CPNI Mobey Forum Mobile Payment Trusted Service Provider Sept 23 2008


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Mobey Forum quarterly meeting Sept 23, 2008. The opportunity for banks and the entire mobile payment ecosystem created by focusing on remote mobile payments.

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  • IBM Confidential
  • CPNI Mobey Forum Mobile Payment Trusted Service Provider Sept 23 2008

    1. 1. CPNI Inc. Proprietary Information Jason Hurlbut VP Global Sales & Business Development CPNI Inc. [email_address] September 23, 2008 Mobile Commerce The Opportunity is Now…
    2. 2. Agenda <ul><li>Disintermediation </li></ul><ul><li>Disruption </li></ul><ul><li>Definition </li></ul><ul><li>Opportunity </li></ul><ul><li>Security </li></ul><ul><li>Challenge </li></ul><ul><li>What does this mean for you? </li></ul>
    4. 4. Who is this bank? <ul><li>157+M customer accounts </li></ul><ul><li>In 190 markets, and support 19 currencies </li></ul><ul><li>Merchant Services growth rate of 57% per annum </li></ul><ul><li>Record Total Payment Volume (TPV) of $14.9 billion in Q2-08 </li></ul><ul><li>Advised on banking strategy by ex-head of retail banking for Lloyds TSB and ex-chairman of Master Card UK </li></ul><ul><li>Brand name widely known and trusted </li></ul><ul><li>Provide key ring sized authentication devices for customers use alongside regular user IDs and passwords. </li></ul><ul><li>Award winning Anti-Fraud capabilities </li></ul>
    5. 5. Who is this bank?
    6. 6. Who is this bank?
    7. 7. Disintermediators – many entrants MTO’s Mobile Carriers Mobile/Online Financial Services
    8. 8. DISRUPTION
    9. 9. Disruption <ul><li>“ There are only 2 potentially disruptive movements in the banking industry for the foreseeable future: </li></ul><ul><li>E-Invoicing and </li></ul><ul><li>Mobile Payments” </li></ul><ul><li>Eric Sepkes, Former Citibank VP and Director of Global FI Strategy, Financial Services Club, London, May 2008 </li></ul>
    10. 10. The Most Valuable Piece of Real Estate in the World! Over 3.3 Billion Users
    11. 11. DEFINITION
    12. 12. What is Mobile Commerce? <ul><li>“ Mobile Commerce” </li></ul><ul><ul><li>the ability to perform financial transactions on your mobile phone </li></ul></ul><ul><li>Comprised of two components: </li></ul><ul><ul><li>Mobile Banking </li></ul></ul><ul><ul><li>Mobile Payments </li></ul></ul><ul><ul><ul><li>Person to Person </li></ul></ul></ul><ul><ul><ul><li>Person to Merchant </li></ul></ul></ul><ul><li>The majority of solutions are focused on Mobile Banking. </li></ul>
    13. 13. Mobile Banking <ul><li>Selling the same thing, to the same people…. for no more money </li></ul><ul><li>No creation of viral growth… </li></ul><ul><li>“ Yet one in 10 m-banking customers at Charlotte-based Wachovia Corp . are new to the bank!” </li></ul>
    14. 14. Mobile Payments NFC Remote Proximity
    15. 15. The NFC adoption problem… <ul><li>“ The study found around 12% of all mobile phones in circulation … will support NFC by 2011.” </li></ul><ul><li>Juniper Research 2007 </li></ul>
    16. 16. Mobile Payments Person to Person AND Person to Merchant Person to Merchant ONLY P2P payments are an additional revenue stream providing a superior business case NFC relies on phone hardware advances and the uptake of merchant PoS devices NFC Remote Proximity
    17. 17. OPPORTUNITY
    18. 18. The Industry is moving ahead…. <ul><li>“… the number of consumers accessing banking services and products via their mobile phones will reach 816 million by 2011, a tenfold increase on the number using such services in 2007…. </li></ul><ul><li>… the annual number of global mobile banking transactions will rise from 2.7 billion in 2007 to 37 billion by 2011….” </li></ul><ul><li>Mobile Financial Services: Banking & Payment Markets 2007-2011 Juniper Research </li></ul>
    19. 19. Customer Acquisition is the Name of the Game Youth : Cell phone penetration greater than credit card ownership Immigrant workers : Growing at 12+% per annum Everyone : Those without a cheque or credit card handy, or not near a card terminal – practically every customer at some time The Highly Mobile : Use PC banking from the hotel/airport
    20. 20. Who else in the Ecosystem Benefits from Remote Payments? <ul><li>Mobile Carriers </li></ul><ul><ul><li>Increased data, SMS and voice revenue </li></ul></ul><ul><ul><li>Lower cost and increased frequency of mobile top-ups </li></ul></ul><ul><ul><li>Sell content without drawing down on a prepaid account, more high margin revenue on core services </li></ul></ul><ul><ul><li>Mobile couponing - charge merchants </li></ul></ul><ul><ul><li>Mobile advertising - charge merchants </li></ul></ul><ul><ul><li>Incents users to upgrade handsets </li></ul></ul><ul><ul><li>Promotes consumers’ use of other data applications through familiarity </li></ul></ul><ul><ul><li>Complements proximity payments but better </li></ul></ul><ul><ul><li>Cash distribution through retail outlets </li></ul></ul>
