DISRUPTION BY MOBILE PREPAID –SHOULD BANKS EMBRACE PREPAID?

Wednesday, 8 October 2014

Mobey Day, Barcelona

Barca, banks and emotions…

…but prepaid is not FIFA

http://img.bleacherreport.net/img/images/photos/002/603/616/hi-res-187595838-neymar-of-fc-barcelona-controls-the-ball-during-the-la_crop_exact.jpg?w=1500&h=1500&q=85

…it’s street football!

http://mediad.publicbroadcasting.net/p/shared/npr/styles/x_large/nprshared/201405/313994563.jpg

Key takeaways of this presentation

One conclusion: Prepaid is a major driving force in the near future of mobile wallets

Two lines of attack of mobile prepaid players on banks

Three levels of developmentof mobile prepaid

Four options for banks to deal withmobile prepaid

• Different stakeholders - each of them holding a piece of the puzzle (control points)

• Each of them is vying to establish a commercially influential position in the value chain

Deadlock and market fragmentationReduced integrative potential and market adoption

Mobile Wallets 1.0: Digitising Leather Wallet

Enhancing existing physical products via mobile channel• Mobile reload / top up• Additional channel to improve customer value• Interactive channel to get in touch with the users

Mobile Prepaid: A Future Full of Opportunities

Enhancing existing physical products via mobile channel• Mobile reload / top up• Additional channel to improve customer value• Interactive channel to get in touch with the users

Digitisation of existing physical prepaid solutions• Replacement or endorsement of the existing solution• Host card emulation (HCE)

Mobile Prepaid: A Future Full of Opportunities

Merchant has a Winning Combo:HCE + Closed Loop Prepaid

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Enhancement of existing physical products via mobile channel• Mobile reload / top up• Additional channel to improve customer value• Interactive channel to get in touch with the users

Digitisation of existing physical prepaid solutions• Replacement or endorsement of the existing solution• HCE?

Development of new mobile-based prepaid solutions• Launching a new mobile-based prepaid solution• No need to produce physical cards anymore - is there?

Mobile Prepaid: A Future Full of Opportunities

• Strengthening the brand loyalties of customers

• Uniquely pleasurable shopping experience

• Minimising the inconvenience of payment

Prepaid: a way to minimise payment disruption

Focus on unique advantages to conventional commerce

Mobile Wallets 2.0:Reinventing Commerce

Starbucks (US, Canada, UK)

Examples: Reinventing Commerce

• Digitization of existing prepaid card

• Combination with its new loyalty program

• Over 10 million customers

• More than $1 bn in sales (2013) / 14% of purchases in U.S.

• It’s about customer loyalty andbehaviour (not payment)

Apple / iTunes (Worldwide)

Examples: Reinventing Commerce

• Global powerhouse in mobile commerce

• Small steps (iTunes store, App Store, Passbook, digitizediTunes card, TouchID, Apple Pay)

• Mobile prepaid –an instrument to reach non Apple customers and thosewho don’t have payment cards

• Prepaid instead of current account

• Challenging the banks at their own game

• Integrated cashback, reward and loyalty schemes of high street and online retailers

Prepaid as a model for personal mobile banking

Progressive banking customers and NOT underbanked

Mobile Wallets 2.0:Reinventing Banking

Examples: Reinventing Banking

Google Wallet • Open loop product & closed loop product in one wallet Interest in transactional data

• Google Wallet Card, a prepaid plastic card

• additional functionalities like P2P money transfers and cash withdrawals at ATMs

Examples: Reinventing Banking

Amex Bluebird • Partnership with Walmart

• Digital first (online & mobile)

• Positioned as an alternative toa bank account

• Doesn’t support Apple Pay

Prepaid Options for Banks

• Option 1: Deploy an invisible prepaid infrastructure in support of a new service

• Option 2: Establish a prepaid agent network and resell the products of high profile merchants

• Option 3: Use prepaid openly and actively

• Option 4: Play a supporting back-end role to new players in prepaid

Examples: Options for Banks

Option 1:Danske Bank

Option 2:PostFinance

Option 3:Use prepaid

actively & openly

Option 4:CBW Bank

Looking to the Future –What a Bank Should Consider

Mobey Forum predicts: Prepaid – a major driving force in the near future of mobile wallets

New forms of engagement with the merchant sector (compare to PayPal)

Start paying attention to possible disruption of current account and customer relationship

Question your own role in the ecosystem

Obstacles such as with regulation, operating procedures and legacy systems integration are no good excuse for missing the momentum

• Anne K. Shreiner American Express

• Hans S. Ildstad EVRY

• Thor Ragnar Klevstuen EVRY

• Sarah Kocianski Monitise

• Ville Sointu Ericsson

• Kasper Sylvest Olsen Danske Bank

• Kristian Thure Sørensen Nets

• André Zölch PostFinance

Special Thanks to the Core Team!

Thank you!