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Why all payments innovations are rubbish
 

Why all payments innovations are rubbish

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Latest presentation focused upon the BIG trends in payments, particularly the iPhone revolution in developed economies and the mobile revolution in emerging economies.

Latest presentation focused upon the BIG trends in payments, particularly the iPhone revolution in developed economies and the mobile revolution in emerging economies.

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    Why all payments innovations are rubbish Why all payments innovations are rubbish Presentation Transcript

    • Why all the innovations in payments – including PayPal – are RUBBISH ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Wow numbers! • In 1990, the first web page was created • By late 1992, there were 26 websites in the world • In 1994 there were around 10,000 internet users • In 1998 Google launched with an index of 26 million pages • By 2000, this number increased to 500 million pages • Today, Google indexes over 20 billion internet pages • 20 billion pages = 1+ Exabyte of information = 8,000 years worth of uninterrupted live and streaming television • Google run over a billion searches every day! • Every minute, 15 hours worth of video is sent to YouTube — the equivalent of 86,000 new full length movies every week ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • The world is changing Access Communicating • 1.8 bn internet users • 90tn emails sent in 2009 – 740m Asia – 247bn per day, of which200bn – 420m EU are spam – 250m USA – 1.4bn email users w/w – 180m Latin America • 234m websites (Dec 09) – 70m Africa • 126m blogs (BlogPulse) – 20m Oceania • 27.3m tweets per day (Nov09) Socialising • Facebook Entertaining – 400m users • 1bn videos watched on YouTube – 260bn page views per month every day • 6m per minute/27.4tn per year – 12.2bn watched in USA in Nov09 • MySpace 24bn – 182 videos watched per month per • LinkedIn 2bn average internet user – 2.5bn photos per month (Flickr – 82% of US users watch videos 4bn), or 30bn per year online – 30,000 servers+ ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • The world is changing Access Communicating • 1.8 bn internet users • 90tn emails sent in 2009 – 740m Asia – 247bn per day, of which200bn – 420m Robbing EU are spam – 250m USA – 1.4bn email users w/w – 180m • 148,000 zombie PCs created every day Latin America • 234m websites (Dec 09) – 70m Africa • 2.6m malicious code threats, Jan09(BlogPulse) • 126m blogs – 20m Oceania • 27.3m tweets per day (Nov09) Socialising • Facebook Entertaining – 400m users • 1bn videos watched on YouTube – 260bn page views per month every day • 6m per minute/27.4tn per year – 12.2bn watched in USA in Nov09 • MySpace 24bn – 182 videos watched per month per • LinkedIn 2bn average internet user – 2.5bn photos per month (Flickr – 82% of US users watch videos 4bn), or 30bn per year online – 30,000 servers+ ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • “At Cambridge all the party invitations go out on Facebook ... so if you don’t have Facebook, you won’t get invited to any parties, so you won’t have any sex, so you won’t have any children, so your genes die out.” Ross Anderson, Professor of Security Engineering at Cambridge University
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • The times, they are changing 1959 1969 1979 2009 1989 1999
    • The times, they are changing 1959 1969 1979 1989 1999 2009
    • “The world is changing fast. Big will not beat small anymore. It will be the fast beating the slow.” Rupert Murdoch ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • 2002: Bought by eBay for $1.5 billion, with revenues at $200 million 2005: Revenues reach $1 billion 2008: • Purchases made outside eBay > on eBay • PayPal provides 28.2% of eBay revenue, up from 24.8% a year before. 