OmlisWP_Mobile_Payments_Security_UAERussia

Mobile Payments Security:
The Arab States and Russia
(Financial Sector)
Impact of Mobile Payments Security on Profits,
Reputation and Customer Loyalty
Part 4 of Global Mobile Payments Series from Omlis151103_oml_v1p | Public | © Omlis Limited 2015

2151103_oml_gmp_arab_state_russia_v1p | Public | © Omlis Limited 2015
Contents
Introduction 2
The Mobile Use Landscape: The Arab States 3
Mobile Payments: An Overview 4
The Mobile Payments Landscape: Case Studies 5
The Mobile Use Landscape: Russia 7
Mobile Payments: An Overview 8
The Mobile Payments Landscape: Case Studies 9
Key Mobile Issues for Financial Institutions in the Arab States and Russia 11
Issue 1: Security 13
Issue 2: Readiness 15
Issue 3: Infrastructure 17
Summary and Recommendations 19
About Omlis 21
References 23
Contributors 23
Introduction
The rapid evolution from retail to digital banking and, in
some cases, exclusive focus on mobile driven financial
services by established financial institutions, has disrupted
financial and banking industries across the globe. This
entry in our ‘Global Mobile Payments’ white paper series
offers an insight into disparate yet equally fascinating
regions, detailing the impact of mobile payments security
on profits, reputation and customer loyalty in the Arab
States and Russia.
It is no secret that the majority of large Russian-based
financial institutions are still partly owned by the state.
The Russian Central Bank has a majority interest in
Sberbank, as well as financial giants including VTB
and Rosselkhozbank. The recent and ongoing political
unrest between Russia and its neighboring countries
has had an undeniably negative impact on the Russian
economy and its financial institutions, with the banking
sector experiencing minimal growth in 2014. Recognized
performance indicators such as banking system capital to
GDP, and banking assets to GDP, demonstrate a decline in
the prosperity of Russia’s banking sector especially when
compared to their counterparts in other developed and
emerging economies.
1
The relative merits in the management of banking
infrastructures within various global economies will always
be open for debate, but one certainty is the lack of traction
for customer focused retail banking which has struggled
to take off in Russia, leaving the idea of a ‘mobile banking
strategy’ a distant reality.
The Arab States, on the other hand, tells a very different
story. Countries such as the UAE (United Arab Emirates)
rely on a very traditional financial sector, due to a period of
financial institution mergers in the 1970s and 1980s. Despite
the age and heritage of these traditional banks, it is evident
that these financial institutions are driven to modernize
their operations, products, services and communication
channels as they direct their attention to the opportunities
afforded them via the mobile channel. IDC predicts that
IT investment in the UAE will reach $270bn in 2015
2
as
customer engagement via the mobile channel continues
to increase. This investment and forward thinking attitude
has positioned banks in the Arab States as ones to watch,
as they strive to increase their share of global transaction
banking revenues by at least 25% by 2025.
3
The key to understanding the operational landscape of
financial institutions in both the Arab States and Russia
is to, first and foremost, recognize the varied and ever-
evolving payment habits of these two contrasting payment
ecosystems.
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The Mobile Use Landscape:
The Arab States
Section Summary:
Consumers in the Arab States are much more likely to have made a purchase on a mobile
device than the global average
Despite their long history and stable position, Arab State banks are constantly and
consistently looking for better technologies
The Arab States have a growing millennial audience who are increasingly receptive to
adopting new technologies
Gartner confidently predicts consumer spending through
the mobile channel in the Arab States will surpass $39bn
in 2018.
4
This is unsurprising, especially as the rapid pace
of customer adoption through this channel continues to
demonstrate accelerated growth. Indeed, over 40% of
consumers from Arab countries have made a purchase
through the mobile channel, neatly surpassing the current
global average of 21.3%.
5
Financial institutions in Arab regions including Saudi Arabia
and UAE have a history that would imply a reticence in
accepting change, especially when faced with little to no
competition from the ‘challenger banks’ which are evident
across Europe. They also appear safe from the disruptive
influence of digital banks, who experience massive
challenges as they try to make an impact in this part of the
world especially given the nature of strict KYC (Know Your
Customer) rules which often demands a branch based
presence to verify customer identities.
