Prepared for:     Mobile Banking & Payments for Emerging Asia Summit     Building blocks for the     Mobile Financial Serv...
Mobile Financial Services       (MFS)Prepared for: Mobile Banking & Payments for Emerging Asia Summit   Date: 10 October 2...
Hot Topics Introduction                                           2012 Mobile Banking Summit in Bali                      ...
What is Mobile Financial Service?                               Connecting consumers financially through mobile   Identify...
Mobile Banking   Mobile Banking ecosystem roles and constraint / limitation      Actor                                    ...
MFS –       The 6-Block Success FactorPrepared for: Mobile Banking & Payments for Emerging Asia Summit   Date: 10 October ...
Success Factor Analysis   The 6 building blocks to a successful mobile banking model for emerging markets            Count...
Success Factor–       Demand SidePrepared for: Mobile Banking & Payments for Emerging Asia Summit   Date: 10 October 2012 ...
Demand Side Factors    Building the first 2 essential blocks    Potential Demands Block      What are the products?      B...
Potential Demand Block (1)    Build Product Idea, build Product Concept and build Product Image/Branding  Generally done o...
Potential Demand Block (2)            Criteria                 India          Indonesia          Malaysia        Philippin...
Consumer Perception/Readiness     Perform a consumer Product Concept testing (qualitative and quantitative study)         ...
Success Factor –       Supply SidePrepared for: Mobile Banking & Payments for Emerging Asia Summit   Date: 10 October 2012...
Supply Side Factors (1)                                           4 Blocks to shape the demand    Social Economic Context ...
Supply Side Factors (2)                                           4 Blocks to shape the demand    Access to Financial Serv...
Socio-Economic Context      Country        Urbanization Level (Rate of urbanization)       India                          ...
Regulations and Business Environment (2)                                      Philippines  India                          ...
Regulations and Business Environment (4)    Qualitative score to assess the country readiness                             ...
Existing Access to Financial Services                                                                                     ...
Mobile Market Situation (2)                                                      Average competitiveness                  ...
Payment Instruments       Business ModelPrepared for: Mobile Banking & Payments for Emerging Asia Summit   Date: 10 Octobe...
Mobile Banking Service Ahead                                                     The 3 Phases Forward    Higher    Value  ...
How does Mobile Payment Work? (1/3)                                                      Bank Centric Model               ...
How does Mobile Payment Work? (2/3)                                                      Bank Centric Model               ...
How does Mobile Payment Work? (3/3)                                                     Collaborative Model               ...
Conclusion     By 2015, estimated mobile penetration rate is 101% with                                                    ...
Prepared for:     Mobile Banking & Payments for Emerging Asia Summit     Building blocks for the     Mobile Financial Serv...
Hot Topics Introduction                                       2012 Mobile Banking Summit in Bali                          ...
Workshop Approach             Focus Group Discussion - FGDPrepared for: Mobile Banking & Payments for Emerging Asia Summit...
A 120-min workshop                            From 6 Building Blocks to Strategic Business Plan    The FGD approach      4...
Strategic Business Plan Framework                                 Selection on business plan attributes framework       Ex...
A Mock Group                                     Our team, our mission and our deliverables    “Our company is on of the l...
Strategic Focus                                                  Objective and Mission    The objective       What do we w...
Goal                                                   Highest Priority Goals    Goal One.      Eg. The 1st cross-border m...
Social Economic-Context                                                      MARKET ANALYSIS    What are the industrys eco...
Demand Factors            Demand Analysis and Testing Customer Readiness/User Perception    Demand Potential      What is ...
Product                                                         A quick check         Describe our current and near-future...
Regulation and Business Environment                                        Stakeholder relationship and alliances       Ar...
Infrastructure/Telco and Access to Financial Service                                        Connecting the customer and bu...
Group work                                                            Key Findings                                        ...
A Mock Group work                        Sample - Malaysia Mobile Payment business strategic plan  Early adopter predomina...
Summary                                                   STRATEGIC ACTION PLAN        Workshop FGD Key Findings        Ke...
Strategic Business Plan Framework                                                      Executive SummaryPrepared for: Mobi...
Conclusion                                                What’s next and takeaways?         Where to begin Demand Side or...
Prepared for: Mobile Banking & Payments for Emerging Asia Summit   Date: 10 October 2012   Page 51
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121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Building blocks for the Mobile Financial Services Ecosystem in Emerging Markets

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Held in Bali, Indonesia, the “Mobile Banking and Payments for Emerging Asia Summit 2012” gathered many thought leaders from the telecommunications and banking industries; unveiling the potential of mobile channels penetrating Asia’s emerging markets. Spire Research and Consulting was honored to be invited as a post-conference workshop leader at this prestigious event.

Representing Spire Research and Consulting, Jeffery Bahar, Deputy Chief Executive Officer and Yap Far Loon, Business Development Director, Telecommunication, led a post-conference workshop in the “Mobile Banking and Payments for Emerging Asia Summit 2012” held in Bali, Indonesia. The event brought together many eminent industry experts and marketers from the telecommunications and banking industries – highlighting the potential of mobile banking and payments in emerging economies.

Read more about the event coverage here:
http://www.spireresearch.com/newsroom/events/spire-joins-mobile-banking-and-payments-for-emerging-asia-summit-2012-as-workshop-leader/

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  • 1. Mobile Transfer aka P2P or mobile money transfer services - MMT
  • Social Economic Context Depending on the social and economic factors, MFS providers could identify the consumer groups and the mobile services pertaining to that group. As for the Gini Index, it measures the income/wealth distribution equality in a country. A 0 index means perfect equality. In the context of MFS, Gini index and urbanization level could help in pushing the expenditures towards target services. Singapore is a highly urbanized country, with high income disparity. But since the facilities and services are available to people, the major task is to identify the segment of potential consumer. It helps assess the spending patterns of the population as it helps create a virtual distinction between the income groups. Access to financial services: Banking services penetration in a country helps in assessing the availability of basic financial services to the people. Lack of it requires the service providers or the government to expand those services or provide with alternate solutions. And mobile banking could be the alternate solution to the unbanked low income population in the economy.
