Mobile in Banking & Finance “ What Make Sense and What Not” 4 th February 2004, Kuala Lumpur The 4 th Mobiles Malaysia - 2005

Introduction

Dynamics Of The Banking Industry Banks today are faced with unprecedented challenges created by the three forces of De-regulation Deregulation has created a climate of increased competition and changing business structures. New competitors have emerged from both different geographies and other industry sectors -- such as insurance -- challenging the value delivered to customers and the costs. There are more opportunities for mergers, and they must offer a return on investment through greater reach and economies of scale. Globalisation Customers have better access to information and new expectations. The Internet, cable news, mailing lists and newsgroups are just a few examples of how regular investors are provided with information that was previously unavailable to them. As service industries have moved to availability through a variety of communications and support 24x7, customer expectations have hit new highs. Technology The innovations in computing and telecommunications have improved all the functions in retail banking. Computers have empowered the production and telecommunications have created new distribution channels that have instantaneous and global reach. The advances in communication and information technology have accelerated and broadened the dissemination of financial information while lowering the costs of many financial activities.

Banks today are faced with unprecedented challenges created by the three forces of

De-regulation

Deregulation has created a climate of increased competition and changing business structures. New competitors have emerged from both different geographies and other industry sectors -- such as insurance -- challenging the value delivered to customers and the costs. There are more opportunities for mergers, and they must offer a return on investment through greater reach and economies of scale.

Globalisation

Customers have better access to information and new expectations. The Internet, cable news, mailing lists and newsgroups are just a few examples of how regular investors are provided with information that was previously unavailable to them. As service industries have moved to availability through a variety of communications and support 24x7, customer expectations have hit new highs.

Technology

The innovations in computing and telecommunications have improved all the functions in retail banking. Computers have empowered the production and telecommunications have created new distribution channels that have instantaneous and global reach. The advances in communication and information technology have accelerated and broadened the dissemination of financial information while lowering the costs of many financial activities.

Financial Services Industry Globalization and technology are fundamentally changing the financial services industry worldwide Competition has accelerated and is fierce for “best credits”/corporates in most countries New competitors have entered the market Margins and fees are narrowing significantly Opportunity Leverage financial, information & communication technologies to reduce transaction costs, enhance quality, increase service value, improve reach and thus expanding services to larger number of clients - profitably.

Globalization and technology are fundamentally changing the financial services industry worldwide

Competition has accelerated and is fierce for “best credits”/corporates in most countries

New competitors have entered the market

Margins and fees are narrowing significantly

Changing Face of Banking & Finance In recent years, the banking & financial services industry has been undergoing rapid changes, reflecting a number of underlying developments. Internet, wireless technology, and global straight-through processing have created a paradigm shift - from brick-and-mortar banks to banking virtually across time zones, geographical locations, access points and delivery channels. Customers are increasingly fickle and demanding. Unprecedented advances in technology are changing the rules of the game. New entrants to the industry are picking off profitable niche businesses. A rash of mergers & acquisitions will most probably evolve into massive global consolidation across the industry as a whole. And last not the least diminishing lines between banking and other financial services.

In recent years, the banking & financial services industry has been undergoing rapid changes, reflecting a number of underlying developments. Internet, wireless technology, and global straight-through processing have created a paradigm shift - from brick-and-mortar banks to banking virtually across time zones, geographical locations, access points and delivery channels.

Customers are increasingly fickle and demanding.

Unprecedented advances in technology are changing the rules of the game.

New entrants to the industry are picking off profitable niche businesses.

A rash of mergers & acquisitions will most probably evolve into massive global consolidation across the industry as a whole.

And last not the least diminishing lines between banking and other financial services.