Despite their comfortable position, these banks are
relentlessly pressing ahead with modernization in order
to reflect their customers’ appetites, preferences and
mobile-centric habits. Smartphone penetration is nearing
200% in both the UAE and Kuwait,
6
driven by the fact that
the average age is strikingly young. The banks are rightly
responding to these factors, not because they are under
threat from newcomers; but due to the massive revenue
potential of these mobile spenders.
Age Influences Adoption
The average Saudi citizen is just 21.6
years old and therefore, in line with
global trends, more likely to adopt
alternative transactional methods such
as mobile payments.
7
Financial institutions looking to capitalize on the opportunity
to engage a millennial audience include Emirates NBD,
who launched a P2P (Person to Person) scheme called
MePay and Mashreq who released an NFC (Near-field
Communication) enabled payment terminal known as
Payport. This upward innovation trend can be identified
right across the Arab States, with BLC Bank in Lebanon
now offering a service called ‘HEY!’, an e-wallet that allows
consumers to conduct a variety of transactions through a
mobile device.
UAE based RAK Bank’s promotion of cardless ATMs is
distinctive in terms of changing payment culture, granting
mobile devices the same status as a credit card at the
cash machine. It also pulls the unbanked towards banking
services as people without traditional bank accounts are
free to receive money via the MobileCash service. RAK
Bank reported a 40% growth in mobile banking users in the
first six months of 2014.
8
The potential market opportunity
for banks with secure and practical mobile products is
clearly evident.
Mobile Payments: An Overview

The Mobile Payments Landscape:
Case Studies
A growing dependence on mobile driven solutions for
everyday activities has spurred the growth of various
innovative mobile channel initiatives across the region.
Successful mobile banking and mobile transport
ticketing schemes demonstrate a clear appetite and
willingness to adopt new methods in the region as
consumers increasingly transact and manage their
finances through mobile channels.
Case Study 1: A United
Solution
The UAE Banks Federation
announced the completion of the
pre-implementation phase of their
groundbreaking project to deliver
a mobile wallet solution that all 51
member banks can utilize to offer P2P,
mobile payments and loyalty programs
to their customers.
Participating banks also have the
choice to link with this application or
integrate the system with their own
internet and mobile banking platforms.
9
Case Study 2:
Readiness in Egypt
A country which is more than willing
to embrace mobile banking solutions,
Egypt has a rapidly growing (28.5%)
number of financial institutions
that provide alternate methods for
customers to manage their finances
and conduct transactions.10
By
providing a range of services to enable
and empower consumers, financial
institutions in Egypt have indirectly
become catalysts for the adoption of
mobile payments in the region. The
impact of their willingness to adopt
mobile payments is clear, as during
2014, 80% of Egyptian smartphone
users made a purchase with their
device at least monthly.
11
Case Study 3: mPOS (Mobile Point of Sale)
The opportunity for increased integration of mobile
payments within the Arab State economy as an option
for consumers to engage in activities such as paying bills
and shopping has clearly been identified by the region’s
financial institutions. This is made evident in Case Study 1
as the UAE Bank Federation are uniting their approach to
offer a consistent mobile experience to their customers.
The variety of mobile payment options on offer within the
region displays the impeccably high standard and market
opportunity which must be leveraged to successfully
compete for customer acquisition and retention in the Arab
market.
Financial services provider QNB recently
launched their mPOS solution in Qatar.
Their card acceptance solution employs
a compact card reader that connects and
transforms any merchant’s smartphone or
tablet into a fully certified EMV (Europay,
MasterCardandVisa)chip-and-PINmobile
payment terminal. The solution, powered
by Swiftech, was developed by Mathema
Technology and can be customized
according to individual merchant needs
while being compatible across iOS and
Android platforms on any smart device.
In conjunction with Bluetooth-enabled
card readers, the solution also enables
merchants to accept payments in a
secured environment.
12
“Financial institutions in the Arab States have paved the
way for wide adoption of mobile payment methods and
the success of this forward thinking approach should be
emulated worldwide.
”Markus Milsted, Founder and CEO of Omlis

The Mobile Use Landscape:
Russia
Section Summary:
Mobile commerce is growing in Russia but is still approached with skepticism by the
majority of the country’s consumers
Financial institutions in Russia were slow to embrace electronic payment methods and
mobile banking services
Some smaller banks are currently offering more efficient mobile services than Russia’s ‘top
20’ financial institutions
Although consumer spending habits in Russia are heavily
reliant on a cash based system, there is evidence that these
attitudes are shifting; especially as m-commerce sales
doubled across the country in 2014.