2009: Q1 revenues $645 million, up 11% YOY; Q2 $669 million, up 11% YOY; Q3 $688 million, up 15% YOY Q4 2009: $796 million, up 28% YOY and transactions exceed $20 billion for first time Q4 2008: 70 million active users, an increase of 23% year-over-year. Q3 2009: 78 million, up 19% YOY 2009: Mobile transactions up from $24 million in 2008 to $140 million 2010: >$75 billion transactions, >$3 billion revenues, $1 billion profit ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • The new social gaming world • Zynga, the social gaming company behind Facebook hits such as Farmville and Mafia Wars, would likely be worth as much as $5 billion • SecondShares project that by 2015 the game maker could have a theoretical market value as high as $10 billion • Zynga is the leader in the social gaming market with 237 million monthly active users and six of the top seven social games. That gives the company more than four times as many monthly active users as Playfish, which was recently bought by Electronic Arts for $400 million. China’s Tencent Holdings is the only online game company that is larger than Zynga, the report says, with 400 million monthly active users. • Based on an estimate of what Zynga likely makes in revenue from the average user, Second Shares projects that the company will pull in about $500 million in revenue this year (Farmville’s about half of the company’s revenue) and could be making as much as $1.6 billion per year in five years. • April 2010, the ask price is about $9/share, implying a market cap for Zynga of $2.8 billion. • November 2009, Pacific Crest Securities said Zynga could be worth as much as $1 billion, given the $400 million that Electronic Arts paid for Playfish. At that point, Inside Social Games estimated that Zynga would have revenue of $210 million for 2009 and $355 million this year, and a statement from the company said that 1 million of its 200 million active monthly users were buying virtual goods. ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Apple All-Time Top 20 Apps All-Time Top Paid Apps All-Time Top Free Apps Crash Bandicoot Nitro Facebook Moto Chaser iPint Virtual Pool Google Earth Cro-Mag Rally PAC-MAN Lite Flick Fishing Touch Hockey: FS5 Koi Pond Labyrinth Lite Edition MONOPOLY Here & Now Lightsaber Unleashed Super Monkey Ball Tap Tap Revenge PocketGuitar Flashlight iCopter Shazam Pocket God Backgrounds London Tube iBowl Bejeweled 2 Crazy Penguin Catapult Texas Hold’em Remote Real Football 2009 BubbleWrap Blocked Audi A4 Driving Challenge Fieldrunners Darts TETRIS eBay Mobile iShoot Last.fm iFart Mobile Movies ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Apple All-Time Top 20 Apps All-Time Top Paid Apps All-Time Top Free Apps Crash Bandicoot Nitro Facebook Moto Chaser iPint Virtual Pool Google Earth Cro-Mag Rally PAC-MAN Lite Flick Fishing Touch Hockey: FS5 Koi Pond Labyrinth Lite Edition MONOPOLY Here & Now Lightsaber Unleashed Super Monkey Ball Tap Tap Revenge PocketGuitar Flashlight iCopter Shazam Pocket God Backgrounds London Tube iBowl Bejeweled 2 Crazy Penguin Catapult Texas Hold’em Remote Real Football 2009 BubbleWrap Blocked Audi A4 Driving Challenge Fieldrunners Darts TETRIS eBay Mobile iShoot Last.fm iFart Mobile Movies ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Microtransactions are the future ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Second Life Economy Hits New All-Time High, Q1 2010 • The Second Life economy kicked off 2010 with strength in many key indicators in Q1. – User-to-User Transactions totaled US$160 million, a 30% increase year-to-year and an all-time high – Total Sales on Xstreet reached US$2.3 million, an 82% increase for the year and a 24% increase over the previous quarter – Total L$ exchanged on the LindeX totalled US$31 million, a 9% yearly increase – Residents active in the Economy reached 517,349 in March, a 2010 high – Monthly Unique Users with Repeat Logins peaked in March at 826,214, a 13% increase year-to-year and an all-time high • Second Life continues to be the largest user-generated virtual economy in the world with US$567 million in user-to- user transactions in 2009 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • The language of QQ http://thechinaobserver.com/2008/12/an-introduction-to-virtual-currency-in-china/ ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • M-PESA is the dominant success story • After 12 months, 20% of Safaricom subscribers were registered – And over 10% of all Kenyan’s had sent or received money on M-PESA – The fastest growing service of any type on any mobile network • November 2009 – World’s biggest mobile money service – Over 10% of Kenya GDP is moved – Over 8 million registered – Over $2 Billion moved to date – Almost 50% of all money transfers – 3.5 million transactions per day • Also in – Tanzania (Vodacom on USSD) – Afghanistan (Roshan using IVR) – Installed in India (16 circles on one system) – Launches imminent in South Africa and Egypt • Concern Worldwide used the service – to distribute aid after the Kenya riots following the 2007 elections ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • M-PESA How it works ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk Source: Olga Morawczynksi, CGAP, 2009 http://thefinanser.co.uk/fsclub/2009/01/mobile-payment-provider-infuriates-banks.html