Three Pillars of Strategy Principal issues that will determine the transformation of Banking & Financial Services: Transparency, or the ability of all market participants to determine the available range. Differential pricing, in which finer and finer distinctions must be made among groups of customers, setting their prices based upon the revenue streams they generate, the costs to serve them, and their resulting profitability; Dis-intermediation or bypass, in which direct interaction eliminates the role previously enjoyed by financial advisors, retail stock brokers, and insurance agents. Or traditionally Price (interest rate)‏ Quantity (deposit and loan size) Quality (reputation-relationship)

Principal issues that will determine the transformation of Banking & Financial Services:

Transparency, or the ability of all market participants to determine the available range.

Differential pricing, in which finer and finer distinctions must be made among groups of customers, setting their prices based upon the revenue streams they generate, the costs to serve them, and their resulting profitability;

Dis-intermediation or bypass, in which direct interaction eliminates the role previously enjoyed by financial advisors, retail stock brokers, and insurance agents.

Or traditionally

Price (interest rate)‏

Quantity (deposit and loan size)

Quality (reputation-relationship)

Shifting the Productivity Frontier Broader service offerings & higher asset quality Productivity Frontier (Future state of Best Practice)‏ Limited Services To Limited Number Of Customers: Unprofitable How? Generating Growth: Through profitable marketing strategies Improving Asset Quality: Through enhanced risk management Increasing Operating Efficiency: Through technological innovation Lower unit costs per transaction or service

Capabilities To Succeed Key capabilities that are pivotal to Banks’ future success are Flexibility Efficiency Innovation Convenience Experience Security

Key capabilities that are pivotal to Banks’ future success are

Flexibility

Efficiency

Innovation

Convenience

Experience

Security

Technology: Fast Changing Landscape Availability of convergence, a concentration of computer power in a variety of devices such as laptops, dashboard computers, mobile phones and personal digital assistants has led to an explosion in mobility and therefore – higher productivity levels. The growth of the Internet has coincided with another major phenomenon – the introduction of the mobile phone. The growth in the number of cellular subscribers has eclipsed that of any other technological development in the 20 th century, including the Internet. Statistics are proving that mobility will be increasingly important. This year alone, there will be nearly 1200 million mobile subscribers, as against 600 million on-line personal computer users. Microprocessors are rapidly becoming smaller, faster, more power- efficient and less expensive, which means they will be used more often, in more places to create a host of intelligent devices that will increase access to those services. Wired and wireless bandwidth is expanding at a rapid rate, providing the final component necessary to create “universal connectivity” among all of those new devices and the instant availability of the information and services they help to deliver.

Availability of convergence, a concentration of computer power in a variety of devices such as laptops, dashboard computers, mobile phones and personal digital assistants has led to an explosion in mobility and therefore – higher productivity levels.

The growth of the Internet has coincided with another major phenomenon – the introduction of the mobile phone. The growth in the number of cellular subscribers has eclipsed that of any other technological development in the 20 th century, including the Internet. Statistics are proving that mobility will be increasingly important. This year alone, there will be nearly 1200 million mobile subscribers, as against 600 million on-line personal computer users.

Microprocessors are rapidly becoming smaller, faster, more power- efficient and less expensive, which means they will be used more often, in more places to create a host of intelligent devices that will increase access to those services.

Wired and wireless bandwidth is expanding at a rapid rate, providing the final component necessary to create “universal connectivity” among all of those new devices and the instant availability of the information and services they help to deliver.

Technology Evolution in Banking More than most other industries, financial institutions rely on gathering, processing, analysing, and providing information in order to meet the needs of customers. Given the importance of information in banking, it is not surprising that banks were among the earliest adopters of automated information processing technology. The technological revolution in banking actually began in the 1950s, when the first automated bookkeeping machines were installed at a few U.S. banks. Automation in banking became common over the following decade as bankers quickly realized that much of their labour-intensive, information-handling processes could be automated on the computer. A second revolution occurred in the 1970s with the advent of electronic payments technology. Next in the line the world's first Internet bank opened its virtual doors in the fall of 1995. Today, all banks in USA and 80% of banks in Europe offer Internet based banking. The euphoria surrounding the m banking being the latest in the technology advancement in Banking.

