How to Ease Profit Losses from Regulatory Interventions with Intelligent Pricing

Although central bank moves are sometimes sudden, financial service providers can prepare well in advance for regulatory intervention. In this article, we shed light on opportunities for financial service providers to react to price regulations and proactively mitigate the impact of potential measures.

When the Central Bank of Kenya enforced lower transaction charges for mobile money services in March last year, effects were immediately visible. Transaction volume soared by 80 percent and almost three million new users registered. But the measure also blew a hole in the financial statements of financial service providers. M-Pesa, the incumbent player, announced a sharp decline in revenues by more than 10 percent.

The banking and financial services industry has always been prone to regulatory intervention.…