  • Product Idea is an idean for a possible product offering to the market Product Concept is a detailed version of the idea stated in meaningful consumer terms Product Image/Branding is the way consumers perceive an actual or potential product
  • India: Within the current framework of MFS, advanced financial services and loan payment services are not available through mobile applications (of banks as well as of MNOs/third party) Through the mobile apps for banking institutions like State Bank Freedom, only account transfer (of the same bank as well as other banks through NEFT scheme of RBI), balance inquiry, airtime top-up, bill and retail payments can be made. No financial services of bank can be performed through those applications. Mobile money transfer in allowed only for domestic transactions. International money transfer is not available. With a variety of government disbursement and payment schemes, mobile technology could become an alternate service to explore. There are tie-ups between commodity exchanges and mobile service providers for the dissemination of crop information through text messages Indonesia: At present, Indonesia provides similar mobile financial services as India. With a variety of government disbursement and payment schemes, mobile technology could become an alternate service to explore. Malaysia: Apart from bill payment, P2P transfers, basic banking services and retail payments, Malaysia offers public service access through mobile phone. There have been significant improvement in contactless infrastructure like ‘Touch n Go’ in the country. With inbound cross border remittance forming ~0.5% of the GDP, Maxis, the leading mobile operator, has tied up with western union to bank on the cross-border remittances. Philippines: Bill payments, retail payments, banking services and money transfers(including remittances) One problem that exists is the non-interchangeability of mobile wallet money. Currencies of the two major mobile wallets Globe and Smart are not interchangeable. One distinct feature of MFS in Philippines is the G2P payments. Conditional cash transfers are also made through mobile phones. Transactions are processed through Green Bank’s mobile banking facility and Globe’s GCash platform. Singapore: Singapore is the most developed in terms of MFS, it rolled out mass deployment of NFC based payment services last month.
  • Regulation: In order to assess the regulatory situation for the mobile financial services, the openness and certainty of each country is judged. Openness: Openness suggests the extent to which a country’s legal, policy and regulatory environment is conducive to innovation. Certainty: Certainty defines the stability of the regulatory environment. Position 1: High certainty, high openness: Best position for innovation. Position 2: High openness, low certainty: Requires strong motivation and risk-taking approach. Position 3: High certainty, low openness: Need regulation reforms Position 4: Low certainty, low openness: Need regulation reforms India:   Payment in India is divided into closed, semi-closed, semi-open and open instruments. The first two are applicable for banking and MFIs and do not permit cash withdrawal or redemption by the holder. Semi-open is allowed to MNOs as it allows purchase of goods, airtime recharge and mobile prepaid services.   Relaxation in transaction limit from 50,000 per day to unlimited. Allowing non- banks to offer banking services as business correspondents appointed by banks only and limited involvement of MNO in providing services. MNO’S cannot operate by themselves to provide the services. Citizens can soon open a ‘mobile linked no frill account for financial transaction. The controversial government distribution of 2G licenses has created an environment of uncertainty and regulatory setback and Uncertainty . India is rated low in the scale of ease of doing business, thus relatively lower openness than other countries. Indonesia: This shows the low openness relative to other countries, but Indonesia has better stability as per the government involvement is concerned. Philippines: Below average in measures like burden of government regulations in business and having well developed laws of IT and communication. Government involvement in MFS initiatives like tax and social security distribution provides certainty of the environment and growth of the sector. Tax benefit schemes for MFS providers by government create promotes the industry and creates a stable and certain environment. Value of mobile wallets can be considered as deposits indicating openness in the services. There are no international mobile money transfer regulations. The cross-border mobile remittances are allowed but without regulations, the market becomes risky. Malaysia: Malaysia has high financial sector liberalization and openness in the economy, relative to India and Indonesia. The taxation on mobile services is also lower at 5% while India has a tax regime of 12% and Indonesia 8%.
  • High financial literacy and access to financial services could help in defining the extent of need of MFS. If the financial services through traditional modes have reached most of the population, then MFS gets positioned as a complimentary service . People can use the traditional as well as mobile services with similar ease. But when the banking is limited to a certain percentage of people, MFS provides an alternative solution to reach the untapped population . Financial literacy among people would then help in identifying the kind of services that consumer friendly. ATM and payment card users would have to made to switch to MFS. Non-users of payment cards would be less reluctant in using MFS since there is no opportunity cost for them and they have not identified the advantages of using a card. India: With low ATM and Payment cards penetration, composite access to financial services (includes services by banks, MFIs) is at 48%. Though the numbers have improved over the last 7 years with the popularity of micro-finance institutes and financial inclusion correspondents, banks still hesitate to invest in risky territories. Indonesia: It is higher than India on financial literacy but access to financial services is limited to only 40% of the population. Thus the demand for services is already there. Malaysia: Malaysia has a higher banking penetration than the other countries, except Singapore but half the mobile penetration levels. More than half the population in Malaysia has composite access to financial services. With higher access to banking services and payment card penetration relative to India, Indonesia and Philippines, it is necessary to move the card holders to mobile services. Philippines: Philippines, similar to Indonesia and Malaysia has 65-70% financial literacy rate with 27% banking penetration rate. High literacy rate combined with high mobile penetration rate allows leveraging for the absence of banking facility. Since the majority of consumers are financially aware, there awareness and needs could be met through mobile services (with 96% mobile penetration). Singapore: Singapore has the highest financial literacy rate among the five countries (higher in global ranking also).
