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Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
Distribution Approaches & Collaboration Trends
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Distribution Approaches & Collaboration Trends

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A few types of collaboration. Strengths & weaknesses in MNO collaboration, comparison of business models. Developed World Case Study: joint-venture between banks & MNOs to launch NFC services. …

A few types of collaboration. Strengths & weaknesses in MNO collaboration, comparison of business models. Developed World Case Study: joint-venture between banks & MNOs to launch NFC services. Developing World Case Study: MNO & bank collaboration on agency banking & integration with MNO Mobile Money (MM) e-value systems: a.) from a business point of view, and b.) from a customer point of view

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  • Physical Banking Channels Branch Networks Self-Service Machines (ATMs, teller machines)Partnership Models & Agency Banking“Branchless” Banking with Bank-Owned Channels/PersonnelVehicle BanksContainer BankingFlash and Capacity-Management Service ChannelsVirtual Service ChannelsIVR Banking and Call-Centre Support / BankingInternet Banking (incl. Internet Banking Kiosks)Mobile BankingSMS Banking and Information Services for Consumers, Farmers, BusinessMerchant and Retail Payments, Support for the Supply-ChainEmail BankingPhysical MailTelevision BankingOther Value-Added Services
  • Physical Banking Channels Branch Networks Self-Service Machines (ATMs, teller machines)Partnership Models & Agency Banking“Branchless” Banking with Bank-Owned Channels/PersonnelVehicle BanksContainer BankingFlash and Capacity-Management Service ChannelsVirtual Service ChannelsIVR Banking and Call-Centre Support / BankingInternet Banking (incl. Internet Banking Kiosks)Mobile BankingSMS Banking and Information Services for Consumers, Farmers, BusinessMerchant and Retail Payments, Support for the Supply-ChainEmail BankingPhysical MailTelevision BankingOther Value-Added Services
  • Physical Banking Channels Branch Networks Self-Service Machines (ATMs, teller machines)Partnership Models & Agency Banking“Branchless” Banking with Bank-Owned Channels/PersonnelVehicle BanksContainer BankingFlash and Capacity-Management Service ChannelsVirtual Service ChannelsIVR Banking and Call-Centre Support / BankingInternet Banking (incl. Internet Banking Kiosks)Mobile BankingSMS Banking and Information Services for Consumers, Farmers, BusinessMerchant and Retail Payments, Support for the Supply-ChainEmail BankingPhysical MailTelevision BankingOther Value-Added Services
  • Physical Banking Channels Branch Networks Self-Service Machines (ATMs, teller machines)Partnership Models & Agency Banking“Branchless” Banking with Bank-Owned Channels/PersonnelVehicle BanksContainer BankingFlash and Capacity-Management Service ChannelsVirtual Service ChannelsIVR Banking and Call-Centre Support / BankingInternet Banking (incl. Internet Banking Kiosks)Mobile BankingSMS Banking and Information Services for Consumers, Farmers, BusinessMerchant and Retail Payments, Support for the Supply-ChainEmail BankingPhysical MailTelevision BankingOther Value-Added Services
  • Transcript

    • 1. Distribution Approaches & MobileCollaboration TrendsCollaboration with MNOs & Other IntermediariesExcerpts from discussion slides for an interactive session on collaboration (with focuson MNO collaboration areas).12 November 2012Sandton - JohannesburgSouth AfricaDan Armstrongdan.armstrong@takashimobile.com+31 652 085 071
    • 2. Contents  A few types of collaboration, including partner bank case studies  Strengths & weaknesses in MNO collaboration, comparison of business models.  Developed World Case Study: the proposed “Sixpack” joint- venture between banks & MNOs to launch NFC services  Developing World Case Study: MNO & bank collaboration on agency banking & integration with MNO Mobile Money (MM) e- value systems • From a business point of view • From a customer point of view Distribution Conference 11/2012 – Dan Armstrong – page 2
    • 3. Some thoughts ..  MNOs tend to generate their revenues from “transaction-based business” (sale of SMS, data, voice calls), whereas margins on actual “transactions” for banks are thinning, and in some cases unprofitable in general.  New/old players (VISA/MC, switching providers, MNOs, aggregators) are moving quickly into the payments services space.  The question about the value of payments services for banks is a burning one these days – especially for developed world banks, but also for the developing world as well.  Deposit-taking and lending are major differentiating business lines of banks, although some MNOs and other parties are starting to make moves in this direction. Distribution Conference 11/2012 – Dan Armstrong – page 3
