TRENDS IN MOBILE BANKING
thefinanser.co.uk
Chris Skinner
Chairman of the Financial Services Club
chris.skinner@fsclub.co.uk

2

3

4

Too big to ignore
millions
5,000
~5+ B
4,500
Personal Essential Immediate Global
4,000
Networked Ubiquitous Proximate ~3.5 B
3,500
Sophisticated Trusted Operator-Led
3,000
2,500
Mobile devices are no longer just walkie talkies.
They are quickly becoming send/receive payment
2,000 instruments; as such, they represent a major threat
to financial services institutions.
1.5 B
1.4 B
1,500 1.3 B
1B
1,000 2008
2013
500 300M
250K 500K 600K 1M 25M
0
Western Bank Post ATM PoS Broadband PC Landline Credit Television Mobile
Union Branch Office Card
Traditional Channel Touch Points Consumer Technologies
Sources: CGAP Banking on Mobiles: Why, How, for Whom? Oct 2008, Forrester Research, Internet World Statistics, Bank for
International Settlements (BIS) statistics, http://communities-dominate.blogs.com/

Mobile finance is broad, from balance
inquiries to mobile ticketing
Services Definitions
Mobile banking Channel enabling interactions between customers and banks
Information Services
Money Movement Services
Support functions
Alert Services
Marketing and promotion
Proximity Use of mobile devices at point of sale and ATM
payments Primary aim to replace cash
Remote Bill payments/Web payments
payments Digital downloads
Phone top-up
P2P Transfer funds from one person to another
transfers International remittances
Other Services Ticketing and access control
Loyalty vouchers
Source: Perrine Fiorina, Celent, 2009

A spectrum of applications
• SMS Payments • Remittances
• Chip Payments • P2P Payments
• WAP Banking • Merchant Payments
• Browser Banking • Account Balances
• MBPP
• Alerts

SMS TEXT PAYMENTS
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M-PESA
How it works
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

M-PESA
How it works
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

M-PESA
How it works
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

M-PESA
How it works
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

M-PESA
How it works
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

M-PESA
How it works
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

M-PESA
How it works
• M-PESA Agents are:
– Safaricom dealers
– Retailers with a substantial distribution network such as petrol
stations, distributors, supermarkets and registered SMEs
– selected banks and micro-finance institutions
• Sending money
– go to an agent and make a cash deposit
– electronic money is then transfered into your M-PESA account
confirmed by an SMS received by both the agent and the customer
– you can then transfer money to other mobile phone users by SMS
• Receiving money
– go to an M-PESA agent and make an electronic transfer to the agent,
who will exchange this for cash
http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

Phenomenal Growth
Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html

A key source of revenue growth
http://thefinanser.co.uk/fsclub/2007/11/workers-remitta.html

The World Bank estimates that remittances amounted
to $397 billion in 2008 …
… $305 billion went to developing countries involving
190 million migrants or 3.0% of world population.

Big news in the Philippines
The service generated 45,000 As of March 2006, approximately 1.3m of
transactions in its first month. Globe’s 20m subscribers had registered as
Remittances sent on the “SMART G-Cash users, and the G-Cash system was
Padala” service are charged at 1 handling about US$100m per
percent commission on all transactions, day. Remittance companies pay a
and subscribers pay US$0.04 per commission to Globe of approximately
minute for airtime used in the US$0.97 per transaction and the recipient,
transaction. This price is considerably upon collecting the money, pays US$0.21
less expensive than that of traditional for transactions below US$21 (Php 1,000),
wire services and related courier costs. or 1 percent of the transaction amount for
larger transfers. The service can also be
used to send money within the Philippines.
http://thefinanser.co.uk/fsclub/2009/03/numbers-part-twelve-remittances.html

Innovations in payment channels for
remittances: mobile
• Mobile payments
– Plethora of schemes
– Quasi-account facility
– Introductory financial inclusion tool
Still face a number of challenges
– Regulatory inconsistency
– Cash in and cash out
– Customer acceptance internationally
– Role of each stakeholder has yet to be
defined
• Mobile payments will become increasingly
important with estimates of turnover of
$5bn in 2011
Source: Leon Isaacs, DMA, 2009 http://thefinanser.co.uk/fsclub/2009/03/numbers-part-twelve-remittances.html

UMPay, China
100 million users rising to 500 million
http://thefinanser.co.uk/fsclub/2009/03/mobile-payments-in-china.html

CONVENIENCE PAYMENTS
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Oyster Card, London

NTT DoCoMo, Japan
www.balatroltd.com

www.balatroltd.com

MOBILE BANKING
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USSD
Unstructured Supplementary Service Data