  • The state of mobile market influences the m-money sector in two ways: The competitiveness and health of the sector determines the appetite and capacity of MNOs to invest in an m-money business, The dominance of a single operator can be conducive to an m-money business, whereas a more competitive market needs to address the issue of interoperability to create economies of scale. The HHI Index Herfindahl-Hirschman Index is a standard measure of competitive intensity in a market, based on the number of players in the market and their respective market shares. Markets are measured on a scale of 0 to 1, where markets close to 1 have the lowest competitive intensity while those close to 0 are the most competitive India is a highly competitive market in terms of existing MNOs in the country, which could lead to decreasing revenues of the companies. With more than 10 companies competing for the consumer base, gaining economies of scale is a tough task. The major MNOs have managed to that till now, but reaching saturation in urban years. To make profit in the long run and sustain the customers (and reduce churn rate), they need to move into new horizons and markets. At present, mobile service providers offer basic financial services like airtime recharge, balance enquiry, transaction statements and bill payments. Indonesia also has a highly competitive market with ~10 players existing in the market. But the majority share of the market is retained by the major players like Telecomsel, Indosat and XL. Malaysia, Philippines and Singapore have lesser number of players in the market with 3 players dominating the market share. Philippines have Globe and Smart which have taken over a lot of small companies reducing the competition in the markets. This allows both the companies to provide the services more according to their business plans     Comparing the competitiveness with broadband data: India and Indonesia have a relatively competitive market than Malaysia, Philippines and Singapore, yet India has one of the lowest mobile broadband speeds. According to a study by Google, measuring the internet speeds across 50 countries as the average (median) time for loading webpages, India and Philippines were the lowest among the five countries with 16.4 and 16.9 seconds respectively. Also, even with highly competitive mobile operator markets in India and Indonesia, POS device penetration is very low at 5% and 1% respectively. Even when the competition is high, penetration levels are low providing ample opportunity for the operators to gain economies of scale with the existing unreached population. On the other hand, Philippines, which have the lowest competition in the mobile operators market, suggest the highest POS penetration. At Google, we are passionate about speed and making the web faster, and from first hand experience, we are glad to see that many website owners share the same goal. A faster web is better for both users and businesses - faster pages lead to better user experience and improved conversions. Global Site Speed Overview: How Fast Are Websites Around The World The first step in optimizing any process is to establish and obtain an accurate set of measurement data. In the context of optimizing the user experience on the web, it means that we need to measure the speed of a page as seen by your real users: users network, device type and speed, geographic location, cache sizes, and a dozen other factors all come into play. 
  • The state of mobile market influences the m-money sector in two ways: The competitiveness and health of the sector determines the appetite and capacity of MNOs to invest in an m-money business, The dominance of a single operator can be conducive to an m-money business, whereas a more competitive market needs to address the issue of interoperability to create economies of scale. The HHI Index Herfindahl-Hirschman Index is a standard measure of competitive intensity in a market, based on the number of players in the market and their respective market shares. Markets are measured on a scale of 0 to 1, where markets close to 1 have the lowest competitive intensity while those close to 0 are the most competitive India is a highly competitive market in terms of existing MNOs in the country, which could lead to decreasing revenues of the companies. With more than 10 companies competing for the consumer base, gaining economies of scale is a tough task. The major MNOs have managed to that till now, but reaching saturation in urban years. To make profit in the long run and sustain the customers (and reduce churn rate), they need to move into new horizons and markets. At present, mobile service providers offer basic financial services like airtime recharge, balance enquiry, transaction statements and bill payments. Indonesia also has a highly competitive market with ~10 players existing in the market. But the majority share of the market is retained by the major players like Telecomsel, Indosat and XL. Malaysia, Philippines and Singapore have lesser number of players in the market with 3 players dominating the market share. Philippines have Globe and Smart which have taken over a lot of small companies reducing the competition in the markets. This allows both the companies to provide the services more according to their business plans     Comparing the competitiveness with broadband data: India and Indonesia have a relatively competitive market than Malaysia, Philippines and Singapore, yet India has one of the lowest mobile broadband speeds. According to a study by Google, measuring the internet speeds across 50 countries as the average (median) time for loading webpages, India and Philippines were the lowest among the five countries with 16.4 and 16.9 seconds respectively. Also, even with highly competitive mobile operator markets in India and Indonesia, POS device penetration is very low at 5% and 1% respectively. Even when the competition is high, penetration levels are low providing ample opportunity for the operators to gain economies of scale with the existing unreached population. On the other hand, Philippines, which have the lowest competition in the mobile operators market, suggest the highest POS penetration. At Google, we are passionate about speed and making the web faster, and from first hand experience, we are glad to see that many website owners share the same goal. A faster web is better for both users and businesses - faster pages lead to better user experience and improved conversions. Global Site Speed Overview: How Fast Are Websites Around The World The first step in optimizing any process is to establish and obtain an accurate set of measurement data. In the context of optimizing the user experience on the web, it means that we need to measure the speed of a page as seen by your real users: users network, device type and speed, geographic location, cache sizes, and a dozen other factors all come into play. 