    • 4. Some Current MNO Distribution Collaboration Agreements in Place  Traditional wholesale telco services (leased lines, corporate products) – but not really “partnership” per se  National short-codes  Extra security for mobile banking, e.g. WAP, etc.  Wholesale access (e.g. GSM service provider like www.rabomobiel.nl)  USSD mobile banking (requires connectivity to the SMSC)  Airtime sales via mobile banking, branches, ATMs, agents, etc.  etc. Distribution Conference 11/2012 – Dan Armstrong – page 4
    • 5. USSD (BPR example) *150# BPR Mobile BPR Mobile Your BPR account BPR Mobile Banking Please enter your Banking balance is: BPR Mobile PIN. 1. Balance Enquiry 000,000.00 RWF 1. Balance Enquiry 2. Mini-Statement 2. Mini-Statement Enter “9” to return 3. Money Transfer 3. Money Transfer to the main menu. 4. Prepaid Airtime 4. Prepaid Airtime 5. Bill Payments 5. Bill Payments 6. Bank Services 6. Bank Services 7. Help 7. Help Pease enter the Enter the amount Please confirm Money transfer recipient BPR of money to be your money successful! account or phone transferred: transfer: 000,000 RWF was number registered 000,000 RWF will transferred to for BPR Mobile be transferred to you wish to BPR Mobile Ref. transfer money to: No: 12345678 Enter “0” to confirm transfer and send. Enter “9” to return to the main menu. Distribution Conference 11/2012 – Dan Armstrong – page 5
    • 6. Clearly there are strengths associated with MNOs MNOs are major players in each of our markets and collaborations with them could be highly beneficial on multiple levels:  Large networks of influence and activity (airtime sales dealers, Mobile Money dealers)  Large customer bases (although restricted to limited product ranges)  Substantial marketing power (multiple orders of magnitude larger than ours normally, very high brand recognition)  Well-funded (not always, but often have deep pockets) At the same time, their business model is not the same as other industries (like banking), so at times there have been issues with trust, short-term/opportunistic commercial behaviour to get market share, etc. Distribution Conference 11/2012 – Dan Armstrong – page 6
    • 7. But, it‟s important to realise .. “The business interests of MNOs might not always aligned with those of the bank.” Distribution Conference 11/2012 – Dan Armstrong – page 7
    • 8. Thoughts on the 2 sorts of players in collaborations .. Player: Category 1 ”I have stuff I want to do via channels. Enable Player: Category 2 bank account control, enable payments, provide ”I have a pipe and I want to monetise the ticketing, sell ads, credit loyalty points, etc. and I investments I made in creating it. I want as much need as many (cost effective) channels and pipes to get through that pipe and the (mobile) phones to do it.” accessing it as possible.” Distribution Conference 11/2012 – Dan Armstrong – page 8
    • 9. Differing Business Models <?> An MNO Business Model A Bank Business Model  Invest in assets to realise profits  Invest in assets to realise value- from activity/transaction-based based profits (there are fees - exceptions of course). Longer- minutes/SMS/kb/subscriptions. term/stable revenue from  Costs: GSM licence, Radio / profitable, loyal customers, Transmission Networks, Dealer multiple accounts, etc. Network, Handset Subsidies  Often the most revenue comes  Substantial revenue required to from high-value products: cover new and continuing business products, mortgages, investments, otherwise not really higher-value loans, etc. worth-while. Especially true for  Key component in addition to multi-country MNOs. profitability is managing costs over  The more usage of mobile the long-term and choosing phones the better, regardless of battles in distribution which don’t segment, behaviour. bleed.  The more usage of bank products might lose the bank money, depending on the segment. Distribution Conference 11/2012 – Dan Armstrong – page 9
    • 10. A Few Types of Collaboration Entity Provides Party treats the Partners Using No Special Distribution other as a Assets as Joint-Ventures Collaboration Services (branded/white-labelled) “supplier” „Partners‟ SIXPACK MNOs (airtime) all Polish banks Distribution Conference 11/2012 – Dan Armstrong – page 10
