The decades old mobile technology standard, USSD remains relevant today, even more than it was back in the days. Anyone using a mobile phone can't escape dialing *123# to either check airtime balance or some other service prompt; but nowadays, USSD have gone beyond network providers' native services.
USSD, which stands for Unstructured Supplementary Service Data has got a mainstream appeal because it doesn't require data, nor airtime to access, as mobile operators typically use USSD for their native services such as airtime balance checks, top-ups, data services and promotional offers.
It’s perhaps the most basic mobile phone-based service – which potentially, have made some big strides in fintech services inclusion of the unbanked Nigeria, who are mostly living in the rural areas where network data services are abysmal or utterly unavailable.
Why the USSD Service was Introduced
As the mobile industry realized the need to facilitate easy machine-to-machine communications to take care of some basic tasks that requires the mobile device to query the network, the USSD protocol was born to supplement the existing GSM standards that mostly focused on person-to-person communications.
While network operators utilized STK (Sim Toolkit) technology in order to facilitate the reselling and subscription service offerings, the STK technology allows the operators to code a set of commands into their SIM cards which defines how the SIM cards interact with the device.
However, for STK to work, it's essential that the SIM card inserted in the mobile device is burned with the menu. Then, the application is normally protected by pin, either SIM card pin or phone lock pin and whenever the phone is locked or no sim inserted into the phone the service won't be possible.
Whereas, the USSD technology is network-deployed and not resident on the mobile device, the service is located in the mobile network and users who switched to the network will have access to the network's USSD menu. Whenever a user requests a menu, it initiates a real-time session between the USSD application platform and the mobile user once the service is invoked.
Mobile Apps vs USSD
Despite the predictions by several experts in financial services that app-powered mobile banking would be replacing USSD, it has remained the most widely adopted and successfully integrated mobile technology in emerging markets, including Nigeria.
Albeit, the USSD service has not necessarily rendered app-based services, such as banking redundant, as they’re quite different in their offerings, with different customers and market segments.
While some customers would prefer one, others might not. There are currently multiple variables that determines individual preferences, like data access, mobile device and educational background, plus of course, income. And certainly, not every customer have a smartphone and most devices don’t have data support or Wi-Fi connectivity in the rural areas.
In considerations to the factors, any financial service providers (FSPs) looking to enter the Nigerian market with mobile banking solutions should as a necessity incorporate USSD service, if they really want to succeed, as only USSD works for everyone.
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