  • 3 rd party US eBay’s PayPal, US Obopay and US Cashedge
  • Answers to the above questions provide a start-point for preparing a statement that clearly positions the company in the minds of key stakeholders and customers What products and services do we deliver? This is a mobile payment service called mobile wallet that will act as a complement payment for cash in online e-commerce purchase such as food delivery, fashion and clothing delivery. Where and when do we deliver our products and services? Upon the successful payment transactions service in 1 min, the e-commerce customer (i.e. merchant) will deliver the product to the customers doorstep Which customer groups are our primary groups? The customers are users (mobile subscribers) and business owners (i.e. online merchant ) Where are our primary customers Segmentation for Early Adopters (EA) and Mass Market (MM) What tangible value do our products and services deliver to customers? Convenient, Fast, Easy, Remote for customers What is our competitive advantage? Access to 20 million mobile subscribers and 1,000 ecommerce online merchants What additional community and environmental benefits do we generate? After each goal has been clearly formulated develop a set of supporting objectives and strategies. Objectives define the best pathway for achieving each goal. Strategies define the pathway for achieving each objective. Objectives and strategies are also written using the SMAAART acronym - Specific, Measurable, Action-orientated, Affordable, Achievable, and Time-bound. The final step in developing an interacting hierarchy/network of focussed action is the Task plan. This plan allocates people and resources to completing those tasks required for achieving each strategy. Vital budget and resource considerations are integrated in to the overall planning process to ensure all planned actions are affordable .   The interacting hierarchy/network of action for achieving the aim of the plan is illustrated below. The hierarchy/network of focussed action is not a rigid structure and, where possible, should be adapted to the each situation to ensure it provides fast, effective and relatively simple action pathways for delivering results of significance .
  • Goal One . The 1 st cross-border mobile wallet provider across 3 countries in Asia Pacific in 5 years Goal Two To simultaneously launch mobile wallet access to 50% mobile subscriber for 3 countries as an alternative payment for e-commerce online purchase, domestic money transfer and information access for banking facility in 6 months. To grow the mobile wallet access from 3 countries to 6 countries in 2 years Goal Three To enable the mobile wallet service with cross border facility to 3 countries in APAC in year 1 To enable and grow the cross border facility the countries from 3 to 6 in year 3.
  • After each goal has been clearly formulated develop a set of supporting objectives and strategies. Objectives define the best pathway for achieving each goal. Strategies define the pathway for achieving each objective. Objectives and strategies are also written using the SMAAART acronym - Specific, Measurable, Action-orientated, Affordable, Achievable, and Time-bound. The final step in developing an interacting hierarchy/network of focussed action is the Task plan. This plan allocates people and resources to completing those tasks required for achieving each strategy. Vital budget and resource considerations are integrated in to the overall planning process to ensure all planned actions are affordable .   The interacting hierarchy/network of action for achieving the aim of the plan is illustrated below. The hierarchy/network of focussed action is not a rigid structure and, where possible, should be adapted to the each situation to ensure it provides fast, effective and relatively simple action pathways for delivering results of significance .
  • 121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Building blocks for the Mobile Financial Services Ecosystem in Emerging Markets

    1. 1. Prepared for: Mobile Banking & Payments for Emerging Asia Summit Building blocks for the Mobile Financial Services Ecosystem in Emerging Markets Prepared by: Spire Research & Consulting Date: 10 October 2012Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 1
    2. 2. Mobile Financial Services (MFS)Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 2
    3. 3. Hot Topics Introduction 2012 Mobile Banking Summit in Bali Payment via SMS, USSD Point of Sales Bank-led or Telco-led Branchless bank NFC m-Pesa Consumer Adoption and Usage Deposit Taking P2P Transfer Payment Rural banking Inter-operability Regulation Cash In/cash Out Money Float Agents/Distribution Market Assessment Mobile Money Barriers Mobile Wallet KYC Mobile Money AML/CML User Perception Remittance Focus Group Discussion Broadband iPhone apps SMART money Mobile Payment Customer Readiness Financial Inclusion GCASH Cross border transferPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 3
    4. 4. What is Mobile Financial Service? Connecting consumers financially through mobile Identifying types of Mobile Financial Services Mobile Transfer Value Proposition (over payment cards) Domestic remittance International remittance Two-way interaction Cash-in or Cash-out on between merchant and mobile wallets consumer Financial Accessibility in remote Mobile Payment Services location Bill payments No mandatory requirement Public facility access of POS terminal Retail purchase Airtime recharge Social security payments Mobile Banking Alternative form Compliment Form Financial services (loan, In developing countries: In developed countries: savings and bank transfer) Limited number of payment Wide range of payment Account management instruments instruments Information services Larger unbanked Lower unbanked population (balance, transaction population records) Poor financial infrastructure Well-developed financial Micro-insurance and credit infrastructurePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 4
    5. 5. Mobile Banking Mobile Banking ecosystem roles and constraint / limitation  Actor Roles Limitation and Constraint Provide infrastructure and communications service Regulatory limitations on providing Provide agent oversight and quality control financial services Issue e-money (where permitted by law) Shareholder pressure for faster, higher MNO Exercise leadership in drawing mobile money returns ecosystem together Strategic focus that may not include Advise other businesses (banks, utilities, etc.) on their mobile money mobile money strategies Offer banking services via mobile Narrow customer base Hold float or accounts in customers’ names Lack experience with or interest in Financial Handle cross-border transactions, manage foreign low-income customers Institution exchange risk Stringent regulatory requirements with Ensure compliance with financial sector regulation significant compliance burdens Perform cash-in and cash-out functions Liquidity shortfalls Handle account opening procedures, including Basic business skill gaps customer due diligence Agent Report suspicious transactions in accordance with Lack customer trust (in some cases) Limited ability to partner with large AML/CFT requirements corporations Identify potential new mobile money applications Provide enabling environment for mobile money Lack experience with convergence of Protect stability of financial system financial and telecommunications Regulator Demonstrate leadership to encourage and protect regulatory schemes behavior change Lack of financial and technical capacity Lack awareness Consumer Use mobile money to improve their lives Limited financial literacy Cultural and psychological resistancePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 5
