Mobile Financial Services

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Mobile Financial Services

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Mobile Financial Services

  1. 1. TRENDS IN MOBILE BANKING thefinanser.co.uk Chris Skinner Chairman of the Financial Services Club chris.skinner@fsclub.co.uk
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  5. 5. 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/
  6. 6. 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
  7. 7. A spectrum of applications • SMS Payments • Remittances • Chip Payments • P2P Payments • WAP Banking • Merchant Payments • Browser Banking • Account Balances • MBPP • Alerts
  8. 8. SMS TEXT PAYMENTS thefinanser.co.uk
  9. 9. M-PESA How it works Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  10. 10. M-PESA How it works Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  11. 11. M-PESA How it works Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  12. 12. M-PESA How it works Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  13. 13. M-PESA How it works Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  14. 14. M-PESA How it works Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  15. 15. 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
  16. 16. Phenomenal Growth Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
  17. 17. A key source of revenue growth http://thefinanser.co.uk/fsclub/2007/11/workers-remitta.html
  18. 18. 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.
  19. 19. 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
  20. 20. 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
  21. 21. UMPay, China 100 million users rising to 500 million http://thefinanser.co.uk/fsclub/2009/03/mobile-payments-in-china.html
  22. 22. CONVENIENCE PAYMENTS thefinanser.co.uk
  23. 23. Oyster Card, London
  24. 24. NTT DoCoMo, Japan www.balatroltd.com
  25. 25. www.balatroltd.com
  26. 26. MOBILE BANKING thefinanser.co.uk
  27. 27. USSD Unstructured Supplementary Service Data
  28. 28. 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
  29. 29. http://thefinanser.co.uk/fsclub/2009/04/africas-mobile-revolution.html
  30. 30. 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
  31. 31. 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.
  32. 32. The secret of success? Source: Len Pienaar, FNB, 2009
  33. 33. SMART MOBILE BANKING thefinanser.co.uk
  34. 34. 35
  35. 35. An iPhone with Money Built-in http://thefinanser.co.uk/fsclub/2009/04/mobank-britains-first-pureplay-mobile-bank.html
  36. 36. http://thefinanser.co.uk/fsclub/2008/07/bbva- the-first.html
  37. 37. http://thefinanser.co.uk/fsclub/2009/03/jibun-bank-the-mobile-only-bank.html
  38. 38. http://thefinanser.co.uk/fsclub/2009/03/ jibun-bank-the-mobile-only-bank.html
  39. 39. http://thefinanser.co.uk/fsclub/2009/03/ jibun-bank-the-mobile-only-bank.html
  40. 40. Quick Response (QR) and DataMatrix (DM) Codes http://mobilecodes.nokia.com/index.htm
  41. 41. 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
  42. 42. BANKS THAT ARE MOBILE thefinanser.co.uk
  43. 43. A bank that is mobile …
  44. 44. KEY OBSERVATIONS thefinanser.co.uk
  45. 45. Decentralised Ubiquitous Access 24*7
  46. 46. Access changes Source: Richard Johnson, Monitise, 2009
  47. 47. 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
  48. 48. The Precog Bank
  49. 49. www.balatroltd.com
  50. 50. What happens when …?
  51. 51. 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
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. 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
  56. 56. 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
  57. 57. 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
  58. 58. 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.”
  59. 59. 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
  60. 60. 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
  61. 61. TRENDS IN MOBILE BANKING thefinanser.co.uk Chris Skinner Chairman of the Financial Services Club chris.skinner@fsclub.co.uk
  62. 62. 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
  63. 63. 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
  64. 64. The Problem
  65. 65. Converging Technologies

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