More than most other industries, financial institutions rely on gathering, processing, analysing, and providing information in order to meet the needs of customers. Given the importance of information in banking, it is not surprising that banks were among the earliest adopters of automated information processing technology.

The technological revolution in banking actually began in the 1950s, when the first automated bookkeeping machines were installed at a few U.S. banks. Automation in banking became common over the following decade as bankers quickly realized that much of their labour-intensive, information-handling processes could be automated on the computer.

A second revolution occurred in the 1970s with the advent of electronic payments technology.

Next in the line the world's first Internet bank opened its virtual doors in the fall of 1995. Today, all banks in USA and 80% of banks in Europe offer Internet based banking.

The euphoria surrounding the m banking being the latest in the technology advancement in Banking.

Financial Technology Technology Architecture Wide Area Network Local Area Network Mainframe/Parallel Simplex Branch Architecture Call Centre ATM POS SWIFT/MERVA Wireless Mobile Banking Call Centre POS ATM Branch Banking Application Architecture Bank Program & Project Mngt. Change Mngt. Service Mngt. Recovery Mngt. Quality Mngt. Technological Organization & Key Processes Security Mngt. Operations Mngt.

Disruptive Technologies Key technologies which completely changed Banking & Financial Services Industry are… Computerization & Automation Payment and Settlement Systems Electronic Funds Transfer (EFT) Real Time Gross Settlement System (RTGS) Centralized Funds Management System (CFMS) Structured Financial Messaging Solution (SFMS) Monitoring of Clearing Systems Imaging of Instruments Electronic Clearing Services And now “Mobile”

Key technologies which completely changed Banking & Financial Services Industry are…

Computerization & Automation

Payment and Settlement Systems

Electronic Funds Transfer (EFT)

Real Time Gross Settlement System (RTGS)

Centralized Funds Management System (CFMS)

Structured Financial Messaging Solution (SFMS)

Monitoring of Clearing Systems

Imaging of Instruments

Electronic Clearing Services

And now “Mobile”

Delivery Channels Alternative electronic delivery channels provide a major means to cut costs. The proliferation of ATMs, plastic cards, PINs and a totally revised customer value system. The first renaissance was profound but took about 20 years to fully take hold. The second renaissance is driven by the Internet and is now in the early stages and migrating towards a more convenient wireless banking. The most striking difference between the two periods is the financial customer. In the '70s and '80s, financial customers were being led by the financial industry. Today, financial customers are waiting for the industry to catch up to their expectation levels. Average transaction cost Branch 2.95 USD CallCenter 0.56 USD Internet 0.04 USD ATM 0.01 USD Mobile 0.004USD

Alternative electronic delivery channels provide a major means to cut costs. The proliferation of ATMs, plastic cards, PINs and a totally revised customer value system.

The first renaissance was profound but took about 20 years to fully take hold.

The second renaissance is driven by the Internet and is now in the early stages and migrating towards a more convenient wireless banking.

The most striking difference between the two periods is the financial customer. In the '70s and '80s, financial customers were being led by the financial industry. Today, financial customers are waiting for the industry to catch up to their expectation levels.

Delivery Channels - Convenience ATM Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time. Fact: Even today, for a retail bank, an average of 30% of consumers still do not bear an ATM card. Call Centre Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time, Anywhere Banking. Fact:Transaction fulfilled by a live agent over the phone can be as low as 1/6th of that of the branch agent and IVR and automated call handling is ineffective so far. Internet Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time. Anywhere Banking. Fact:Very effective but requirement for computer with network connection, basic computer and browser literacy Mobile Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time. Anywhere Banking. Fact:Mass Appeal Other channels under development are TV, RFID etc.

ATM

Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time.

Fact: Even today, for a retail bank, an average of 30% of consumers still do not bear an ATM card.

Call Centre

Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time, Anywhere Banking.

Fact:Transaction fulfilled by a live agent over the phone can be as low as 1/6th of that of the branch agent and IVR and automated call handling is ineffective so far.