13
The increased trend
in Russian smart device ownership, which currently stands
at over half of the population (55%), is also testament to
this.
14
The access these devices provide to commerce sites
and alternative payment methods is beginning to make a
sizable impact on how Russian consumers transact.
The continued uptake of mobile payment methods
has been delayed by the fact that Russian banks have
been notoriously slow in developing electronic payment
and mobile banking services. As recently as mid-2012,
only four of the 30 largest Russian banks provided their
customers with mobile banking services and only seven
of these banks made P2P money transfers possible. The
others offered either severely limited services or no mobile
banking services at all.
15
Another factor which influenced
this crawling pace was the government’s delay in
recognizing the necessity of regulating electronic payments
and banking systems which introduced uncertainties into
this industry, therefore hindering its growth.
Despite these barriers, an increasing number of Russia’s
population (143m) are now using mobile internet and, as
a result, mobile shopping is on the increase. The growing
interest in mobile has led to a third of smartphone users in
Russia choosing to purchase products from online stores
via their devices.
16
The growth of mobile commerce in the
country has been noticed by companies such as PayPal
who have stated that despite the clear reservations held
by many Russian consumers, mobile shopping in Russia
is beginning to rival that of Western Europe.
17
Slow M-Banking Growth
As of the end of 2014, 10% of Russian
banking customers are using mobile
banking applications to manage their
funds.18
Research by Deloitte has established that the top 20
Russian banks (based on assets) generally offered a higher
standard of application than banks with lower ratings.
However, it is worth noting that not all of the banks from
the top 20 have their own mobile apps. Interestingly, their
findings showed that smaller banks such as TCS Bank and
Svyaznoy Bank have set themselves apart by offering the
best mobile banking apps in the Russian market.
19
Mobile Payments: An Overview

The Mobile Payments Landscape:
Case Studies
Even though Russia is still faced with challenges that
currently stifle the widespread adoption of mobile
payment solutions in the region, attitudes are gradually
changing. The most successful mobile focused initiatives,
such as Qiwi, have experienced accelerated growth
driven by their understanding of consumer attitudes
toward mobile-based services and their deeply rooted
cash culture. As Russian consumers demonstrate a
willingness to embrace change in their payment habits,
integration of more mobile driven initiatives must occur
at a steady pace to maximize every opportunity for a
successful transition from cash to mobile.
Case Study 1: Mobile Wallet
A new mobile wallet from CardsMobile
named ‘The Wallet’ allows consumers
to download their credit, loyalty and
travel cards to an in-device smartphone
wallet application. The smartphone can
then be swiped across POS (Point of
Sale) and ticketing terminals for instant
payment in tens of thousands of stores,
restaurants, train stations, buses and
trams across Russia.
20
Case Study 2: Cash Culture
Roughly 50% of Russians are skeptical
about using debit and credit cards,
even if they own one. Therefore, more
than 83% of the active bank cards
(upwards of 140m) are payroll cards
and more than 90% of card activity
comes from ATM withdrawals on
payday. Favoring cash over electronic
and mobile forms of payment has roots
in Russians’ mistrust of the level of
security against financial fraud and also,
the government’s ability and motives in
tracking their financial transactions.
21
Case Study 3: Qiwi
The Russian mobile market is complex and, as displayed
in Case Study 2, it isn’t just a mistrust of mobile device
security that is hindering the adoption of mobile payment
and banking solutions, but a culture where people fear that
the government actively monitor their transactions. With
many of the banks under the strong influence of the state,
it is no surprise that Russians are increasingly seeking
alternative independent banking services such as Qiwi
who offer the convenience of mobile transactions, with the
familiarity of cash payments.
In our last study (focused on Central &
Eastern Europe) we saw how a solution
like M-Pesa introduced mobile payments
to some fairly unlikely markets where the
banks did not necessarily fill the gaps
created by consumer demand. The
Russian payments solution known as
Qiwi Wallet has achieved a similar feat to
M-Pesa, filling a vital gap in the Russian
payments architecture.
Qiwi recognized that Russia was still
very much a cash based society, but
one which was subject to the same net-
based consumer forces as any other
developed nation. The need to combine
conventional cash payment methods
with online purchases was therefore the
inspiration for Qiwi Wallet which is backed
by a network of payment kiosks. These
kiosks allow customers to pay their mobile
shopping bills (as well as fines and utility
bills) by feeding money into a machine
which resembles an ATM.