Mobile banking adoption has grown very
rapidly in the past five years (South Africa)
Historical Perspective & Projection until end of 2010*
Year Customers Transaction Volume Transaction Value
2001 +- 9 500 +- 410k +- R89m
2003 +- 47 000 +- 2,4 mil pa +- R392mil pa
+- 2.4m +- 21mil pm/252mil
2009 +- R16bn pa
(120 000 pm) pa
+- 63mil pm/630 mil +- R40bn pa
2010 +- 5m
pa $5.3bn @ R7.5
Mobile Channel figures including Messaging
Year Customers SMS Transaction Volume Transaction Value
+- 12m
2009 +- 250mil pm/3.5 bil pa N/A
(450 000 pm)
2010 +-15m +- 500mil pm/7 bil pa N/A
*ABSA market estimates
Source: Christo Vrey, ABSA, 2009 http://thefinanser.co.uk/fsclub/2009/04/africas-mobile-revolution.html

http://thefinanser.co.uk/fsclub/2009/04/africas-mobile-revolution.html

First National Bank, South Africa
In December 2008
FNB sent 67 million SMS and processed 4.5
million transactions worth R600 million
($80 million) through the various
interactive mobile banking services
In February 2009
1.29 million customers registered for the
various interactive mobile banking services
including a new, of which 70,000 were new
customers and 45,000 new customers
started using the full mobile banking
service
Source: Len Pienaar, FNB, 2009

Wizzit, Bank of Athens
Target market: the 16 million
unbanked or underbanked South
Africans representing about 60% of
the country's population. Unlike FNB,
WIZZIT does not require users to have
a bank account and is compatible with
early generation cell phones popular
in low-income communities. The
facility even works with customers
who use pay-as-you-go phones.

The secret of success?
Source: Len Pienaar, FNB, 2009

SMART MOBILE BANKING
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35

An iPhone with Money Built-in
http://thefinanser.co.uk/fsclub/2009/04/mobank-britains-first-pureplay-mobile-bank.html

http://thefinanser.co.uk/fsclub/2008/07/bbva-
the-first.html

http://thefinanser.co.uk/fsclub/2009/03/jibun-bank-the-mobile-only-bank.html

http://thefinanser.co.uk/fsclub/2009/03/
jibun-bank-the-mobile-only-bank.html

http://thefinanser.co.uk/fsclub/2009/03/
jibun-bank-the-mobile-only-bank.html

Quick Response (QR) and
DataMatrix (DM) Codes
http://mobilecodes.nokia.com/index.htm

Mobile Boarding Pass
SMS Text message received:
LH4728, FRA-LHR, 22MAR, Boarding 11:50, Gate B61, Seat 32A
Mobile Boarding Pass
http://www.lufthansa.mobi/mbp/9qxm9h8i0lxnqz3fsx96b3jfc

BANKS THAT ARE MOBILE
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A bank that is mobile …

KEY OBSERVATIONS
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Decentralised Ubiquitous
Access 24*7

Access changes
Source: Richard Johnson, Monitise, 2009

00:00
01:00
02:00
03:00
Monday
04:00
Source: Richard Johnson, Monitise, 2009
05:00
06:00
Tuesday
07:00
08:00
09:00
Wednesday
10:00
11:00
12:00
Thursday
13:00
14:00
Friday
15:00
16:00
17:00
Saturday
18:00
Access changes
19:00
20:00
Sunday
21:00
22:00
23:00

The Precog Bank

www.balatroltd.com

What happens when …?

How good we are at predicting …
“There will be much less face-to-face contact and less use of ATMs, except
for cash. Will banks be needed as financial intermediaries?”
“A bank’s branding disappears. We become a pure commodity where the
customer will only want us to be there and service them via the mobile they
use.”
“Seems like a long way off and would probably need a Virgin or a Wal-Mart
to partner to make it happen.”
“I think this idea is way out there – ten to twenty years – before this plays
out in any sizable way.”
American Bankers at the BAI Show, November 2003

How good we are at predicting …
“There will be much less face-to-face contact and less use of ATMs, except
for cash. Will banks be needed as financial intermediaries?”
“A bank’s branding disappears. We become a pure commodity where the
customer will only want us to be there and service them via the mobile they
use.”
“Seems like a long way off and would probably need a Virgin or a Wal-Mart
to partner to make it happen.”
“I think this idea is way out there – ten to twenty years – before this plays
out in any sizable way.”
American Bankers at the BAI Show, November 2003

How good we are at predicting …
“There will be much less face-to-face contact and less use of ATMs, except
for cash. Will banks be needed as financial intermediaries?”
“A bank’s branding disappears. We become a pure commodity where the
customer will only want us to be there and service them via the mobile they
use.”
“Seems like a long way off and would probably need a Virgin or a Wal-Mart
to partner to make it happen.”
“I think this idea is way out there – ten to twenty years – before this plays
out in any sizable way.”
American Bankers at the BAI Show, November 2003

How good we are at predicting …
“There will be much less face-to-face contact and less use of ATMs, except
for cash. Will banks be needed as financial intermediaries?”
“A bank’s branding disappears. We become a pure commodity where the
customer will only want us to be there and service them via the mobile they
use.”
“Seems like a long way off and would probably need a Virgin or a Wal-Mart
to partner to make it happen.”
“I think this idea is way out there – ten to twenty years – before this plays
out in any sizable way.”
American Bankers at the BAI Show, November 2003