Internet

Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time. Anywhere Banking.

Fact:Very effective but requirement for computer with network connection, basic computer and browser literacy

Mobile

Benefits:Transaction Cost Reduction, 24-hour availability, Saving of Customer Time. Anywhere Banking.

Fact:Mass Appeal

Other channels under development are TV, RFID etc.

Issues in Mobile Internet

Mobile Internet Service Evolution Instant message Ring tone download Directory service Music download Ticket reservation information On-line betting E-Salary Advertising Auction Broking Shopping banking Video communication VOD AOD Game Content-based service Transaction-based service Multimedia service mCommerce Application Wireless infrastructure technologies SMS SIM Tool kit WAP GPRS EDGE UMTS 1998 1999 2000 2001 2002 2003

Mobile Internet Service Evolution Hype Disappointment Current Situation Growth 1998 1999 2000 2001 2002 2003 2004 Business perspective High fee Low quality contents& service Limited CP profit model Capital investment for infrastructure set-up Technology perspective Inconvenient user interface Low speed due to narrow bandwidth Low reliability due to security problem Business perspective Low fee according to packet based method Fierce competition to get customer Technology perspective CDMA 1X, HDR Java, VOD/AOD multimedia technology Enhance reliability from higher security technology like WPKI

Business perspective

High fee

Low quality contents& service

Limited CP profit model

Capital investment for infrastructure set-up

Technology perspective

Inconvenient user interface

Low speed due to narrow bandwidth

Low reliability due to security problem

Business perspective

Low fee according to packet based method

Fierce competition to get customer

Technology perspective

CDMA 1X, HDR

Java, VOD/AOD multimedia technology

Enhance reliability from higher security technology like WPKI

M-Commerce Value Chain OS MICROBROWSER ME/WAP HSCSD GPRS EDGE UMTS MIDDLEWARE (GATEWAY)‏ News Sports Game Stock Traffic CONTENTS PACKAGING MOBILE PHONE COMMUNICATOR Dominant Role Mobile Portal Providers Infrastructure &Equipment Vendors Technology Platform Vendors Application Platform Vendors Application Developers Content Providers Content Aggregators Mobile Network Operators Mobile Service Providers Handset Vendors Service Carriers Financial Facilities

Barriers to M-Commerce Market Aspect Customer Dissatisfaction Inconvenience According To Mobility Weak Profit Structure Compared To Infra Investment Poor Quality Of Content High Price Technology Aspect Security And Privacy Terminal User Interface Reliability Of Network Poor Standardization Bandwidth

Limiting Technological factors Mobile Devices Battery Memory CPU Display Size Networks Bandwidth Interoperability Cell Range Roaming Localisation Upgrade of N/W Upgrade of Device Precision Mobile Middleware Standards Distribution Security Mobile Device Network Gateway

Mobile Devices

Battery

Memory

CPU

Display Size

Networks

Bandwidth

Interoperability

Cell Range

Roaming

Localisation

Upgrade of N/W

Upgrade of Device

Precision

Mobile Middleware

Standards

Distribution

Security

Mobile Device

Network

Gateway

Mobile Advantage : Some Attributes Mobility—users carry cell phones or other mobile devices Broad reach—people can be reached at any time Ubiquity—easier information access in real-time Convenience—devices that store data and have Internet, intranet, extranet connections Instant connectivity—easy and quick connection to Internet, intranets, other mobile devices, databases Personalization—preparation of information for individual consumers Localization of products and services—knowing where the user is located at any given time and match service to them

Mobility—users carry cell phones or other mobile devices

Broad reach—people can be reached at any time

Ubiquity—easier information access in real-time

Convenience—devices that store data and have Internet, intranet, extranet connections

Instant connectivity—easy and quick connection to Internet, intranets, other mobile devices, databases

Personalization—preparation of information for individual consumers

Localization of products and services—knowing where the user is located at any given time and match service to them