This hybrid approach of manual
payment and mobile commerce helped
to dispel Russian consumers’ latent
fear of cybercrime whilst at the same
time retaining a convenient and familiar
payment method. Qiwi Wallet means
that customers never expose their bank
account details to third party websites.
Some might see the Qiwi system as a
‘workaround’, but as long as fears over
threats like cybersecurity persist and
cash takes precedence over plastic, it
appears to be a sound compromise. 65m
customers use Qiwi’s 170,000 kiosks
each month. Importantly, these kiosks
require banking licenses emphasizing that
Qiwi is very much a banking solution.
22
Qiwi’s Chairman Boris Kim has clearly
stated his intention to, “…target cash-
based markets across the globe
where consumers need convenient
alternatives.”
23
“Although many Russians are still very reliant on cash
payments, growing trends in the use of mobile devices to
transact imply that they would be open to changing their
payment habits if mobile financial offerings were marketed
on a platform of proven, robust security.
”Paul Holland, Analyst at Omlis

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Key Mobile Issues for Financial
Institutions in the Arab States
and Russia Amongst many others, there are two core requirements
for mobile channel service providers battling to change the
minds of consumers who reach for their wallet as opposed
to their mobile device. Services made available through the
mobile channel must be convenient and guarantee robust
data and transaction security to the user.
Information released by numerous security service
providers suggests that Russia and cybercrime are very
closely linked, with several high profile data breaches
having originated from the country. In 2014, Russian
cybercriminal network known as CyberVor was discovered
to have stolen upwards of 1.2bn username and password
combinations, along with more than 500m email addresses
across a range of industries including, of course, the
financial sector.
24
Russian controlled botnets have also
been identified in Arab State banks perpetuating Russia’s
identity as a hub for cybercriminals and confirming the
fears of many Arab State consumers to whom security
concerns remains the main barrier to their adoption and
use of mobile payment services.
25
Despite these concerns, research by Juniper suggests
that 11.9m users in the Arab States are currently engaging
mobile transactions.
26
This has been aided by a younger
population who are both tech savvy and willing to
adopt new methods of transacting which provide huge
convenience benefits in an increasingly mobile-centric
lifestyle.
There is however a huge contrast when compared to
Russian consumers whose reliance on banking kiosks
to facilitate bills and other payments is accentuated by a
largely cultural preference for cash-based transactions. As
a result, many Russians display strong hesitance to making
the digital leap. In practice, many Russian consumers
actually withdraw their entire paycheck in cash, and then
make payments as required through these automated
kiosks.
Russia’s financial institutions could be partly blamed for
this reticence as they were slow to provide suitable digital
and mobile means for consumers to bank and transfer
funds. This was due to a lengthy state legislation process
which caused uncertainty for the financial sector and their
customers.
TheArabStateshavenothadtosuffertheseinconveniences
as their financial institutions have supplemented their
customer focused approach, secured through rigorous
KYC rules, with effective and convenient mobile banking
solutions. This has led to rapid adoption throughout the
region as although some security concerns persist, the
Arab population have demonstrated an openness to
adopting mobile financial services.
Across both regions, there is certainly room for improved
focus on specific areas that, once addressed, could
positively impact the growth of mobile payments services
for financial institutions in both the Arab States and Russia.
We have identified three core key issues that hinder the
effective implementation of mobile payment solutions
in the Arab States’ and Russia’s financial institutions:
Security, Readiness and Infrastructure.
“Investment in fit-for-purpose cybersecurity is essential
in a global financial market which is increasingly plagued by
fraud and malicious attacks on consumer data.
”John Stuart, Chief Commercial Officer at Omlis

Issue 1: Security
Section Summary:
Security concerns are barriers to consumer uptake of mobile payment and banking
services in both Russia and the Arab States
Cybercrime and Russia are never too far apart and this poses cybersecurity threats both
within and outside of Russia
The Arab States have responded to concerns over data theft by investing heavily in
cybersecurity
As noted in our previous white paper on Central and Eastern
Europe, countries which are hubs for cybercrime are often
the most victimized. Russia’s black market is infamous for
the sale of malware and malicious code across the world.
As well as being the source of many of the world’s most
famous banking Trojans, Russia is also one of the world’s
largest victims of these exact same malicious programs.
