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MasterCard Financial Inclusion 2013
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  • 1. ADVANCING INNOVATION ADVANCING COMMERCE Promoting Financial Inclusion through new technologies Raymond Yap, Market Development, South East Asia June 11, 2013
  • 2. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Statement of Confidentiality and Disclaimer ©2013 MasterCard. All third-party product names and trademarks belong to their respective owners The information provided herein is strictly confidential. It is intended to be used internally within your organization and cannot be distributed nor shared with any other third party, without MasterCard’s prior approval. This proposal is intended solely to facilitate discussion between the parties. This proposal only sets forth a general description of the financial terms that are anticipated to be included in a proposed agreement between the parties and shall not create a legally binding or enforceable agreement or offer. The parties acknowledge that other terms and conditions are also anticipated to be included in the proposed agreement. Except for the confidentiality obligations stated above, neither party shall be liable to the other party as a result of the failure to fulfill any obligation described in this proposal or the failure to enter into any agreement contemplated by this proposal. Information in this presentation or in any report or deliverable provided by MasterCard in connection herewith relating to the projected impact on your financial performance, as well as the results that you may expect generally are estimates only. No assurances are given that any of these projections, estimates or expectations will be achieved, or that the analysis provided is error-free. You acknowledge and agree that inaccuracies and inconsistencies may be inherent in both MasterCard’s and your data and systems, and that consequently, the analysis may itself be somewhat inaccurate or inconsistent. The information, including all forecasts, projections, or indications of financial opportunities are provided to you on an "AS IS" basis for use at your own risk. MasterCard will not be responsible for any action you take as a result of this presentation, or any inaccuracies, inconsistencies, formatting errors, or omissions in this presentation. Page 2 June 11, 2013 Page 2 June 11, 2013
  • 3. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE The Need for Financial Inclusion is Global Sources: 1) “Half the World is Unbanked”; McKinsey / Financial Access Initiative; October 2009. 2) 2011 FDIC National Survey of Unbanked and Underbanked Households, September 2012. North America 68MM Adults 23% Latin America 250MM Adults 65% Central Asia / East Europe 193MM Adults 49% Middle East 136MM Adults 67% Sub-Saharan Africa 362MM Adults 80% South Asia 612MM Adults 58% East / SE Asia 878MM Adults 69% June 11, 2013 Page 3
  • 4. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Indonesia Landscape Page 4 Background • Population of 250 million • 50-60 million bank accounts • 160 million unique mobile subscribers (over 90% prepaid) • Financial sector inadequately serves 79% of poor households Source: Various Internet sources June 11, 2013
  • 5. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Consumers are Transacting Anywhere - Online, Offline, Physical, Digital Consumer ExperiencesConsumer Experiences Developed Market Emerging Market Receiving payroll and social benefits on mobile phone or card Dining with a physical card Shopping on a mobile phone Accessing ATMs and merchants (prepaid cards) Paying bills or merchants via SMS on a mobile phone Commuting with a contactless enabled mobile phone June 11, 2013 Page 5
  • 6. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Mobile Money eCommerce through mobile devices NFC payments and value added services Mobile Money eCommerce through mobile devices Mobile Money ■ NFC payments and Value Added Services ■ e-com through mobile channel ■ Mobile banking NFC smart phones and Tablets Smart phones and tablets Feature phones ■ e-com through mobile channel ■ Mobile banking ■ Mobile Money  Cash in, cash out  P2P  Top up, airtime  Bill, merchant payment  Others Affluent market with well developed card acceptance Unbanked emerging market with low banking infrastructure Consumer ServicesService Categories Mobile DeviceMarket Type Financial Services providers need to map services to market via different mobile channels Page 6 June 11, 2013
  • 7. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE • The Payments Sector as an enabler of Financial Inclusion – Robust, global networks – Integrated with Private Sector – Financial Services – Telecommunications Services – Integrated with Public Sector – National, State and Local – Often viewed as a ‘public service’ or ‘utility’ – Cash is costly and often inefficient – Manufacture, transport, storage, theft, etc – Many limitations in usage • In places where Financial Inclusion is a focus – Cash is the dominant form of payment – Few have access to banks let alone a bank account – Many have mobiles and the trend is increasing The Payments Sector and Financial Inclusion June 11, 2013 Page 7
  • 8. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Driving Change in the Ecosystem Page 8 June 11, 2013 Solve the “chicken and egg” and “business case” problems by proactive actions Government Businesses Underbanked Merchants Incentives Payroll Payments Benefits Benefits, Payroll, Payments Enhanced Tax Revenues Payments