People With Mobile Internet Access ( In Millions)‏ 2000 2003 2005 USA 20 120 224 Africa 4 34 78 Asia/Pacific 29 151 282 Western Europe 101 324 409 Rest of the World 7 64 159 World Total 184 737 1,187

House Holds with Mobile/Pc/TV Millions Mobile Subscribers TV Households PCs

1996 1998 2000 2002 2004 0 200 400 600 800 1,000 (millions)‏ Wireline Wireless Internet Seamless Communication

Wireless Challenge Mobile and wireless business applications have definite allure, but these applications can involve few fearsome obstacles: Application design and development Application deployment Network-related issues Building a mobile banking solution is complex, and requires advanced technical skills to bring successful solutions to market quickly. Financial institutions are faced with technical barriers when developing mobile banking solutions, such as integrating: Disparate networks Devices Operating systems In addition, as customers use the public Internet to convey confidential information to highly portable devices, rigorous security issues must be addressed.

Mobile and wireless business applications have definite allure, but these applications can involve few fearsome obstacles:

Application design and development

Application deployment

Network-related issues

Building a mobile banking solution is complex, and requires advanced technical skills to bring successful solutions to market quickly.

Financial institutions are faced with technical barriers when developing mobile banking solutions, such as integrating:

Disparate networks

Devices

Operating systems

In addition, as customers use the public Internet to convey confidential information to highly portable devices, rigorous security issues must be addressed.

Mobile Service Scenarios M- Services Entertainment Music Games Graphics Video Pornography Communications Short Messaging Multimedia Messaging Unified Messaging E-mail Chat Rooms Video - Conferencing Transactions Banking Broking Shopping Auctions Betting Booking & Reservations Mobile Wallet Mobile Purse Information News City Guides Directory Services Maps Traffic And Weather Corporate Information Market Data Marketing & Advertisement Tracking

Entertainment

Music

Games

Graphics

Video

Pornography

Communications

Short Messaging

Multimedia Messaging

Unified Messaging

E-mail

Chat Rooms

Video - Conferencing

Transactions

Banking

Broking

Shopping

Auctions

Betting

Booking & Reservations

Mobile Wallet

Mobile Purse

Information

News

City Guides

Directory Services

Maps

Traffic And Weather

Corporate Information

Market Data

Coupon Shopping point card Governmental Service ID card Driver’s license Transportation Train/Bus ticket Prepaid card Air ticket Bank Bank card Credit card e-money e-Ticket Concert Sports event Contact less IC Card R/W Smart phone UIM Shopping M-Commerce Application

Coupon

Shopping point card

ID card

Driver’s license

Train/Bus ticket

Prepaid card

Air ticket

Bank card

Credit card

e-money

Concert

Sports event

Top Mobile Services - 2005 Users want Financial Services as a core offering in their portfolio source: ARC Group 1268M navigation 469M 206M 614M 775M 785M messaging e-commerce intranet internet entertainment financial services 798M

Mobile Application: Financial Tool Mobile Banking Services Mobile Payment Services Mobile Financial Services

Mobile Banking Services

Mobile Payment Services

Mobile Financial Services

M Banking: Any time and Anywhere Mobile banking is a subset of on-line banking. Based on an existing back office on-line banking operation, mobile banking can be deployed in a straightforward manner. It requires the elements in the form of a private information service, SIM Tool kit or WAP support and security. services mainly considered for offering through mobile banking are: Public Information check exchange rates check interest rates Private Information check account and credit card balances administer credit lines check interest earned on deposits check last transactions Transaction transfer funds pay invoices apply for credit line

Mobile banking is a subset of on-line banking. Based on an existing back office on-line banking operation, mobile banking can be deployed in a straightforward manner. It requires the elements in the form of a private information service, SIM Tool kit or WAP support and security. services mainly considered for offering through mobile banking are:

Public Information

check exchange rates

check interest rates

Private Information

check account and credit card balances

administer credit lines

check interest earned on deposits

check last transactions

Transaction

transfer funds

pay invoices

apply for credit line

Mobile Payment Services “ transform mobile phones into secure, self-contained purchasing tools capable of instantly authorizing payments…” Types: Micropayments Wireless Wallets (M-wallet)‏ Bill Payments Example Swedish Postal Bank - Check Balances/Make Payments & Conduct simple transactions Dagens Industri - Receive Financial Data and Trade on Stockholm Exchange Citibank - Access balances, pay bills & transfer funds using SMS

“ transform mobile phones into secure, self-contained purchasing tools capable of instantly authorizing payments…”

Types:

Micropayments

Wireless Wallets (M-wallet)‏

Bill Payments

Example

Swedish Postal Bank - Check Balances/Make Payments & Conduct simple transactions

Dagens Industri - Receive Financial Data and Trade on Stockholm Exchange

Citibank - Access balances, pay bills & transfer funds using SMS

Mobile Finance Services “ transform mobile phones into information, trading and transaction tool capable of instantly initiate transactions…” Types Mobile Brokerage: This service offers the user information about the stock market and also transaction capabilities. The commands for the service could be given through a voice recognition server, SMS, WAP etc. Notifies users when anything changes or event happens that is of interest to them. Example Merrill Lynch, Fidelity, Charles Schwab and E*Trade

“ transform mobile phones into information, trading and transaction tool capable of instantly initiate transactions…”

Types

Mobile Brokerage: This service offers the user information about the stock market and also transaction capabilities. The commands for the service could be given through a voice recognition server, SMS, WAP etc. Notifies users when anything changes or event happens that is of interest to them.

Example

Merrill Lynch, Fidelity, Charles Schwab and E*Trade

Mobey Forum Financial industry-driven forum founded in May, 2000 Founding members: ABN AMRO, BNP Paribas, Deutsche Bank, HSBC, Nokia, Nordea, Santander Central Hispano, Siemens, USB Goal: to encourage the use of mobile technology in financial services such as payment, remote banking and brokerage Supports dual-chip technology

Financial industry-driven forum founded in May, 2000

Founding members:

ABN AMRO, BNP Paribas, Deutsche Bank, HSBC, Nokia, Nordea, Santander Central Hispano, Siemens, USB

Goal:

to encourage the use of mobile technology in financial services such as payment, remote banking and brokerage

Supports dual-chip technology

Mobile Electronic Transactions (MeT)‏ Founding members: Ericsson, Motorola, Nokia Goals: to establish a framework for secure mobile transactions, the ability to buy goods and services using a mobile device to ensure that interoperable mobile transaction solutions are developed around the world - enabling consumers to access goods and services seamlessly wherever they may be

Founding members:

Ericsson, Motorola, Nokia

Goals:

to establish a framework for secure mobile transactions, the ability to buy goods and services using a mobile device

to ensure that interoperable mobile transaction solutions are developed around the world - enabling consumers to access goods and services seamlessly wherever they may be

Global Open Platform In 1999, organizations interested in issuing multiple application smart cards founded a global alliance under the leadership of Visa. GOP adopted the Open Platform card specifications and terminal framework. Goal: - to promote global smart card use and to assure interoperability of smart card. Interoperability issues have not been completed yet. Some core parts are still left up to vendor ’ s individual interpretation and left optional.

In 1999, organizations interested in issuing multiple application smart cards founded a global alliance under the leadership of Visa.

GOP adopted the Open Platform card specifications and terminal framework.

Goal:

- to promote global smart card use and to assure interoperability of smart card.

Interoperability issues have not been completed yet. Some core parts are still left up to vendor ’ s individual interpretation and left optional.