27
Over the last two years, Russian malware has increasingly
been rolled out to international markets but inevitably,
hackers choose to test their malware and Trojans in the
Russian economy before building criminal markets across
the globe.
Homeland Hacking
In 2013, a Kaspersky Lab study found
that over 40% of unique Russian
users were attacked by malware; to
put context on that figure, India was
placed second with only 7.9% of users
suffering malware attacks.
28
The threat of malware attacks on Russian consumers is still
very high and shows no signs of slowing. Russia currently
ranks as the fifth most infected country in the world when it
comes to malware, exhibiting an infection rate of 38.8%.
29
A large majority of Russians remain reluctant to adopt
mobile money, an issue the constant threat of cybercrime
can only reinforce. These security worries are also evident
across the Middle East as over half (56%) of consumers in
the region are concerned about fraud.
30
Fortunately, it appears these concerns are being actively
dealt with. The cybersecurity market in the Middle East
(including the Arab States) was estimated to be worth
$5.17bn in 2014 and is expected to grow to $9.56bn by
2019, such is the commitment in the region not just in
adopting new mobile driven initiatives but also in ensuring
that user data is as secure as possible. Current projections
indicate that Saudi Arabia will be the largest market on the
basis of spending and adoption for cybersecurity solutions
and services.
31
How Omlis can Help:
Arab State financial institutions should
make security a key priority when
rolling out mobile banking services.
The highly interoperable Omlis
architecture fits seamlessly into existing
systems while providing the same high
integrity approach used in mission
critical applications such as medical life
support machines and air traffic control
to protect against the growing risks
posed by cybercrime.
Russia’s reputation as the home of
cybercriminalactivityleavesusersofmobile
payment methods vulnerable to significant
risk from hackers testing their Trojans in-
country before launching international
attacks. Through our innovative one-time
key encryption approach, Omlis is able to
spread the risk and significantly limit the
value of information that can be breached.
Find out more, contact:
marketing@omlis.com
“With a black market responsible for selling some of
the most damaging malicious code in the world, much
of it targeted internally, Russia’s financial institutions must
prioritize the security of the growing mobile channel.
”Stéphane Roule, Senior Technical Manager at Omlis

Issue 2: Readiness
Section Summary:
The disparity between the Arab States and Russia clearly demonstrates how cultural
attitudes influence mobile payment adoption
Despite over half of Russians owning smartphones (55%), very few of them are willing to
use them to bank or transact
The Arab States’ financial institutions are rolling out numerous mobile schemes to satisfy a
rapidly growing consumer demand
The ultimate success of mobile payment solutions in any
geographic region depends greatly on the willingness of
consumers to adopt these innovative and often unfamiliar
technologies. Readiness varies greatly across the globe
with issues including cultural attitudes, the average age
of the population and access to technology deciding
how quickly new payment schemes gain traction. A clear
example of the importance of consumer readiness is the
disparity in attitudes between the Arab States and Russia.
The issue of privacy is currently at the forefront of
mainstream media and Russia no exception. The idea of
having their spending habits documented or chronicled is
very unpopular which is unsurprising given their political
history and fear of paper trails. It is important not to diminish
how Russians transact however, especially as a cash
culture does have its advantages, often providing a sense
of financial transparency and control. The shaky financial
infrastructure in Russia isn’t helped by doubts surrounding
the stability of its economy and banking systems which
endured a string of banking crises in 1998, 2004, 2008,
and 2010.
32
These uncertainties have had an undeniably negative
impact on consumer perceptions of new and unfamiliar
payment methods in Russia, leaving them highly
dependent on cash and payroll cards. The development
of new mobile solutions are unlikely to make any difference
to the abstinent attitudes of the Russian consumer in the
short term. Unless the rollout of a new mobile payments
scheme is executed flawlessly, there is a strong risk that it
will only serve to further undermine consumer confidence
in non-cash payment methods.
The Arab States are not burdened with a cultural stigma
towards the financial sector, with many established
and respected institutions such as Arab Bank and QNB
serving millions in the region. With its reputation as a high
growth economy in numerous sectors and with access
to immense wealth, it is no surprise that Arab banking
customers are willing to try new and more convenient ways
to transact and access their funds.
This readiness to accept mobile payment solutions has
been identified and capitalized on by financial institutions
across the region. A notable example of the rollout of
mobile schemes occurred in 2014 when the Bank of
Jordan launched a ‘mobile cash’ service as a method to
pay individuals, stores and government parties without
ever having to carry cash or card again. The application
is linked to the central banking system named JoMoPay;
a national, centralized network of smartphone payments,
connecting all parties involved in payments.