  • 9. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Money In How consumers receive money to fund their unique lifestyle needs Money Out How consumers spend money for their unique lifestyle needs Money Management A safe value store for the consumer’s funds and the ability for the consumer to be informed and in control of their money POS/ATM Alerts Account Management Activity Query Balance Query Activity Alerts Load Money at Bank Load Money at Merchant Deposit Payroll /Benefits Account Transfer Load Money at ATM Receive Funds Family & Friends Remote Purchase Local Purchase Card/POS PurchasePay Bills Cash-out at ATM Buy Airtime Self/Others Pay Merchant Account Transfer Pay Family & Friends June 11, 2013 Page 9 Sources of Funds Uses of FundsDEPOSIT Drivers of Financial Empowerment Solving for the Sources and Uses of funds
  • 10. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Next phase of Financial Inclusion depends on solving key pain points Page 10 June 11, 2013 Key Consumer Need Level of Service and Pain Points Key Gaps Bank accounts Access to traditional branches and extensive KYC Agents to help open “lite” banking accounts Cash-in/ Cash-out Network of cash in/out merchants and agents, but not interoperable Bank and cross network interoperability P2P Interoperable between some banks/telcos Interoperability through a common switch Merchant payments Proprietary acceptance systems (card/mobile) Broad acceptance with Interoperability through shared infrastructure Salary/Benefits disbursement Proprietary disbursement infrastructure Ability to disburse into a different accounts through a common platform Bill payments Lack of universal bill payment; need to manage multiple banks/telcos Standard network for bill payments International remittance Mobile to mobile remittances not possible except for select few corridors Cross border remittance through an interoperable platform Micro-financing Proprietary lending systems operated by individual financial institutions A common infrastructure to enable lending through networks Micro-insurance Proprietary lending systems operated by individual financial institutions A common infrastructure to enable insurance through networks
  • 11. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE A Platform for Financial Inclusion Key value propositions Page 11 Quick Time to Market Multi – Channel Integration Ecosystem Support Scalable and Secure Platform Quick Time to Market • Reduces OPEX and CAPEX • Pre-integrated application verticals • Reusable enablers and components Multi-Channel Integration • The same services and business logic are enabled through multiple channelsEcosystem Support • Tapping into the larger ecosystem by connecting with other enabler partners • Connecting merchants, consumers and service providers in one single platform • Enterprise-grade platform built for security, performance and scalability • Flexible business rule orchestration June 11, 2013
  • 12. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Creating a Financial Inclusion Platform A step by step approach A platform for ‘light’ banking services for underbanked customers, starting with a mobile payment platform and then expanding into a micro banking and other financial services. Business Model Formation Next Gen Financial Institution • Run a virtual banking and payment services on mobile • Economically run support and maintained • Robust technological framework • Scalable to meet future needs Launch Mobile Payment Platform Offer Micro Banking Services Innovate & Expand Customer Base • Build and launch mobile payment platform as the foundation capability • Provide payment services convenience and generate revenue • Build the customer base and cash flow for the expanded services • Analytics tools for up- sell and cross-sell • Product and services bundling • Customer centric and relationship based pricing • Social networking • Internally discuss approaches to exploit the liberalization opportunity • Select the right partner considering the long term • Launch micro-banking services to offer deposit and lending/financing • Integrate with and leverage on core banking system • Roll out other financial services as Insurance management, NFC wallet, workflow management etc. • Open loop cards linked to prepaid/debit accounts June 11, 2013 Page 12
  • 13. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE South Africa: Government Grants are Delivered Through a Technologically Advanced Program June 11, 2013 Page 13 • Already 3 million cards issued, with 10 million projected issuance by Q2 2013 • $360MM – Expected savings South Africa will realize in five years from paying 10 million social grants electronically Objective Distribute social benefits to 15 million recipients in South Africa. • Cards are issued instantly from a mobile issuance “kit” • Biometric functionality from Net1, including both finger prints and voice recognition, virtually eliminates fraud Solution Key Results
  • 14. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE Developing the Ecosystem: Remote Mobile Payments June 11, 2013 Page 14 Mexico Financial Inclusion • A successful private-public partnership connecting consumers in a remote village to an electronic and mobile payment ecosystem • Mobile phone-based initiative with a companion prepaid card allowing consumers to make payments, P2P transfers and local calls • Significant reduction of cash in-flows Mobile Payments
  • 15. ©2011 MasterCard. Proprietary and ConfidentialADVANCING INNOVATION ADVANCING COMMERCE How Payment Network Can Help • Payment system organizer • Common technology infrastructure • Common standards and interfaces • Equitable value distribution • Openness and interoperability • End to end program management MasterCard leverages its core competencies to create a cooperative and profitable value system for all participants Banked Entities Unbanked Consumers Mobile-Centric Informal Financial Services Bank-Centric Formal Financial Services Electronic payments replace cash payments as medium of exchange Mobile Network Operators Issuers