    6. 6. MFS – The 6-Block Success FactorPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 8
    7. 7. Success Factor Analysis The 6 building blocks to a successful mobile banking model for emerging markets Country 6 Building Blocks Potential Demand India Demand Side Factors User Perception/Consumer Readiness Indonesia Socio-Economic Context Malaysia Regulation and Business Environment Viability of MFS Supply Side Competitive Factors Philippines Access to Financial Strategy Decision Services Existing Mobile Market Singapore Situation/InfrastructurePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 9
    8. 8. Success Factor– Demand SidePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 10
    9. 9. Demand Side Factors Building the first 2 essential blocks Potential Demands Block What are the products? Build Product Idea, build Product Concept and build Product Image/Branding Consumer Perception/Readiness Block Perform a Product Concept testing (qualitative and quantitative study) Perform a Product Image/Branding testing (qualitative and quantitative study)Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 11
    10. 10. Potential Demand Block (1) Build Product Idea, build Product Concept and build Product Image/Branding Generally done over-the-counter, in long queues Airtime recharge on mobile phones is provided by every In India, State Bank provide the option of bill payments MNO as the basic service for like electricity etc. on mobile phones after registering mobile users. for the service at the bank branch. Services like account balance enquiry, balance transfers, mini-statements and cheque book request etc. High domestic and cross-border migration indicates Retail sector experiences the potential demand maximum exchange of cash or card transactions. Today, mobile money as a substitute Example: Globe in has huge potential. Philippines allow cross-border transactions Example: Telkomsel in Indonesia provide e-wallet service without bank involvement Value proposition is to provide cost-effective, time saving and structured service to Increasing need for faster services like economically underprivileged transport creates a massive demand. Government’s initiatives to provide NFC Example: Philippines government enabled transport access could be banked payments on like in Singapore.Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 12
    11. 11. Potential Demand Block (2) Criteria India Indonesia Malaysia Philippines Singapore Vietnam Bill Payments       P2P Transfers      Banking Services       G2P Transfers  Public Services Access   P2B Payments       Airtime Recharge       India Philippines Only domestic transfers are available Currencies of two-major mobile wallets, Smart and Globe, are not Loan repayment is not available. interchangeable Limited mobile financial literacy hinders growth Mobile operators have struck deals with banks to provide micro- loans and insurance. Like Globe Indonesia Only domestic transfers are available Singapore Funds on one Telcos mobile wallet are not Singapore has the most development infrastructure though there is transferable to another’s wallet lack of trust among the consumers High frequency of fraud and limited trust. Singapore launched the NFC tap and pay services this year on mass-scale Malaysia Significant improvements in contactless Vietnam infrastructure like ‘Touch n go’ In 2011, Momo, the first mobile wallet by m-service was launched in Western Union and Maxis collaborated to provide partnership with Vinaphone cross-border remittances P2P services will be included in the mobile wallet services once Though the volume of transactions is growing, approved by the Sate Bank of Vietnam margin is low Cash-in and cash-out services in the wallet to be done by bank onlyPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 13
    12. 12. Consumer Perception/Readiness Perform a consumer Product Concept testing (qualitative and quantitative study) Familiar1 Willing1 Using1 Attributes P2P POS M-Commerce P2P POS M-Commerce P2P POS M-Commerce India 14% 10% 14% 14% 8% 12% 5% 5% 6% Indonesia 4% 2% 4% 8% 6% 6% 1% 1% 2% Malaysia 9% 6% 9% 13% 8% 13% 6% 3% 7% Philippines 43% 26% `36% 47% 35% 39% 15% 11% 17% Singapore 15% 11% 30% 15% 15% 23% 5% 3% 12% Vietnam 16% 7% 7% 33% 27% 26% 17% 13% 14% Consumer Readiness India Indonesia Malaysia Philippines Singapore Vietnam P2P payments are Willingness to use Predominantly P2P and mobile Predominantly Usage of MFS is the used more by P2P services is the high income male payments are young highest within the higher income most consumers more popular in professionals (25- group males between Willingness to use between the ages Philippines 30 years) with high Willingness to use ages of 18-34 MFS is more than of 18-34 Willingness to use income MFS is higher than POS and M- the familiarity of Familiarity levels MFS is more than Frequent users of its usage, commerce is also services among people is the familiarity online purchasing providing potential skewed towards Indonesian lower and internet of unmet demand young male consumers have browsing Low mobile population still not been Less willing to use coverage might Familiarity and persuaded of the mobiles for hamper growth willingness of the value of MFS remittance or at services are similar POSSource: Master Card Mobile Readiness Study, http://mobilereadiness.mastercard.com/the-index/Note: 1The totals will not add up-tp 100% as there is an overlap between, Familiarity, Willingness, and usage of the MFSPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 14
    13. 13. Success Factor – Supply SidePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 15
    14. 14. Supply Side Factors (1) 4 Blocks to shape the demand Social Economic Context Block Depending on the social and economic factors, MFS providers could identify the consumer groups and the mobile services Regulation and Business Environment Block Assess a country’s legal and government rulings efficiency on how they interact with business in areas of communication and technology. In order to assess the regulatory situation for the mobile financial services, the openness and certainty of each country is judged.Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 16