How good we are at predicting …
“There will be much less face-to-face contact and less use of ATMs, except
for cash. Will banks be needed as financial intermediaries?”
“A bank’s branding disappears. We become a pure commodity where the
customer will only want us to be there and service them via the mobile they
use.”
“Seems like a long way off and would probably need a Virgin or a Wal-Mart
to partner to make it happen.”
“I think this idea is way out there – ten to twenty years – before this plays
out in any sizable way.”
American Bankers at the BAI Show, November 2003
“We saw 300% growth from 2007 to 2008 and currently have 2.2 million active
mobile banking customers .” Doug Brown, SVP at Bank of America, April 2009

Bank of America's
Mobile Banking service
• The service was introduced in
May 2007 as part of Bank of
America's suite of Online
Banking services
• Nearly 25 million consumers
bank online with Bank of
America, with over 100,000
users daily on peak high
usage days
• Mobile Banking allows
customers to check balances,
pay bills, transfer funds, view
posted and pending transactions and even locate banking centers and ATMs,
accompanied by maps and directions
– 10 out of 10 to view account balances
– 8 out of 10 review transactions
– 4 out of 10 use their handhelds to transfer funds or pay bills
– Active users increase monthly, with over 4 million account sessions in May 2008
– 66% are under 35 years old and 80% are under 45 years old

Bank of America's
Mobile Banking service
• 29 million online banking
users (February 2009)
• 2.6 million mobile banking
users (May 2009), up from 1
million the year before
• Fewer than 4 million mobile
banking households exist in
the USA
• 40% of active mobile bankers
use an iPhone or iPod touch
(Apple have a 23% share of
the U.S. installed smart
phone base)
• 8% to 10% of mobile bank
users signed up within 90
days of opening a BofA
account

EU agreement
30th June 2008
“The GSMA, through its Pay-Buy-Mobile initiative, and
the EPC will focus on defining a contractual framework
document detailing the minimum set of requirements
for a Trusted Service Manager to interface with banks
and mobile operators.
“A ‘Trusted Service Manager‘ will support banks and
mobile operators in the distribution, configuration and
activation of the bank's payment application on the
UICC (chip card) within users' NFC handsets.”

Mobile Payment Initiatives in
Asian Countries
China Japan
Great Potential with 500 m-Payment with
mio Subscribers Carrier Solution,
Monternet (Carrier Banking & Payment
Solution) , Yeepay (B2B), Provided by Major
SmartPay (B2C), paipai Banks, and Contactless
(Top-up), etc.
(OSAIFU-KEITAI)
Expanding
Thailand
AIS m-payment (Bill South Korea
Payment etc.), True
Banking & Payment
Money (Mobile Wallet)
Services on BankON,
KBank, MBank
Malaysia
Maxis and Maybank
Taiwan
Providing Payment Contactless Solution Trial
including Top-up with VMA, Paypass,
EasyCard
Indonesia Philippines
Banking & Payment Smart (Prepaid reloading
Provided by Major Banks Service)
Singapore
(Information from Web as
EZ-Link on Mobile with
of Dec, 2007) StarHub

Mobile Payments Market
European Mobile Payment initiatives in 2008
Belgium: operators and
Banksys launch SMS Norway: Telenor and banks
payment launch BankID for identification
& authentication
UK: Vodafone and
Citigroup announce Netherlands: NFC mobile
remittance venture payment pilots (Rotterdam,
Amsterdam)
Germany: NFC implementation
in public transport in Frankfurt
area
Austria: operator-owned Paybox
France: Payez Mobile grows to 300,000 mobile
Launch of Mobile NFC payment users
Croatia: 50% of parking
fees paid by moble phone
Italy: card issuer CartaSi
launches ski pass
payment service
ING announced mobile
pilot starting in Rumenia

TRENDS IN MOBILE BANKING
thefinanser.co.uk
Chris Skinner
Chairman of the Financial Services Club
chris.skinner@fsclub.co.uk

USAA is storming up the charts
• Launched July 2008
• Used by 11.4% of the 7 million
USAA members, about 800,000
people
• More than 13 million logins in ten
months, about 3% of its nearly
500 million annual customer
contacts
• This makes USAA the second
largest mobile banking providers
in the country

Multiple Services in Japan
(All Data as of July, 2007 from Diamond)
Category Name Owner Method Mobile Option Launched No. Issued Points of Sale
Suica JR East Prepaid Available Nov. 2001 21.6mio 21,330
PASMO PASMO Prepaid Mar. 2007 4.3mio 1,790
Transport
ICOCA JR West Prepaid Nov. 2003 3mio 270
PiTaPa Surutto Kansai Postpay Aug. 2004 0.8mio 16,000
e-Money Edy BitWallet Prepaid Available Nov. 2001 32.5mio 67,000
nanaco Seven & I Hldgs. Prepaid Available Apr. 2007 4.3mio 12,000
Retail
WAON AEON Prepaid Apr. 2007 0.4mio 4,700
iD NTT Docomo Postpay Available Dec. 2005 3.3mio 170,000
Visa Touch Visa International Sep, 2006
Credit Postpay Available 0.2mio 15,000
Smartplus Mitsubishi UFJ Nicos Dec. 2004
QUICPay JCB Postpay Available Apr. 2005 2.4mio 57,000

The Problem

Converging Technologies