaulting on handset payment instalments. As their locking partner, Trustonic can remotely de-activate a handset until the user’s debt is settled. Once the payment is made, functionality is instantly restored.
Mobile World Live surveyed operators, financiers and retailers globally. It compared those running device financing programmes with those yet to implement them. The focus was on success metrics and barriers. The same questions were put to Trustonic customers experienced in running successful device financing programs, secured by device locking, to compare results.
Enhanced customer retention is the most significant benefit for organisations offering device financing. 48% of respondents use it as a powerful tool for enduring customer relationships beyond the immediate transaction. In addition, 32% cite reduced churn to be a benefit. New customer acquisition is also clear for organisations offering device financing. 32% expanded their customer base in non credit worthy segments, while 30% increased market share in both established and emerging markets.
Device locking is an effective solution to the challenge of safely financing devices to the vast majority of any population. By placing more control over the handset, it gives telcos the ability to consider traditionally high risk customers, and to limit non-performing loans. Over half of respondents, 53%, expect up to 25% increase in Smartphone Average Selling Price (ASP) from serving higher-risk consumers while 23% anticipate an even more substantial 26-50% increase. When the same question was asked to Trustonic customers, 75% reported an increase in ASP and 35% indicated seeing an ASP growth above 25%.
Many organisations are very interested in device financing but have yet to enter the market. As a tool typically serving higher-risk or unbanked customers in emerging markets, understandably barriers relating to risk management of non-performing loans dominate the findings. 53% of respondents are concerned about non-payment and delinquency and a further 36% worried about fraud.
Risk-control technology, such as locking, is the key enabler of scalable financing. The research shows that confidence in expanding financing is primarily driven by solutions that directly reduce repayment risk and improve payment certainty. Respondents identified key enablers as device locking to ensure payment speed and reduce bad debt (39%), insurance/risk mitigation products (41%) and fraud detection systems (40%).
Among Trustonic customers, reliance on device locking and security is even more pronounced. 52% rank it as the most critical enabler, 33% higher than the response from the wider industry questioned by Mobile World Live, reinforcing Trustonic’s role as a core risk-control layer underpinning sustainable financing growth.
“Trustonic has removed the inherent risk for creditors with a proven ability to reduce delinquency rates and bad debt for carriers, retailers and financiers. We are seeing amazing results with our LATAM retailer partners confirming delinquency rates under 2%. Our research shows that by working together across the mobile ecosystem, flexible financing options, underpinned by our locking platform, has multiple growth benefits for all stakeholders. We know when devices are made affordable and people get online for the first time, this digital dignity enables them to grow their income, source new jobs and access vital mobile services. Our signal to the mobile industry is that the combination of higher ASPs, lower bad debt and dramatically enhanced customer loyalty, indicates that device financing is the defining growth strategy both in developed and emerging markets. Together we are making real progress in bridging the digital divide.”
-Dion Price, CEO, Trustonic
The industry understands the importance of this challenge, the GSMA has created a global coalition to boost the affordability of smartphones in some of the world’s poorest countries. Members of The ‘Handset Affordability Coalition’, including Trustonic, alongside key mobile network operators (MNOs), vendors, device ecosystem partners and international organisations such as the World Bank Group, the International Telecommunication Union (ITU), and the WEF Edison Alliance, aim to build tangible solutions to bring mobile internet into the hands of those who need it the most.
