Mobile Commerce

Syed Babar AhmadDeputy General ManagerBabar.Ahmad@waridtel.com

CREATING A FOUNDATION FOR A

WIN – WINPARTNERSHIP

What is Mobile Commerce

Mobile Banking

Mobile Commerce

It is more than just getting your access to the bank account – it is about using all the facilities that any financial institution can provide. Including:• Making person-to person and person-to-institution payments and transfers using your bank or other account• Depositing and withdrawing cash• Getting access to credit • Making investments in stock exchange and other institutions•Retail purchases

How does this opportunity stack up?

• Large and rapidly growing population• Ultra low banking segment (8k Branches, 4.5M customers)*

• Mass level mobile penetration (90M @~52%)• Unavailability of credit especially micro credit to rural market• Lot of small pockets of rural population • At one end of an expatriate remittance corridor• Mobile connected users surpassing Internet connected users • Large youth segment

* MCB Presentation to PTA

Pakistani Market

Developed Countries

Who are the key Stakeholders?

Micro and Commercial Banks and other FIs Mobile Network Operators (MNO) Technology Enablers (SIM / Phone / Platforms / POS) Pakistan Telecommunications Authority State Bank of Pakistan Utility Companies Stock Exchanges & Investment Houses NGOs and Private lenders Retailers End Users / Customers

Core Competencies

In order to see how to make a win-win partnership we must see what each stake holder brings to the table:

• MNOs – Managing billions of small transactions across billions of customers cost effectively on a daily basis

• Banks – Access to lending funds and current cash management infrastructure, as well as working within an existing legal framework

• Technology Partners – Own finished out-of-box product, ready to rapidly deploy and work on setup and maintain basis

• SBP / PTA – Willing to create a framework conducive to rapid takeup of the service, protecting both the end users and the investors and enhancing the overall fiscal development of the economy

Regulation and consumer acceptance are seen as the main impediments to growth in mobile wallets.

Key hurdles to mobile wallet deployment

% o

f Surv

ey R

esp

ondents

EDC –GSMA EDC –GSMA 2008 Survey2008 Survey

Barriers to Adoption - Cooperation between banks & mobile carriers and agreement on a business model are seen as the most significant barriers to adoption in the next three years

While last year’s survey indicated that merchant and consumer adoption are the top two barriers, this year’s survey shows that bank and mobile carrier cooperation and business model could prove more challenging* Other includes limited handset support, unsophisticated user interface, lack of standardization, etc.

Consumer adoption

Merchant adoption

Agreement on common mobile

payment platform

Agreement on business model

Security & fraud related

issues

Availability of capital

2007 2008Cooperation between

banks and mobile carriersAgreement on

business model

Merchant adoption

Consumer adoption

Agreement on common mobile payment platform

Security & fraud related issues

Regulatory restrictions

Other*

Availability of capital

EDC – MPW EDC – MPW 2008 Survey2008 Survey

Top Reasons for low adoption of M-Commerce

1. Regulatory Framework2. Customer Acceptance3. Business Model still not clear (till

date!)

Regulatory Framework

One of the major reasons for the slow take-up of this service has been the lack of, or near sighted framework which tries to emulate the existing banking system processes on mobile without considering the very different nature of these customers.

Because of this lack of customer focus, often times the KYC processes are so cumbersome that it leaves very little room for growth in banked segment

Customer AcceptanceThis is again because of lack of

customer focus:

• Either, the technology is too complex for the intended customer to use

• Or, the pricing is set at a level which limits the widespread usage

• Or, sometimes the actual functionality is limited because of limited outlets available for mobile transactions and cash in/out

Business Case Clarity

Most important for Pakistani market – i.e. who pays for the technology, marketing, and servicing the combined customer and who gets to keep the majority share of the revenues:

• MNOs• Banks• Technology Providers

Currently We are headed to…

15

Banks

MNOs

Customer

Retailers,Merchants,Publictransportcompanies

The WIN – WIN PrepositionMNO

Technology Provider

MNO

MNO

MNO

MNO

Bank BankLenders

Investme

nt Hous

e

Bank

Customers

What must each player do?

MNOs• Agree on one

Standard tech partner

• Open up their access to that tech partner

• Nominal charges (if any) for M-Comm usage

Banks• Agree on one

Standard tech partner

• Competitive charges for M-Comm usage (cash handling only)

Regulator• Loosen the

KYC requirements that are more in tune with the realities of our rural market

• Competitive charges for M-Comm usage

Technology

• Connect to all MNOs and Banks

• Invest in marketing the product