33
How Omlis can Help:
While consumers in the Arab States are
keen to adopt mobile solutions and their
financial institutions are rushing to supply
this demand, security must be ensured
before rolling out mobile solutions. Omlis
is able to work with financial institutions
to ensure the construction of a solid
solution which provides peace of mind for
consumers through unparalleled security.
Russians remain highly dependent on
cash transactions and are very conscious
of their data security. Using high integrity
processes, to secure the mobile device,
Omlis is able to guarantee the same
level of security provided to safety critical
applications such as military, aerospace
and nuclear power.
marketing@omlis.com
“There is a clear disparity in readiness between regions
such as the Arab States and Russia. The one constant is
that banks must take into account the financial habits of
their target market as well as allaying any security concerns
to expedite the adoption of new payment solutions.
”John Stuart, Chief Commercial Officer at Omlis

Issue 3: Infrastructure
The contrasting attitudes towards mobile banking solutions in the Arab States and Russia
stems from the effectiveness of their respective financial infrastructures
Russia’s late legislation on electronic payments continues to hinder mobile solutions by
creating uncertainty for banks and consumers
Arab State banks are committed to improving customer experience and engagement, and
in doing so, increasing their market share
With high mobile penetration and subscription rates and
low levels of mobile banking, the Russian market clearly
illustrates the point that a simple correlation between
smartphone penetration and mobile payment activity
isn’t always certain; a country’s general infrastructure –
whether legal or physical - has to be complicit to make a
functioning mobile payments ecosystem.
The first laws on electronic payments in Russia were passed
in 2011 entitled: Federal Law No. 161-FZ, ‘On the National
Payment System’.
34
The delays in the establishment of
such key legislation resulted in the stagnation of any
plans to roll out mobile payment initiatives into the existing
banking infrastructure. This ensured that all plans were
effectively grounded until the laws surrounding any new
payment schemes were established.
Russia has also suffered an early disadvantage which is still
evident today as many consumers do not have access to
the variety and quality of mobile solutions required to spur
necessary growth. While adoption is increasing, it is clear
that the country’s initial sluggish response to the advances
in both digital and mobile channels within the financial
sector did nothing to increase consumer enthusiasm for
innovative banking solutions.
The Arab States do have infrastructural similarities to
Russia, whereby the market is dominated by a few long
established institutions. This is largely due to its KYC rules,
which demand a basic branch network in order to verify
a customer’s identity. KYC provides a natural barrier to
entry for challenger banks in the Arab States, thus placing
the onus for technological progress on the established
financial institutions.
Consistent IT investment is rapidly cementing the Arab
States as a market to watch. They currently boast the
second fastest growing market in the world, and unlike
Russia, there would appear to be a clear correlation with
smartphone uptake; the UAE is often cited as having the
highest smartphone penetration rate in the world at around
78%.
35
This supportive, forward thinking approach from Arab
State banks towards consumers has led to a generally
positive attitude from the population when it comes to
new methods of transacting. Consumer confidence in the
region’s financial infrastructure has aided the Arab States’
development into an area of great wealth and inspires
reciprocity from financial institutions who, despite their
comfortable position, focus on pushing innovation and
supplying consumer demand.
How Omlis can Help:
Section Summary:
The Arab States’ banking infrastructure
has stood the test of time and is
continuing to look to the future for
solutions which would benefit their
customer base. To show they are truly
committed to protecting themselves and
their customers, the addition of Omlis’
immensely interoperable, high integrity
encryption solution would guarantee their
ability to fully realize the potential of the
mobile channel while effectively securing
sensitive customer data.
While Russia’s financial sector is similarly
governed by established institutions, the
country hasn’t developed a strong financial
presence when compared to equally
developed countries. Although they are
behind in the development of effective
mobile solutions, through leveraging the
potential of Omlis’ encryption solution,
there is potential to grow their market
share, even persuading those who are
reliant on cash due to a deeply ingrained
mistrust; through the promise of truly high
integrity security.
marketing@omlis.com
“Despite both the Arab States and Russia having
long established banking infrastructures, there is a
stark difference between their relative approaches. The
success of Arab State banks in implementing a change in
transactional attitudes is an example that Russia should
certainly be looking to follow.