    15. 15. Supply Side Factors (2) 4 Blocks to shape the demand Access to Financial Services Block Identify the level of consumer financial service development in terms of accessibility and affordability of service Banking services penetration in a country helps in assessing the availability of basic financial services to the people. Lack of it requires the service providers or the government to expand those services or provide with alternate solutions Existing Mobile Market Situation Block Identify mobile phone industry development such as mobile penetration, network coverage, competitiveness level of service sophistication Accessing the state of mobile market influences on m-money/e-wallet, POS penetrationPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 17
    16. 16. Socio-Economic Context Country Urbanization Level (Rate of urbanization) India 30% (2.4%) Indonesia 44% (1.7%) CHINA Malaysia 72% (2.4%) GDP: 7.29 trillion SOUTH KOREA GDP/ capita: 5,430 GDP: 1.1 trillion Philippines 49% (2.3%) Population: 1.3 billion GDP/ capita: 22,424 Mobile subscribers: 1.02 B Population: 49.7 million Singapore 100% (0.9%) (as of April 2012) Mobile subscribers: 52.7M Mobile Penetration: 78.4% (as in 2012) Mobile Penetration: 106% PAKISTAN GDP: 0.21 trillion GDP/ capita: 1,194 VIETNAM Population: 0.17 billion GDP: 0.12 trillion JAPAN Mobile Subscribers: 120M GDP/ capita: 1,411 GDP: 5.86 trillion (as of Aug 2012) Population: 87.84 million GDP/ capita: 45,903 Mobile Penetration: 70.5% Mobile subscribers: 112 M Population: 0.12 billion (as in 2011) Mobile subscribers: 260M INDIA Mobile Penetration: 126% (as in 2012) GDP: 1.8 trillion Mobile Penetration: 96% GDP/ capita: 1,489 THAILAND   Population: 1.2 billion GDP: 0.34 trillion Mobile Subscribers:679.05M GDP/ capita: 4,972 (as of July2012) Population: 69 million Mobile Penetration: 61% Mobile subscribers: 79M PHILIPPINES (as in 2012) GDP: 0.22 trillion MALAYSIA Mobile Penetration: 114.4% GDP/ capita: 2,370 GDP: 0.27 trillion Population: 94.8 million GDP/ capita: 9,656 Mobile subscribers: 86M (as Population: 28 million in 2011) Mobile subscribers: 30M (as Mobile Penetration: 94% in 2012) SINGAPORE Mobile Penetration: 120% INDONESIA GDP: 0.23 trillion GDP: 0.84 trillion GDP/ capita: 60,500 GDP/ capita: 3,495 Population: 5.3 million Population: 0.24 billion Mobile subscribers: 6.5M Mobile subscribers: 260M (as in 2009) All currency values are in USD * (as in 2012) Mobile Penetration: 196% Mobile penetration rate is of 2011. Mobile Penetration: 88%  Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 18
    17. 17. Regulations and Business Environment (2) Philippines India Low ease of enrollment for MFS agents Low financial sector Regulatory coverage rate requirement from MNOs Indonesia liberalization Value of mobile wallets are allowed to be considered as Non-banks are allowed to Limited non-bank MFS deposits issue e-money but are licensing No international mobile money transfer regulations restricted to retail payments No existing consumer Government has provided tax payment schemes to P2P transfers require MNOs protection policy leverage MFS to get a separate High payment network remittance license quality and interoperability Agents could not be used Vey low ease of doing Certainty – Openness Matrix to provide financial services business High openness by banks or non-banks Government 2G and 3G This allows room for rollout conflicts mobile banking but not through an agent Singapore Banks are not allowed to Vietnam outsource the KYC checks Current regulations impose hurdles for foreign investments Malaysia Low Specific licenses need certainty to be obtained from Philippines High certainty Malaysia ministry and WTO with High domestic financial limitations of entry in India sector liberalization form of joint venture only Indonesia Low taxation of mobile Provision of payment communication services services is governed as a Vietnam No KYC requirements for banking activity by the Law of MFS credit institutions. It requires Bill and MFI loan the involvement and repayment services are not approval of bank for each available service Low opennessPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 20
    18. 18. Regulations and Business Environment (4) Qualitative score to assess the country readiness Country Readiness Focus on building further partnerships between banks and Telcos. Conclusion – Focus Areas Economic environment weighs down India the development of MFS Procurement of advanced technology Increase familiarity of MFS benefits. is lower than the Asian average Strengthen the business and economic environment Country Readiness Expansion of mobile network Low familiarity and usage of MFS Conclusion – Focus Areas Indonesia Ambiguity of MFS regulations Increasing mobile network coverage Marketing of the services to project leading to development of mobile greater value among customers payments Improvements in mobile payment environment to attract customers Country Readiness Marketing of the services to project Regulations and business environment greater value among the customer Conclusion – Focus Areas Malaysia are conducive Communication and technology laws Focus on early adopters are well established i.e. high income males Developing infrastructure and high mobile penetration Develop more interoperability through Lack of awareness and willingness partnerships among the consumersPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 22
    19. 19. Existing Access to Financial Services India, Indonesia and Philippines lag behind in financial services sector, along with low mobile services adoption Malaysia has a relatively developed financial sector with mobile service adoption similar to other countries Singapore is better developed in both financial and mobile services Vietnam has high financial literacy and mobile penetration, but low banking penetration Indicators India Indonesia Malaysia Philippines Singapore Vietnam Financial Literacy 55-60% 65-70% 65-70% 65-70% 70-75% 70-75% ATMs per million 17.64 7 14 54  14 58 inhabitants 2011 (2010) Payment Cards 67.1 118  1063  -  1887 20.5 penetration/million (2011) Composite access to 48% 40% 57% 26% High - financial services Source: ‘Asia Pacific Mobile Observatory 2011’ By ATKearney, World Bank database 2011, MasterCard Mobile Readiness StudyPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 23
    20. 20. Mobile Market Situation (2) Average competitiveness Highly Competitive Market Competitiveness Index (HHI Score) Capacity and viability of MNOs to invest in an m-money business depends on the market competitiveness Monopolistic market can be conducive to m-money business, needs larger investments Competitive market needs to address the issue of interoperability to create economies of scaleSource: Mobile Financial Services Development Report 2011-World Economic Forum, MasterCard Mobile Readiness Study, Bloomberg & Google Analytics, ‘Thestate of the internet’ Akamai TechnologiesPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 25
    21. 21. Payment Instruments Business ModelPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 27