Mobile Payment Forum Founding members: Amex, JCB, MasterCard, Visa Goal: to develop methods for standardized, secure and authenticated mobile payments, using payment card accounts Supports dual chip technology SIM

Founding members:

Amex, JCB, MasterCard, Visa

Goal:

to develop methods for standardized, secure and authenticated mobile payments, using payment card accounts

Supports dual chip technology

Ingredients of Success

Customer Proposition Convenience Ease of use & enrolment Speed Price Freedom to choose any bank, operator & handset Wide usability of mobile payment methods Security Protection against fraudsters and hackers Assurance of genuine payment destination Privacy Personal information remains confidential

Convenience

Ease of use & enrolment

Speed

Price

Freedom to choose any bank, operator & handset

Wide usability of mobile payment methods

Security

Protection against fraudsters and hackers

Assurance of genuine payment destination

Privacy

Personal information remains confidential

Business Priorities Security Effective customer authentication Issuing bank mandates the level of authentication Transaction-level security Versatility Scalability across all payment opportunities Support to multiple payment products Operator-independent service Merchants’ demands Bank and operator independent payment products Low transaction costs & running costs Non-repudiation to protect from charge-backs

Security

Effective customer authentication

Issuing bank mandates the level of authentication

Transaction-level security

Versatility

Scalability across all payment opportunities

Support to multiple payment products

Operator-independent service

Merchants’ demands

Bank and operator independent payment products

Low transaction costs & running costs

Non-repudiation to protect from charge-backs

Technical Considerations Independence of different players Banking relationship and operator relationship should be independent of each other - avoid walled gardens Handset independence No proprietary technologies - use of open standards Use of existing standards & systems Existing infrastructure must be utilized as much as possible Security: confidentiality, integrity, authentication, non-repudiation

Independence of different players

Banking relationship and operator relationship should be independent of each other - avoid walled gardens

Handset independence

No proprietary technologies - use of open standards

Use of existing standards & systems

Existing infrastructure must be utilized as much as possible

Security: confidentiality, integrity, authentication, non-repudiation

Implementation Keys Cost factors Cost for a bank Cost for a merchant Consumer’s total cost Speed to market Availability of existing solutions Speed of roll-out

Cost factors

Cost for a bank

Cost for a merchant

Consumer’s total cost

Speed to market

Availability of existing solutions

Speed of roll-out

The Story so Far: Some Clicked some got Kicked

Good Experiences: M -Brokerage Four of the top 10 U.S. securities houses Merrill Lynch, Fidelity, Charles Schwab and E*Trade launched mobile services. The Current State: Fidelity has around 100,000 registered users E*Trade less than 25,000 registered users Schwab has about 100,000 registered users During a typical month: About 20,000 to 25,000 of the total Schwab-Wireless users access the service Each user averaging 14 times during a typical month

Four of the top 10 U.S. securities houses

Merrill Lynch, Fidelity, Charles Schwab and E*Trade

launched mobile services.

The Current State:

Fidelity has around 100,000 registered users

E*Trade less than 25,000 registered users

Schwab has about 100,000 registered users

During a typical month:

About 20,000 to 25,000 of the total Schwab-Wireless users access the service

Each user averaging 14 times during a typical month

Bad Experiences: M–Retail Banking Bank of Montreal - launched its Veev in 1999, which allowed customers to conduct a range of banking and investment activities. It was broadened in June 2001 to offer real-time news feeds, tailored news on topics from sports, politics, stocks. On August 31, 2002 Bank of Montreal shut down its wireless banking service. Wells Fargo - launched its mobile retail services in Jan 2001. Service required Web-ready phones with Sprint PCS service and Palm VII or i705 organizers. On September 1, 2002 Wells Fargo says it will discontinue its mobile banking service due to limited adoption. In 2001, Top U.S., Canadian and European banks launched mobile banking services. They were Bank Of America, First Union (US), Quick & Reily, Keybank, Washington Mutual (Canada), and NatWest, Bank of Ireland (Europe). All of these Banks closed done their mobile retail services by late 2001 or early 2002.

Bank of Montreal - launched its Veev in 1999, which allowed customers to conduct a range of banking and investment activities. It was broadened in June 2001 to offer real-time news feeds, tailored news on topics from sports, politics, stocks. On August 31, 2002 Bank of Montreal shut down its wireless banking service.