    • 11. Some Distribution Collaboration Discussions with MNOs Integration between bank & Bank branches as “Super Bank branches as Dealer for MNO Mobile Money systems Dealer’ for MNO airtime MNO airtime (can include MM Agents as dealers cash-in/cash-out locations) Bank branches providing Bank Branches as “Super NMO MM Agents as collection secure storage for MNO Agent’ for MNO MM Agents points for loan repayments airtime vouchers MNO MM Agents as provisioning points for new Joint-venture for (new) ?? accounts (sign-up, booking financial services or NFC loans, etc.) Distribution Conference 11/2012 – Dan Armstrong – page 11
    • 12. Partnerships between MNOs & Banks to Launch Mobile NFC Distribution Conference 11/2012 – Dan Armstrong – page 12
    • 13. Partnerships between MNOs & Banks to Launch Mobile NFC  Given the “natural fit’ between financial and telco services required to deliver mobile NFC, there have been a large number of partnerships discussed between banks and mobile operators about how to jointly deliver / support this ecosystem. Sixpack  However, how many of these partnerships will survive commercial launch? • MNOs control the handset market in most countries • Banks, other transaction brokers face higher costs in the near-term • Retailers/loyalty/other VAS parties love the technology, but find it hard to derive tangible business value (cost savings or increased sales or loyalty) to-date. Distribution Conference 11/2012 – Dan Armstrong – page 13
    • 14. Elements of the SIM-based mobile NFC ecosystem  NFC (SWP) Handsets  NFC (SWP) UICC (SIM Card)  NFC Mobile Payment Applications TSM Role  NFC Mobile Wallet Applications  TSM Role (TRAVIK/Sixpack) • Bank/SP Management, New Banks/SPs • Life-Cycle & Memory Management • OTA Capability & MNO Interface Management • Certification & Compliance  NFC POS, Other NFC Readers for NFC VAS  NFC Customer Experience • Other Value-Added NFC Handset Applications • NFC POS Formulas & Combinations  Brand & Marketing, Launch & Continuing Campaigns Distribution Conference 11/2012 – Dan Armstrong – page 14
    • 15. So many apps on SIM cards ... how to eliminate point-to-point chaos? MNO MNO MNO Distribution Conference 11/2012 – Dan Armstrong – page 15
    • 16. The “Trusted Services Manager” Role “Please ensure that APPLICATION X gets to USER Y on MNO Z.” MNO “Trusted Services Manager” MNO Role “Make sure that when there are changes of any sort required, that can be managed securely MNO and easily.” Distribution Conference 11/2012 – Dan Armstrong – page 16
    • 17. TRAVIK / Sixpack Distribution Conference 11/2012 – Dan Armstrong – page 17
    • 18. However, some hurdles .. MNOs Banks  Not clear how MNOs profit  Mobile NFC represents from mobile NFC in the more cost for banks, short term. retailers, public transport,  No direct transaction loyalty companies in the revenues short-term:  More expensive handsets  More “cards” per customer to manage, until whole world  PR, innovation & (in the is 100% contactless case of SIM usage) renting SIM space …  Cost of acceptance infrastructure Distribution Conference 11/2012 – Dan Armstrong – page 18
    • 19. Banks Integrating with Mobile Money Systems  GSM operator “Mobile Money” systems (like M-PESA, Smart Money, MTN Money and Airtel Money) provides some great benefits to banks, but also perhaps some hidden risks. Distribution Conference 11/2012 – Dan Armstrong – page 19
    • 20. Strengths & weaknesses of MNO MM integration Some Potential Positives Some Potential Negatives Customers save time & money going to the Possible trust issues with MNO MM Agents branch, queuing Short-cut to building up full agency network Bank control of business processes, fraud, etc. Helps secure MNO float deposit Higher number of steps to move money in & out, as well as verify that transfer occurred Can help support in locations where customers Transaction costs (bank & MNO wallet fees), presently have cash availability issues presumably passed on to customer, not cheap Great for currently salaried workers with bank accounts more convenient cash-out points  However, assessing the opportunities becomes clearer when the two points of view are assessed separately: 1 2 MNO MM Integration MNO MM Integration Bank Business Point-of-View Bank Customer Point-of-View Distribution Conference 11/2012 – Dan Armstrong – page 20
    • 21. Summary MNO MM Integration Bank Business Point-of-View  The bank getting trust accounts is great.  Interoperability is great for bank customers (freedom to move money where they’d like to), and can generate new transaction revenues.  Having loads of cash-in/cash-out Agents instantly available without huge cost for the bank is great. Distribution Conference 11/2012 – Dan Armstrong – page 21