    22. 22. Mobile Banking Service Ahead The 3 Phases Forward Higher Value Mortgages Private Banking Wholesale Banking Investment banking Micro-insurance Credit Cards Consumer Lending Saving E-wallet accounts Payment Remittance Lower Transfer Value Now Next Near Future Lower Risk Higher Risk Leveraging on existing infrastructure May require infrastructurePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 28
    23. 23. How does Mobile Payment Work? (1/3) Bank Centric Model 5 Transfer of money to merchant’s account Issuer Acquirer Bank Bank 3 Request for money transfer 4 Deduction of transaction fee 2 Initiating payment request 1 Purchase of product Consumer Merchant Example: Wizzit in South Africa, WING in Cambodia Advantages for Bank Disadvantages for Bank New client acquisition opportunities No clear incentive inn situations where the New revenue streams from micro- bank has well established banking payments infrastructure Less risk with control over the system Limited MNO involvement means little incentive to push adoption ratesPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 29
    24. 24. How does Mobile Payment Work? (2/3) Bank Centric Model MNO dominates the process and responsible for the 3 Amount MNO roll-out of m-money deducted from prepaid account or added to monthly bill 2 Service request to MNO 1 Purchase of product Consumer Merchant Advantages Disadvantages Could increase subscriber loyalty, reduce Extensive costs of roll out, like agent churn rate network expenses Increased revenues through charging for Absence of banks add to consumer data services and voice calls uncertainty about security of transactions or deposits Example: M-Pesa in KenyaPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 30
    25. 25. How does Mobile Payment Work? (3/3) Collaborative Model Third-party Issuer MNO service provider Bank 2 Deduction of transaction 5 Transfer of fee 4 Request money to 2 Deduction of for money merchant’s transaction fee transfer account Consumer 3 Initiating 1 Purchase payment request of product Merchant Acquirer Bank Advantages Disadvantages Lower costs due to sharing by Complexity and difficulty of management stakeholders Consumer prices might be higher because each stakeholder requires a share of Example: Obopay/Nokiamoney, MobiKash in Kenya, YellowPepper in Latin America revenuePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 31
    26. 26. Conclusion By 2015, estimated mobile penetration rate is 101% with Asian economies have a increasing investments in 3G infrastructure stable regulatory environment. Efforts are MFS is an alternate service for the large unbanked population being made to improve the laws to support the industry Potential demand for Financial regulations and services like money telecommunication transfers, retail Dm e regulation need to be payments and ad n better aligned is B airtime recharge nu t n er u C With increasing sse n ot aui S E competition, ri n t nov interoperability needs to em r High unbanked tn improved in order to gain MFS i population economies of scale Low financial service and card penetration Asia is an high-average Market competitive market with low Competitiveness willingness among consumers Improving government to use mobile money services support and involvement Strategies Asian countries score high in Technological mobile payment readiness advancements index with Singapore leading the pack Competitive strategies - Differentiation, Cost leadership or Market segmentation Marketing and promotional improvements to increase familiarity and willingness to use the servicePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 32
    27. 27. Prepared for: Mobile Banking & Payments for Emerging Asia Summit Building blocks for the Mobile Financial Services Strategic Business Plan Workshop Prepared by: Spire Research & Consulting Date: 10 October 2012Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 33
    28. 28. Hot Topics Introduction 2012 Mobile Banking Summit in Bali Payment via SMS, USSD Point of Sales Bank-led or Telco-led Branchless bank NFC m-Pesa Consumer Adoption and Usage Deposit Taking P2P Transfer Payment Rural banking Inter-operability Regulation Cash In/cash Out Money Float Agents/Distribution Market Assessment Mobile Money Barriers Mobile Wallet KYC Mobile Money AML/CML User Perception Remittance Focus Group Discussion Broadband iPhone apps SMART money Mobile Payment Customer Readiness Financial Inclusion GCASH Cross border transferPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 34
    29. 29. Workshop Approach Focus Group Discussion - FGDPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 35
    30. 30. A 120-min workshop From 6 Building Blocks to Strategic Business Plan The FGD approach 40 min – Demand Factor 10 min – Break 40 min – Supply Factor 30 min – Participants Joint Wrap upPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 36
    31. 31. Strategic Business Plan Framework Selection on business plan attributes framework Executive Summary Business Systems and Processes Strategic Focus Stakeholder Relationships and Alliances The Business Organisational and Management Market Analysis Environmental and Social Impacts Products Risk Factors and Regulatory Compliance Marketing Corporate Governance Research and Development Financials Production and Delivery Application of Investment Funds Supply Chains Strategic Action Plan Plan ImprovementPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 37
    32. 32. A Mock Group Our team, our mission and our deliverables “Our company is on of the largest telco/bank in APAC with regional presence in the emerging market” “Each of you represents the country head and working with counter part in each countries” “Our mission is to make a strategic business plan for the company identify potential mobile banking product across the emerging market” “Our contribution in this FGD will be recorded and surmarised as key findings at the end of the workshop” “The example for the full strategic business plan will be disseminate to you separately after the workshop”Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 38
    33. 33. Strategic Focus Objective and Mission The objective  What do we wish to achieve with this plan? Eg. To evaluate, test and launch a mobile payment for 3 emerging countries in 3 months Our Mission What products and services do we deliver? Where and when do we deliver our products and services? Which customer groups are our target groups? Who are our customers and agents? What tangible value do our products and services deliver to customers? What is our competitive advantage? Hint: Employ SMAAART acronym as much as possible - Specific, Measurable, Action- orientated, Affordable, Achievable, and Time-boundPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 39
