Open service innovation model has in recent years attracted the attention of both practitioners and academia. In essence, the practice of open innovation is a result of recognizingthe enormous potential for developing innovative products beyond the internal capacity of a firm. Based on literature review, this paper discusses the concept of open innovation and subsequently applies the framework to describe and draw lessons from mobile financial services in Tanzania. A case study of the partnership between National Microfinance Bank (NMB) and a mobile network op-erator - Vodacom Tanzania is presented. From this case it is vivid that open innovation approach has been key to redefining the distribution channel of the bank, which subsequently has the po-tential to benefit all stakeholders involved. Finally, by reflecting on the essence and impact of open innovation as illustrated by NMB and Vodacom case, the paper presents key lessons that may be relevant for SMEs and SME policy.