”Paul Holland, Analyst at Omlis

Summary and
Recommendations
Arab State banks have shown a real commitment in not
only rolling out mobile schemes to meet consumer demand
but also making a conscious effort to combat the growing
threat of fraud. While they are certainly moving in the right
direction, as our previous white papers have identified,
current encryption methods are becoming increasingly
vulnerable as more sophisticated cybercriminals (such
as the Russians whose botnets were detected in Middle
Eastern banking systems) turn their focus to the mobile
payments market.
To address key issues raised in this paper, Omlis makes
the following recommendations:
Security
XX As a hub for cybercrime and a testing ground for
Trojans, it is imperative that Russian banks place
security at the top of their list of priorities when
developing mobile solutions.
XX While the Arab States’ financial sector is investing
heavily in IT and cybersecurity, it must be aware
of the shortcomings of current mobile security
methodologies and adopt a solution built
specifically with mobile in mind.
XX Regardless of how developed the mobile banking
market is within Russia and the Arab States, fit-
for-purpose security is necessary to both prevent
embarrassment and loss of reputation for financial
institutions; as well as providing consumers with
peace of mind and increasing acquisition.
Readiness
XX Understanding what consumers want from
mobile solutions is essential in reticent markets
like Russia; financial institutions must look to
successful services such as Qiwi to increase the
suitability and attractiveness of their proposition.
XX Arab State banks must ensure that they remain
relentless in their approach to meet consumer
demand for mobile payment methods, in markets
with such a high level of readiness; consistent
and robust solutions are required to successfully
compete.
XX Even in areas with high readiness, there is still an
element of mistrust hindering mobile payments.
Banks must be able to assuage these doubts by
ensuring their solutions are designed specifically
for mobile; offering immense convenience and
robust security.
Infrastructure
XX While Russia is home to an established network of
financial institutions, there has been a decidedly
reluctant approach to modernizing banking
infrastructure and the way that they interact with
consumers. To update their services and convince
consumers to adopt these new methods, Russian
banks must ensure their systems are capable of
supporting mobile payments activity or consider
adopting an interoperable solution to bolster their
existing capabilities.
XX Arab State financial institutions haven’t rested on
their laurels despite their comfortable position
which is a commendable attitude and explains
their continued success. However, as discussed
in our previous white papers, established banks
often rely on outdated systems to secure and
carry out transactions. Banks in the Arab States
must ensure that their investment in IT prioritizes
updating these often archaic systems.
Omlis understands the significant impact security has
to the bottom line of any financial institution. The Omlis
core solution is not only crucial in protecting financial
data, but also in retaining a trustworthy brand. Our core
solution was designed specifically for mobile using the
same high-integrity development process (Correctness
by Construction) as security-critical systems such as air
traffic control and nuclear power. The benefits offered
by Omlis also extend to costs. Omlis will significantly
reduce operating spend with an integrated solution that
easily streamlines existing infrastructure. Implementing
the Omlis core high-integrity encryption solution positions
any organization as a provider of fully secure mobile
transactions and demonstrates a real commitment to
successfully combating the growing threat of hacking and
fraud.
There appears to be a stark difference between the Arab
States and Russia when it comes to the adoption of mobile
banking methods. Arab State financial institutions are
rapidly forging ahead, eager to meet customer demand and
reap the benefits of this rapidly growing payments channel;
benefiting from the attitude of a younger, more willing
population. Russia’s banks are not afforded the same luxury,
especially with their delayed entry into the mobile and digital
banking space. They are also challenged with engaging
and converting a hesitant and security weary consumer
base who traditionally mistrust transaction methods that
eliminate the need for cash.
There are signs that mobile payment methods are gradually
gaining traction in Russia but mass adoption will be an
ongoing challenge. It is crucial that financial institutions
recognize and act on the needs and concerns of their
customers to provide a suitable mobile service. Successful
banking kiosk schemes such as Qiwi, embraced for its
balance of using both cash and mobile is an example for
others to emulate.

About Omlis
Omlis is a global mobile payment solutions provider
bringing highly powerful and effective solutions to all mobile
commerce security. We offer a powerful and innovative
secure payments technology specifically designed to
address the major issues that impact on today’s mobile
payments market, most importantly, the massive cost of
fraud.
We strive for a future where anyone, anywhere, can use
their electronic device and safely conduct any commercial
activity with complete and absolute confidence that their
activities are fully secure and uncompromised.