    • http://thefinanser.co.uk/fsclub/2009/04/africas-mobile-revolution.html ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk 53
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • http://thefinanser.co.uk/fsclub/2009/03/jibun-bank-the-mobile-only-bank.html ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Mobile Developments • By the end of 2010, an estimated 1 billion mobile devices will be accessing the Internet worldwide, and the number of iPhone applications will triple to an astounding 300 thousand – [IDC Predictions 2010: Recovery and Transformation, December 2009] • In the U.S. approximately 65% of the population use mobile devices. By 2012, smart phones are expected to comprise of 39% of those devices – [Yankee Group Link Data: Global Mobile Device Forecast, April 2009] • 36 million U.S. adults currently using mobile banking. By 2014, that number is expected to swell to 99 million, or 45% of all mobile phone users – a compound annual growth rate of 22% – [Javelin Strategy and Research, 2009 Mobile-Banking and Smartphone Forecast: Essential Strategies for a Fast-Growing, Evolving Market, September 2009] ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Mobile Banking Developments • Banks offering mobile financial services can increase new customer acquisition by as much as 60% – PRNewswire: Mercatus Study, December 2009 • 70% of bank centre call volume will come from mobile phones. Half of those calls will be related to basic balance inquiry information – Celent, US Mobile Banking: Beyond the Buzz, May 2009 • Any mobile solution requiring online banking as a prerequisite excludes many, as research indicates that only 40% of the US population use internet banking – [Celent: Tackling Technology-Distribution Tradeoff, September 2007] ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Mobile Developments The most frequent transactions are: 1. Account balance information 2. Transfer fund requests 3. Account transaction information 4. Bill payment 5. Check image view 6. Branch/ATM locator 7. Interest rate information 8. Payments outside network (P2P, external transfers, etc) 9. Customized alerts – Financial Insights: Consumer Banking & Credit Advisory Market Overview, July 2009 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Why all the innovations in payments – including PayPal – are RUBBISH ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Because they are all based on old bank infrastructures ... ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Run by banks protected by bank licences ... ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • 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 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • 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 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • 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 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • 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 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • 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 ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • According to Bank of America • 27% of US households are now mobile only • BofA has 35% of all mobile banking users with 150,000 new mobile customers (Sep), 210,000 (Aug) and 220,000 (July) • BofA added 150,000 new checking accounts due to mobile • 99% of mobile users view balances, 90% view transaction detail, about $10 billion of funds have been moved via mobile transfers/bill pay; 15 million location-based searches being performed (annual run rate) • 33% of mobile banking users monitor accounts daily, 80% weekly (Javelin) • More than 50% of iPhone users have used mobile banking in past 30 days (Javelin Strategy) ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Further Reading Really Useful Stuff • http://thefinanser.co.uk/fsclub/2009/04/a-directory-of-social-finance.html Payments • http://thefinanser.co.uk/fsclub/payments/ Mobile Finance • http://thefinanser.co.uk/fsclub/mobile/ Social Finance • http://thefinanser.co.uk/fsclub/social_networking/ SEPA and the Payment Services Directive • http://thefinanser.co.uk/fsclub/sepa/ The Financial Services Club • http://www.fsclub.co.uk/ ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
    • Chris Skinner www.fsclub.net www.thefinanser.com www.shapingtomorrow.com ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk