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Agenda
• Channel conversion
• Importance of mobile channel for banks
• Mobile banking in the past and today
• Customer needs and experience
• Security concerns and measures
• Mobile banking applications and implementation
• Mobile channel integration: approaches
• Partnership strategy ( Main Players/Stakeholders/ Partners )
• Marketing
• Banking Focus
• Trends and Statistics
• Scenario in India
• M-Cheque
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Why Channel Conversion ?
• Control costs, removal of cost duplication
• Cater to increasing online channel customers
• Personalize customer interactions
• Unparalleled convenience and proactive customer service
• Cross selling
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Importance of mobile channel for banks
• Proactive and simple alerting services reduces branch/ call center costs
• M-Commerce is expected to account for an increasingly high proportion of
transactions.
• Mobile device can be an ideal POS device allowing transactions to be
authorized in many more places than ever before
• Mobile services are expected to generate access to new business
opportunities & new alliances across business sectors
• High market penetration (up to 80% in some countries) and still growing
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Mobile Banking in the past
• Mobile banking solutions were mainly reproduction of already
existing web-based applications with less stress on its mobile
aspects
• Low bandwidth & latency issues
• High communication costs
• Low functionality and fewer capabilities in the mobile devices
• Security concerns
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Mobile Banking Today
• Fast data services (GPRS)
• Low data transfer costs (e.g. flat rates)
• More functionality possible (new devices with better displays and browser
functionality)
• Higher Security mechanisms
• Applications capitalize on the mobile aspects and diversify from existing
web-based solutions
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Security Concerns
• Devices are easy to lose/ steal and get misused
• Mobile communication being sent as clear text can be read or interrupted
• Location-aware applications are considered to be invasion of privacy
• Lack of standardizations in payment solutions
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Security measures
• SMS channels can be used with encryption by mobile payment applications
to protect data integrity and security.
• Use of crypto-Java SIM cards & PKI (Public Key Infrastructure) for
establishing hierarchy of trust; non-repudiation.
• Debit/Credit cards linked to a specific phone number of consumer for added
transaction security
• Implementation of secure PIN for transactions
• For a financial application, gateways should reside behind your firewall
instead of the carrier premises.
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Mobile Banking Applications
• M-payments (B2C) & Inter-personal (P2P) payments
• Card based payments (Mobile debit/credit/pre-paid card)
• Cash payments (Electronic purses/wallets)
• Utility bill payments, Credit Card Payment, Mobile Top up
• Alerting Services (Transaction alerts, reminders, Stock alerts, Offers
& marketing promotions)
• Mobile solutions for personnel servicing business customers e.g.
mobile credit approval, mobile insurance assessment, mobile
collections etc.
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Implementation strategy
• Corporate strategy should drive the use of mobile technology.
• Determine which business processes or workflows would benefit most from
being mobile-enabled Eg. Sales and field force automation
• Mobile enable first, those processes that guarantee the best return on
investment
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Approach
• Identify the right processes
• Define measurable outcomes
• Implement integrated platforms
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Mobile channel integration: 2 approaches
Middleware - Separate channel-by-channel or application-by
application integration
Enterprise - An Integrated middleware layer capable of
connecting all delivery channels with all back end systems
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Main Players/Stakeholders/ Partners
• Telco's
• Banks
• Financial services/ Card companies ( VISA, MasterCard …)
• Payment service providers
• Suppliers/ Solution providers
• Customers/ users
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Marketing
• Build up a database with high-quality and detailed information about
customers in their target group.
• Gaining an in-depth understanding about customers desires & building a
means to address customers on a very personal medium such as a cellular
phone
• Launching marketing campaigns which are non-invasive and privacy-
preserving
• Position the products with a strong personal bond
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Banking Focus
• SMS alerts can disburden more expensive channels (e.g. contact
centres).
• Useful information can be transmitted to the client, and increase
customer loyalty at low cost.
• Research shows that the more services the customer uses, the higher
the switching costs would be. Also, the more services the customer
uses, the greater are the bank’s expected profits.
• Mobile offers - e.g Apply for a Personal Loan today "&" get a chance to
win a free dream holiday to Singapore. Just reply "Loan" Conditions
apply
• Broadcast to increase the usage of Credit card or debit card - e.g 10
days left for 5%Cash Back "&“ Bonus Reward Point! Use IDBI Bank
Debit Card Now! *Conditions Apply
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Trends
• Mobile devices are proving to be the most compact
technological aid of the future, set to overtake PCs and laptops.
• Use of mobile handsets as a payment device is already well
established in Europe and the leading Asia-Pacific markets.
eg. Almost a million Koreans now do their banking via 3G cell
phones (CNN report)
• Services which link credit/debit cards with mobile hand held
devices have started to pick up and are expected to play a
major role.
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Statistics
• Cell phone teledensity is still very low in India at around 6%, In comparison, China’s
cell phone density is at around 35%, while some of the European and Asia-Pacific
countries have 100% teledensity or more in mobile telephony.
• In the past two years, the number of people using mobiles has increased three times
• Indian cellular services market is projected to reach $24 billion by the end of 2009, a
CAGR of 35.6%, Gartner said. Indian cellular services market had recorded the highest
growth in Asia Pacific and Japan region in 2004 with a CAGR of 67%.
• India is all set to be among the top four countries in mobile phone subscriber numbers
by the end of year 2005, from its current 8th position, according to industry analysts
• As on August 31, 2005, There were 62.57 million mobile subscribers in India, according
to data provided by the TRAI. Fixed Phone users already lag behind by 47.44 million
• Communications Minister Mr.Dayanidhi Maran recently announced the objective of
India reaching the top of the heap with 250 million phones by December, 2007
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Indian Scenario
• Increasingly faster transmission via GPRS
• 3G technology to be launched soon in India, is expected to bring in a mobile
revolution. Broad band Internet in India is expected to ride on a 3G
backbone
• Users are slowly getting used to the concept of a mobile hand held device
as digital cash or wallet to carry out purchases
• Presently in India low-value m-commerce transactions are happening.
• High value mobile transactions would pick up once the concerns of mobile
secure transactions are being addressed.
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mCheque
mCheque is a secure debit/credit card payment system using
mobile phone SIM with security based on EMV 2000 specifications.
CUSTOMER BANK MERCHANTS/SERVICES
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mCheque - Overview
• mCheque is a secure card-present transaction system.
• Acceptance of VISA/Visa Electron in mChq mode does not require a PoS
terminal. Any GSM mobile phone (with an enhanced mCheque SIM) can be
used to accept a VISA/Visa Electron payment in mChq mode.
• Upto 16 different VISA or VISA Electron cards from different Banks can be
securely personalized Over-the-Air (OTA) on mobile SIMs.
• mCheque is inter-operable across multiple operators and banks.
• Key management process is regulated by IDRBT-Hyderabad (subsidiary of
Reserve Bank of India) in agreement with the participating Bank.
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Product Benefits
Customer Benefits
• Secure, Convenient and easy method of payment
• Anywhere anytime payment
Merchant Benefits
• Additional payment method for customers
• Small payment amounts can be accepted
• Portable payment options for merchants on move (Taxis,
Couriers, Doctors etc)
Banks
• Additional channel for customer payments
• Use of existing Infrastructure
• Value added service to customers
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Future …
•Mobile devices will also be used to handle short distance payments and
transactions enabled by the Blue tooth technology, for example Point of
sale machines and parking meters
•VPN – secured corporate network payments
•m-Commerce – fully loaded including share trading (m-Trading)
INDIA
•India’s mobile market has grown to over 50 million subscribers and this
number is constantly on the upswing. India is one of the world’s largest
markets for mobile phones. – A fact acknowledged by Nokia, Motorola and
LG among others.
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