    21. 21. Who else in the Ecosystem Benefits from Remote Payments? … and Merchants who have another channel through which to sell
    22. 22. European Mobile Commerce Market - Transactions <ul><li>Assumptions: </li></ul><ul><ul><li>10% of the Payments market is suitable for mobile payments </li></ul></ul><ul><ul><li>P2M Transactions account for Debit and Credit card, and Direct Debit conversion transactions </li></ul></ul><ul><ul><li>Conversion rates to Mobile Commerce: 1.25% - 2009, 2.5% - 2010, 4.5% - 2011, 7.5% - 2012, 11.0% - 2013 </li></ul></ul>1.25% of 10% of the Market
    23. 23. Canadian Mobile Commerce Market – Total Payment Value <ul><li>Assumption: </li></ul><ul><ul><li>Average transaction size is €40.00 for Person to Person, €50.00 for Person to Merchant Remote </li></ul></ul>€ 23.7 Billion by 2013
    24. 24. Consumers will Pay for the Convenience of Mobile Payments <ul><li>Price sensitivity testing suggests that around 70% would consider usage for the tested scenarios if a fee were payable </li></ul><ul><li>The table illustrates likely adoption levels at various price points after excluding those who would never use the service </li></ul>Source: GFK research, March 2006 Consumers pay ATM Fees in Many Countries >0p 25p 50p £1 £2 £3 Scenario 1 – Paying £100 to friend/relative 83% 78% 70% 61% 41% 24% Scenario 2 – Paying £100 bill to organisation 78% 71% 64% 51% 36% 22% Scenario 3 – Paying £100 to tradesman 77% 69% 61% 51% 30% 18%
    25. 25. Mobile Commerce Revenue Forecasts: Bank Transaction Fees € 500 Million by 2013
    26. 26. SECURITY
    27. 27. Pent Up Demand for Banks to Provide Mobile Payments Source: P8 What kinds of organisation would you trust to offer this type of service to you? – GfK NOP March 2006 93% of all respondents felt that the most trusted provider of this service would be a bank – most secure! How long will this last with disintermediators fighting for this market?
    28. 28. Security Concern – Who will consumers trust? Consumers want you to provide the mobile application
    29. 29. CHALLENGE
    30. 30. Leveraging Two International Standards Existing Clearing & Settlement Channels Mobile Carrier Network
    31. 31. Remote Mobile Purchases <ul><li>Purchases which satisfy: </li></ul><ul><li>Immediate or Impulsive </li></ul><ul><li>AND Inconvenient to use another channel </li></ul>
    33. 33. Ecosystem Requirements – valid for all Key Stakeholders! A) Initial Requirements B) Operational Requirements <ul><li>Business Case </li></ul><ul><li>Transparency of Ecosystem </li></ul><ul><li>Mass-market potential </li></ul><ul><li>Open standards </li></ul><ul><li>Added new value </li></ul><ul><li>Service adaptability </li></ul><ul><li>Business Sustainability </li></ul><ul><li>Retain Control & Management of your own business </li></ul><ul><li>Branding </li></ul><ul><li>Clarification of roles </li></ul><ul><li>Risk management </li></ul><ul><li>Consumer freedom for change </li></ul>C) Usability Requirements D) External Requirements <ul><li>International Usage </li></ul><ul><li>Service Integrity </li></ul><ul><li>Service Availability </li></ul><ul><li>Easiness of enrolment </li></ul><ul><li>Clear customer service </li></ul><ul><li>Service scope </li></ul><ul><li>Legal requirements </li></ul><ul><li>Seamless Audit-trail </li></ul><ul><li>Security demands </li></ul><ul><li>Customer authentication & transaction non-repudiation </li></ul>
    34. 34. Why is this market important? <ul><li>Provides de novo high growth transaction market </li></ul><ul><li>NEW incremental revenue opportunity </li></ul><ul><li>Customer acquisition tool – attract the youthful unbanked, new residents </li></ul><ul><li>Increased “share of wallet” from existing customers </li></ul><ul><li>Improves customer retention “stickiness” </li></ul><ul><li>Attract new merchants </li></ul><ul><li>Increase transactions with existing merchants </li></ul><ul><li>Increases Interchange volume from existing issued cards </li></ul><ul><li>Quickly Curtails Disintermediation </li></ul>
    35. 35. Bank Audiences – Mobile Strategy Wealth Management Private Client Card Issuing (Visa) Debit/Core Banking Retail Bank Self Service Banking Remittances Merchant Services Payments
    36. 36. The Big Question…. <ul><li>Can the mobile payments market mature without you? </li></ul>
    37. 37. CPNI Inc. Proprietary Information Thank You Mobile Commerce The Opportunity is Now…