    34. 34. Goal Highest Priority Goals Goal One. Eg. The 1st cross-border mobile wallet provider across 3 countries in Asia Pacific in 5 years Goal Two Eg. To simultaneously launch mobile wallet access to 50% mobile subscriber for 3 countries as an alternative payment for e-commerce online purchase, domestic money transfer and information access for banking facility in 6 months. Eg. To grow the mobile wallet access from 3 countries to 6 countries in 2 years Goal Three Eg. To enable the mobile wallet service with cross border facility to 3 countries in APAC in year 1 Eg. To enable and grow the cross border facility the countries from 3 to 6 in year 3.Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 40
    35. 35. Social Economic-Context MARKET ANALYSIS What are the industrys economics, critical success factors, key risks, competitiveness, compliance and standards requirements, emerging trends and key technologies? Eg. Malaysia – With 120% mobile penetration, 66% banking penetration, 72% urban penetration a GDP per capita of USD 9,656 serves a good environment for a readiness on new payment/technology adoption, affordability of payment for goods and purchasing power of goods. Who are the key customers and major competitors in each target markets? What are the sizes of the target markets? Are they growing? If yes, at what rate? What are the strengths and weaknesses of major competitors and their products? What are the competitive price points for products in each market? What competitive advantages must Our products have to successfully enter and compete in target markets? How will you differentiate Our products and add more-customer-value than competitors?Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 41
    36. 36. Demand Factors Demand Analysis and Testing Customer Readiness/User Perception Demand Potential What is the service? Who are target customer/segment? And why? Where are Our customers? How can Our customer get the service? Customer Readiness/Users perception Customer Readiness/User Perception What is each customer perception about the service? How service benefit and what are the barriers for each customer? How to address the benefit and the barriers?Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 42
    37. 37. Product A quick check Describe our current and near-future products? What gives our products a clear competitive advantage? What are the benefits and value provided to customer as opposed to features? What regulations, standards and codes must be complied with? At what stage is each product in its life-cycle? For example: Research completed Prototype completed In-house testing Customer testing Market ready First up-grade completed Short BreakPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 43
    38. 38. Regulation and Business Environment Stakeholder relationship and alliances Are all of our key stakeholders clearly identified and their roles? Who will become key stakeholders in the near future? What are the business model? What are benefit and catalyst to expedite the service? What are the barriers and how to address? Are they kept updated, and involved in those business decisions that will affect them?Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 44
    39. 39. Infrastructure/Telco and Access to Financial Service Connecting the customer and business Existing Mobile Market Situation/ Infrastructure for Telco What are the infrastructure in place and gaps ? What are the expected new infrastructure? What are benefit and barriers? How to address them? Access to Financial Service/Bank What are the financial access today? How is the access to financial service? What are benefit and barriers? How to address them?Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 45
    40. 40. Group work Key Findings 6 Building Blocks Assessment Potential Demand User Perception/Consumer Readiness Socio-Economic Context Regulation and Business Environment Access to Financial Services Existing Mobile Market Situation/InfrastructurePrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 46
    41. 41. A Mock Group work Sample - Malaysia Mobile Payment business strategic plan Early adopter predominantly high income male consumers between 6 Building Blocks the ages of 18-34 High urbanisation with mass Assessment segment city dwellers require - 13% Willing to use P2P - 8% Willing to use POS alternative payment for daliy -Tagline for Payment via NFC purchase - Fast, Easy, Safe, Cashless Potential Demand -Payment via NFC -Tagline for Payment via SMS - Transport - Simple, Remote, - Food & Beverage User Perception/Consumer Anytime - Reload Airtime Readiness -Fund Transfer via SMS A conducive environment in - Person to Person promoting an alternative payment - Online purchase - No KYC requirements for MFS well structured and administered Socio-Economic consumer protection policy - RM 1500 for MFS and high Context Appealing to a reasonably affluent urban society compliance with AML/CFT -Urbanisation of 72% standards Regulation and -medium GDP per capita of US Business Environment 9,600 -high mobile penetration of 120% A conducive environment in Access to Financial promoting an alternative payment -Relative growing POS penetration Services at 3% Relative high bank account -Communication and technology penetration at 66%, financilal Existing Mobile Market literacy at 65% and easy access to laws are well established -Developing infrastructure and Situation/Infrastructure bank ATM 54 per million provide high mobile penetration conducive cash in-cash out and -Capacity and viability of MNOs to cashless transaction invest in an m-moneyPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 47
    42. 42. Summary STRATEGIC ACTION PLAN Workshop FGD Key Findings Key Strategic Goal Objectives to achieve the strategic goal Strategies to achieve each objective Task Plans to achieve each strategy Strategies to Task plan of No Stategic Goal Objective each objective each strategy  The 1st cross-border mobile wallet provider 1 across 3 countries in Asia Pacific in 5 years        To simultaneously launch mobile wallet access to 50% mobile subscriber for 3 countries as an alternative payment for e- commerce online purchase, domestic money transfer and information access for banking 2 facility in 6 months.       To enable the mobile wallet service with cross 3 border facility to 3 countries in APAC in year 1      Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 48
    43. 43. Strategic Business Plan Framework Executive SummaryPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 49
    44. 44. Conclusion What’s next and takeaways? Where to begin Demand Side or Supply Side? Bank-led, Operator-led, Joint Bank & Operator or Regulator-led collaboration Business model / Revenue Stream   Stake holders Set Up Annual Fee Monthly Fee Transaction Fee A Demand Factors         1 Consumer         2 Merchant         B Supply Factors Set Up Annual Fee Monthly Fee Transaction Fee 1 Bank         2 Telco         Addressing Benefit and Barriers Recommendation / Strategic Action Plan / Go-To-Market StrategyPrepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 50
    45. 45. Prepared for: Mobile Banking & Payments for Emerging Asia Summit Date: 10 October 2012 Page 51

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