121204_ASEAN Bank Forum 2012_A Successful Model of Mobile Financial Service (MFS) as Banking e-Channel for Emerging Markets


Published on

Held in Ho Chi Minh City, Vietnam, the ASEAN Bank Forum 2012 aimed to provide market insights on how retail banks can engage and retain customers. The forum is an annual event that offers an interactive platform for bankers and technology corporations to discuss and evaluate growth opportunities in the banking sector. Jeffrey Bahar, Deputy Chief Executive Officer of Spire Research and Consulting, was invited to grace the event as a keynote speaker.

Read more about the event coverage here:

Published in: Business
  • Be the first to comment

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • Good Morning Ladies and Gentlemen.Coincidentally, three earlier speakers – Hung, Sin and Hori-san – cover very similar topic: Mobile Banking, or Mobile Financial Service in SPIRE’s term.Let me build a story why this Mobile Financial Service is such a ‘hot’ topic.The year end Dec is typically a period where people is making prediction on what trend will happen next year 2013.Like the fortune teller looking in the crystal ball. One interesting point of looking into the crystal ball at globaltrends.com highlighting the 10 key trends to watch in 2013. On #10 it is a bold sentence: “Who needs bank anyway? Reshaping the financial system. Look out for mobile wallets and mobile banking. That what it says. Spire Research and Consulting has the same view for ASEAN banking industry. We see the trend of launching Mobile Financial Service emerging up strongly from our bank and telco clients in Indonesia, Malaysia and throughout the region. Likewise, when talking to some of you, some of the banks in Vietnam are going into Mobile Financial Service too.
  • We will start our presentation with the LANDSCAPE OF MOBILE PHONE INDUSTRY in Vietnam and Asia, as the device enabler for Mobile Financial Service.We will address is the READINESS for mobile banking.Then going into more details on Mobile Financial Service – the current development, the road ahead and country specific challengesAnd then wrap up the topic with a sumary.
  • In Asia Pacific region, the mobile phone industry has grown tremendously reaching to 80% mobile phone penetration. This is because: The handset and mobile phone service is more affordable Technology advancement also drive down the usage cost Mobile phone has grown faster than the fixed telephone line
  • Mobile penetration rate in Vietnam is over 100% at 126%. This is a relatively higher percentage than your neighboring Asian countries.The absolute number of over 100 million subscribers is also an exciting number compared to 30 million in Malaysia or 70 million in Thailand.
  • The HHI Market Competitiveness Index reflects the competition level among the telco operators.The lower the number, the competition is higher. India and Indonesia has lower figures, the competition is fierce in India and Indonesia.With higher competition, launching Mobile Financial Service will be more challenging to be launched by operators. Vietnam is in the middle. Not too difficult, not too easy too.
  • 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).
  • 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.
  • 121204_ASEAN Bank Forum 2012_A Successful Model of Mobile Financial Service (MFS) as Banking e-Channel for Emerging Markets