Wells Fargo - launched its mobile retail services in Jan 2001. Service required Web-ready phones with Sprint PCS service and Palm VII or i705 organizers. On September 1, 2002 Wells Fargo says it will discontinue its mobile banking service due to limited adoption.

In 2001, Top U.S., Canadian and European banks launched mobile banking services. They were Bank Of America, First Union (US), Quick & Reily, Keybank, Washington Mutual (Canada), and NatWest, Bank of Ireland (Europe). All of these Banks closed done their mobile retail services by late 2001 or early 2002.

Conclusion – Lessons Learned

Road to Mobilisation Serve a market Avoid unpleasant surprises Capitalize on location, location, and location Make the most of wait states Fit it in-wherever possible Anticipate and avert problems Do things once

Serve a market

Avoid unpleasant surprises

Capitalize on location, location, and location

Make the most of wait states

Fit it in-wherever possible

Anticipate and avert problems

Do things once

Desirables Convenient user experience: Financial services have to be easy-to-use, fast-to-use and they have to offer value for money. Flexibility: Freedom to choose bank, operator and handset, and change them independently of each other. All three are reissued or renewed in varying cycles. Customer habit enhanced: The habit of using mobile financial services has to be formed within the user by starting service provisioning with today’s technologies and exploiting new technologies as they emerge.

Convenient user experience: Financial services have to be easy-to-use, fast-to-use and they have to offer value for money.

Flexibility: Freedom to choose bank, operator and handset, and change them independently of each other. All three are reissued or renewed in varying cycles.

Customer habit enhanced: The habit of using mobile financial services has to be formed within the user by starting service provisioning with today’s technologies and exploiting new technologies as they emerge.

Features Ease-of-use Protection against fraud Speed/transaction time Price (for customer)‏ Confidence that data will not be forwarded Customer and merchant authentication Assurance of genuine payment destination SIM change independence Standards based (interoperable)‏ Transaction level security

Ease-of-use

Protection against fraud

Speed/transaction time

Price (for customer)‏

Confidence that data will not be forwarded

Customer and merchant authentication

Assurance of genuine payment destination

SIM change independence

Standards based (interoperable)‏

Transaction level security

Merchant acceptances Not operator-specific Use of existing or planned infrastructure Set-up costs per consumer Customer enrolments Cost to implement (merchant)‏ Cost to implement (consumer)‏ Existing solution availability Support of multiple payment products Potential to add brand Features

Merchant acceptances

Not operator-specific

Use of existing or planned infrastructure

Set-up costs per consumer

Customer enrolments

Cost to implement (merchant)‏

Cost to implement (consumer)‏

Existing solution availability

Support of multiple payment products

Potential to add brand

Business Plan - Tool Development Process for new Products & Services No Yes No Yes Market Pull Technology Push Business modelling Concept definition of the product/service Business analysis Marketing plan Definition and use of market analysis Business plan Stop Sustainable ok? Sustainable ok? Market analysis (interest, sustainability, competition, competitive advantage)‏ Service development and investment analysis

Strategy Business Comes Before “e, m or t” Technology is Big, but the Processes are Bigger Build on a Solid Technical Foundation Look Beyond the Business Involve the Right People Create a Clear Plan of Action Refresh the Strategy

Business Comes Before “e, m or t”

Technology is Big, but the Processes are Bigger

Build on a Solid Technical Foundation

Look Beyond the Business

Involve the Right People

Create a Clear Plan of Action

Refresh the Strategy

Vision Brand awareness High customer loyalty New Technology Innovations M - Banking Realization Service Differentiation Customer Solution Infrastructure Investment Core Competence Efficient and effective operation know how Close cooperation with partner Capital capacity for investment

Brand awareness

High customer loyalty

New Technology Innovations

Efficient and effective operation know how

Close cooperation with partner

Capital capacity for investment

Thank You Presentation By:- Deepak Pareek Resource4Business +91 98982 69489 [email_address]