Omlis brings to market the first mobile payment solution
designed, developed, and tested using high integrity
development processes that are typically used for security
critical applications. Consumer information is no longer
vulnerable to attack due to this novel method of encryption.
The Omlis solution, unlike other encryption technologies,
does not have a single point of failure. Traditional systems
generally have a single point of failure where sensitive
information is held - the hosted services that malicious
parties can easily target. A key differentiator is our ability
to distribute the risk by displacing it to the mobile device.
Existing encryption often relies on keys derived from a
single master-key to secure sensitive data, meaning that
as more devices join a network, the risk of these devices
becoming compromised also increases. With the Omlis
solution, the level of risk does not increase due to our
single-use encryption keys which remove the possibility for
theft of valuable information as well as the ability to breach
numerous devices through a single-point-of-attack. Any
potential threats to personal data are swiftly isolated and
eliminated, effectively removing the risk if a consumer’s
mobile device is compromised.
Omlis Solution Risk Profile vs Traditional Risk Profile:
Traditional Risk Proﬁle Omlis Risk Proﬁle
Hackers Hackers

23 151103_oml_gmp_arab_state_russia_v1p | Public | © Omlis Limited 2015
1. Valdai Club: Russian Banking Systems
Underdeveloped According to International
Standards
2. QNB via SlideShare: Market Report – March 2015
3. Reuters: Middle East Bank’s Share of Global
Transaction Banking Revenues to Increase by at
Least 25% by 2025
4. Gartner: Mobile Phone Spending in the Middle
East to Surpass $39bn in 2018
5. PayFort: The State of Payments in the Arab World
2014
6. GSMA: Arab States Mobile Observatory 2013
7. Fortumo: Mobile Payments in the Middle-East &
North Africa
8. Gulf News: RAKBank Introduces Cardless ATM
Cash Withdrawals
9. NFC World: UAE Banks Move Towards Mobile
Wallets
10. Daily News Egypt: 28.5% of Egyptian Banks
Provide Mobile Banking
11. PayFort: The State of Payments in the Arab World
2014
12. The Paypers: QNB rolls out mPOS in Qatar
13. PR: Global M-Commerce Growth Outpaces Total
B2C E-Commerce
14. Statista: Share of Smartphone Users in Russia
from 2010 - 2017
15. The World Bank: Mobile Banking – Who is in the
Driver’s Seat?
16. yStats: M-Commerce is Booming in Europe
17. The Moscow Times: PayPal Says Russian Mobile
Shopping Rivals Western Europe
18. We Are Social: Digital, Social & Mobile in 2015
19. Deloitte: Review of Russian Banks’ Mobile
Applications
20. NXP: CardsMobile Extend Secure Mobile
Payments in Russia
21. The World Bank: Mobile Banking – Who is in the
Driver’s Seat?
22. PYMNTS: How Qiwi Feeds Russia’s Cash-Hungry
Soul
23. East-West Digital News: An Interview with Qiwi
President Boris Kim
24. BBC: Russian Gang Hacks 1.2bn Usernames and
Passwords
25. SC Magazine: Russian Trojan Spotted Attacking
Middle Eastern Banks
26. Trade Arabia: Card Data Threat Increases as
Online Payments Grow
27. Symantec: The State of Financial Trojans 2014
28. SecureList: Mobile Malware Evolution
29. PandaLabs: Annual Report 2014
30. Capital Business: Experts Warn of Increased Card
Data Threat as Online Activity Grows in the MENA
Region
31. Markets and Markets: Middle East Cybersecurity
Market Worth $9.56bn by 2019
32. Valdai Club: Russian Banking Systems
Underdeveloped According to International
Standards
33. Bank of Jordan: “Mobile Cash”
34. Russian Federation: Federal Law No. 161-FZ “On
the National Payment System
35. Nielson: Mobile Majority: Smartphone Penetration
Hits 78% in the UAE
References
Contributors
The following individuals contributed to this report:
Helmut Okike
Senior Marketing Executive
John Patterson
Copywriter
Paul Holland
Analyst
John Stuart
Chief Commercial Officer
Markus Milsted
Founder and CEO

Omlis
Third Floor
Tyne House
Newcastle upon Tyne
United Kingdom
NE1 3JD
+44 (0) 845 838 1308
info@omlis.com
www.omlis.com
© Omlis Limited 2015

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