    • 22. MNO MM Integration Basic Components MNO MM Integration Bank Business Point-of-View  Accounts: • Bank establishes a trust account (funded by MNO). • Bank buys e-value and maintains an e-value ledger in the MNO system • Bank maintains a collection account to reconcile each transaction  Account set-up can be more complicated, based on MNO requirements, etc.  Each party provides (real-time) statements for the collection account and the MNO e-value and will notify the other party of any debit/credit to the collection account and/or e-value ledger. Trust Acc Collection Acc E-value Distribution Conference 11/2012 – Dan Armstrong – page 22
    • 23. MNO MM Integration: Super Agency MNO MM Integration Bank Business Point-of-View  MNO MM Agent can buy e-value from bank branch staff, with the cash credited to the collections account. e-value is then credited to the individual MNO MM Agent e-value account by the bank.  MNO MM Agent can sell e-value (request cash) from bank branch staff, with the cash debited from the collections account.  Fees for this service can be charged. (e.g. % charged to MNO MM Agent for cash-in/cash-out)  Requirements: training, devices in bank branches to effect transfers, MNO needs real-time access to bank systems, reconciliation, etc. Trust Acc Collection Acc E-value E-value Distribution Conference 11/2012 – Dan Armstrong – page 23
    • 24. MNO MM Integration: Interoperability MNO MM Integration Bank Business Point-of-View  Customers can transfer value from the bank account to their MNO MM Wallet, and vice versa. This forms core functionality for an MNO MM Agent cash-in/cash-out capability.  Fees can be charged by MNOs for cash-out @ Agents, transfers/payments, but cash-in is usually free. Fees charged by banks for transfers, cash-out (teller, ATM), subscriptions, etc. Trust Acc Customer Acc Collection Acc E-value E-value Distribution Conference 11/2012 – Dan Armstrong – page 24
    • 25. Cash-In & Cash-Out MNO Wallet Integration Bank Customer Point-of-View  Great for bank customers and can encourage people that do not live near branches or ATMs to get an account.  Resulting cash-in/cash-out opportunities for bank customers: • MNO Wallet Systems: cash deposit/withdrawal • ATMs: cash withdrawal • Branches: cash deposit/withdrawal • Other Agency Banking relationships  Given the total amount of MNO MM Agents vs. bank branches in many countries, it seems likely that remote customers will more likely have opportunity to use MNO MM Agents. Distribution Conference 11/2012 – Dan Armstrong – page 25
    • 26. Why use a bank account over an MM wallet? MNO Wallet Integration Bank Customer Point-of-View I trust banks I want to make a I want to earn a holding my bill payment I need to use a I want to earn loan, and the money more only available bank ATM interest bank offers me than MNOs (or via bank credit scoring others) systems Current Bank Customer New Bank Customer • More convenient cash-out points nation- • Real bank account (vs. MNO MM wallet), wide.  including interest % earned, loans.  • Bank customers save time & money going • More convenient cash-out points nation- to the bank branch, queuing.  wide. Saves time & money vs. branches. • No need to begin a new relationship, build  trust. (e.g. salaried workers)  • Question of trust in MNO MM wallet system agents, business processes, fraud, etc.  • Relatively high no. of steps & transaction costs to move money in & out, verify that transfer occurred, similar transactions possible.  Distribution Conference 11/2012 – Dan Armstrong – page 26
    • 27. Some Benefits & Drawbacks MNO Wallet Integration Bank Customer Point-of-View  Cash-in model to MNO MM wallets might be somewhat cumbersome and more expensive.  Multiple Apps, USSD menus, etc., short-codes, transaction types (e.g. bank and individual menus for all MNOs, different transaction steps, balance-checking models, callcentre support for this, etc.)  Motivation to move the funds, if customers can pay bills, make transfers directly from MNO MM wallets  Various fees to get the cash in/out of bank accounts Distribution Conference 11/2012 – Dan Armstrong – page 27
    • 28. Paying Bills Not the Key MNO Wallet Integration Bank Customer Point-of-View  In many developed markets electronic bill payments and automatic payment schemes are in place for most channels already.  In many developing markets, usually the same bill payments are available with a CA as with MNO MM systems. Other banks offer similar bill payment services, or will soon.  Core services are usually enjoyed by all players: money transfer  Some MNOs and bank competitors are leading in these bill payment services anyway. Intermediaries (e.g. switches) also sort payments for many banks at the same time. Distribution Conference 11/2012 – Dan Armstrong – page 28
    • 29. Thank You Distribution Conference 11/2012 – Dan Armstrong – page 30

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