Mark Palmer of BTIG Research suggests that mobile banking firm Monitise Plc (LON:MONI) (OTCMKTS:MONIF)’s recent partnership with International Business Machines Corp. (NYSE:IBM) was a true win – win situation. In his blog published on Tuesday, September 2nd, Palmer expounds on why IBM, a tech giant that forks over more than $6 billion annually on R&D didn’t simply develop its own line of mobile money products.
IBM would’ve if it could’ve
In an earlier investment report, Palmer noted that Monitise’s main competitors were actually the IT departments of the financial institutions whose business it was seeking. Almost all of these companies must’ve asked themselves the question “build it ourselves, or outsource it to MONI?” when considering the best way to climb on the mobile bandwagon.
Assets in private equity and venture capital strategies have seen significant growth in recent years. In comparison, assets in the hedge fund industry have experienced slowing growth rates. Q2 2021 hedge fund letters, conferences and more Over the six years to the end of 2020, hedge fund assets increased at a compound annual growth rate Read More
“The risk if you start dancing with these big bears is that they’ll go do it themselves,” Monitise co-CEO Alistair Lukies explained in an interview back on August 27. “We’ve been here with Visa and MasterCard … and if IBM believe they could have done it themselves they would have built it.”
No one doubts that IBM could have used its considerable resources to develop its own versions of MONI’s “Bank Anywhere,” “Pay Anyone” and “Buy Anything” mobile platforms, it just made economic sense for IBM to partner to take advantage of Monitise Plc (LON:MONI) (OTCMKTS:MONIF)’s decade of experience developing mobile technology.
It really boils down to the partnership making a great deal of sense for both enterprises. Monitise gets access to IBM’s global distribution and marketing strength while it can continues to focus on innovation and successfully implementing its technology with clients. IBM gets access to MONIF’s industry-leading technology and the multiple benefits of a partner with a decade-long head start in the space.
Monitise is looking to cooperate, not disrupt
Lukies elaborates on why Monitise Plc (LON:MONI) (OTCMKTS:MONIF) is truly looking to cooperate, not disrupt. “I think business models of the future are going to be much more about cooperation. You might compete, but you also collaborate.”
Making deals with major partners like Visa Inc (NYSE:V) and maMastercard Inc (NYSE:MA) means the firm will only receive a relatively small portion of the total mobile-banking revenue stream. However, given the huge size of the potential revenue stream, MONI’s small piece of the pie could turn into massive revenues.
“We’re entering a phase of ecosystem economics where it’s all about 10% of a big number is a lot better than 100% of nothing,” Lukies continued.