    1. 1. A Successful Model of MobileFinancial Service (MFS) as Bankinge-Channel for Emerging MarketsPrepared for: ASEAN Banker Forum – HCMC, VietnamPrepared by: Spire Research and ConsultingDate: 5 December 2012
    2. 2. AgendaTopic SlideMobile Market Situation 3Mobile Banking Readiness 5What is Mobile Financial Services (MFS)? 7Mobile Financial Service:The current development, road ahead, various 8eco-system, Country SpecificsMobile Financial Service: 12In Summary
    3. 3. Mobile Market Situation (1) Asia Pacific Trends and Developments Growth Factors 4500 98% 101% 94% Increased affordability of handsets 87% 4000 Pentration… 79% 3500 Cost-effective pre-paid services 68% 3000 56% Investment in mobile network 2500 47% infrastructure (3G, 4G rollouts) 2000 37% 3858 4012 3649 3372 1500 3019 Reduction in mobile usage prices 2588 1000 2116 (voice and data service) 1376 1727 500 Limited fixed line infrastructure has 0 established mobile as a primary 2007 2008 2009 2010 2011 2012 2013 2014 2015 alternative Asia Pacific Connections (million) and Penetration Rate World mobile phone penetration: ~61% Asia Pacific penetration is ~79%Source: ‘Asia Pacific Mobile Observatory 2011’ By ATKearney, World Bank database 2011
    4. 4. Mobile Market Situation (2) Figures: Vietnam vs. Asia Pacific Countries*All currency values are in USD CHINAMobile penetration rate standardized as of 2011 GDP: 7.29 trillion GDP/ capita: 5,430 SOUTH KOREA Population: 1.3 billion GDP: 1.1 trillion Mobile subscribers: 1.02 B GDP/ capita: 22,424 Mobile Penetration: 79% Population: 49.7 million Mobile subscribers: 52.7M PAKISTAN Mobile Penetration: 106% GDP: 0.21 trillion VIETNAM GDP/ capita: 1,194 Population: 0.17 billion GDP: 0.12 trillion Mobile Subscribers: 120M GDP/ capita: 1,411 JAPAN Mobile Penetration: 71% Population: 87.84 million GDP: 5.86 trillion Mobile subscribers: 112 M GDP/ capita: 45,903 Population: 0.12 billion INDIA Mobile Penetration: 126% Mobile subscribers: 260M 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 PHILIPPINES Mobile Penetration: 61% Population: 69 million GDP: 0.22 trillion Mobile subscribers: 79M GDP/ capita: 2,370 (as in 2012) Population: 94.8 million Mobile subscribers: 86M MALAYSIA Mobile Penetration: 114% Mobile Penetration: 94% GDP: 0.27 trillion SINGAPORE GDP/ capita: 9,656 INDONESIA GDP: 0.23 trillion Population: 28 million GDP: 0.84 trillion GDP/ capita: 60,500 Mobile subscribers: 30M GDP/ capita: 3,495 Population: 5.3 million Mobile Penetration: 120% Population: 0.24 billion Mobile subscribers: 6.5M Mobile subscribers: 260M Mobile Penetration: 196% Mobile Penetration: 88%
    5. 5. Mobile Banking Readiness (1) Landscape of Industry Competitiveness 0.6 Moderate competitiveness Highly Competitive 0.4 0.4 0.345 0.366 0.32 0.293 0.2 0.187 0 India Indonesia Vietnam Malaysia Philippines Singapore Market Competitiveness Index (HHI Score) Capacity and viability of investment in an mobile-banking 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 Technologies
    6. 6. Mobile Banking Readiness (2) Access to Financial Services Access to Mobile and Banking Services by Country Higher needs for access to 250% financial services: Singapore Pakistan, Indonesia, Vietnam 200% Mobile Penetration India, Philippines 150% Vietnam Malaysia Higher mobile penetration South Korea Indonesia Philippines allows opportunities for mobile 100% India Thailand banking China Japan 50% Pakistan Vietnam has high financial literacy and mobile penetration, but low 0% 0% 20% 40% 60% 80% 100% 120% access to finance = Banking Penetration OPPORTUNITY! Indicators India Indonesia Philippines Malaysia Singapore Vietnam Financial Literacy 55-60% 65-70% 65-70% 65-70% 70-75% 70-75% ATMs per million 7 14 14 54 58 18 people Payment Cards per 67 118 242 1,063 1,887 21 million peopl e Composite access to 48% 40% 26% 57% High Low financial servicesSource: ‘Asia Pacific Mobile Observatory 2011’ By ATKearney, World Bank database 2011, MasterCard Mobile Readiness Study
    7. 7. What is Mobile Financial Service (MFS)? Connecting Consumers Financially Through MobileBuild Product Idea, build Product Concept and build Product Image/BrandingGenerally done over-the-counter, in long queuesIndia State Bank provides the option of bill payments Airtime recharge onlike electricity etc. on mobile phones after registering Bill & mobile phones isfor the service at the bank branch. Financial provided by every MNO Payment as the basic service forAccount balance mobile users.enquiry, balance transfers, mini- Banking Airtimestatements and cheque book Services Rechargerequest etc. High domestic andRetail sector experiences the cross-bordermaximum exchange of cash migration indicatesor card transactions. potential demandToday, mobile money as asubstitute has huge potential. Retail/P2B P2P Example: Globe in Payment Transfer Philippines allowExample: Telkomsel in cross-borderIndonesia provide e-wallet transactionsservice without bankinvolvement Social Public Value proposition is to provide Security Services cost-effective, time-saving /G2PIncreasing need for faster services Access and structured service to Paymentlike transport creates a massive demand. economically underprivilegedGovernment’s initiatives to provide NFCenabled transport access could be Example: Philippinesbanked on like in Singapore. government payments
    8. 8. Mobile Financial Service The Current Development Criteria India Indonesia Malaysia Philippines Singapore Vietnam Bill Payments       P2P Transfers      Banking Services       G2P Transfers Public Service Access   P2B Payments       Airtime Recharge      Philippines Currencies of two-major mobile wallets, Smart and Globe, are not interchangeable Mobile operators have struck deals with banks to provide micro-loans and insurance. Like GlobeSingapore Singapore has the most development infrastructure though lack of trust among the consumers Singapore launched the NFC tap and pay services this year on mass-scaleMalaysia Significant improvements in contactless infrastructure like ‘Touch n go’ Western Union and Maxis collaborated to provide cross-border remittances Though the volume of transactions is growing, margin is low
    9. 9. Mobile Financial Service The Road Ahead 3 Phases ForwardHigherValue Mortgages Private Banking Wholesale Banking Investment banking Micro-insurance Credit Cards Consumer Lending Saving E-wallet accounts PaymentLower RemittanceValue Transfer Now Next Near Future Lower Risk Higher Risk Leveraging on existing infrastructure May require infrastructure
    10. 10. Mobile Financial Service Various Ecosystem BANKS End MFS MNOsUsers ECO- SYSTEM Regulators Agents
    11. 11. Mobile Financial Service Country Specifics, Different Focus Areas Country Readiness Create convenience in the Efficient regulatory system, consumer perception of the MFS Focus AreasSingapore financial system & infrastructure Coordinating various mobile High mobile penetration with payment players for more choices high per capita consumption Wide gap between willingness to use and actual usage Expanding mobile payments (other e-channels available) at POS Country Readiness Broaden the MFS services Highly regulated MFS system and service access Focus AreasVietnam with limited openness for foreign investment Coordination among banks & High mobile penetration MNOs to create better portfolios Wide gap in rural and urban of MFS infrastructure Wide gap between willingness Improvement in regulations to use and actual usage and consumer familiarity
    12. 12. Mobile Financial Service In Summary MFS is an alternative e-channel for the large unbanked population Banking and telecommunicationBanking service regulations needAirtime to be alignedrecharge Situation Current With increasingMoney transfers competition, interoperability needs to improved in order to gain economies of scale MFSHigh unbanked Asian countries scorepopulation high in mobileLow access to paymentfinance Strategies readiness including Vietnam Competitive strategies to banks: Differentiation, Cost leadership, Customer Segmentation Marketing and promotion to increase familiarity and willingness to use
    13. 13. Tel: (84 8) 3521 8734 Fax: (84 8) 3521 8736 6th Floor, Phuong Tower 31C Ly Tu Trong, Ben Nghe WardDistrict 1, Ho Chi Minh City, Vietnam vn.info@spireresearch.com www.spireresearch.com