Mobile Money
-
Upload
dion-lisle -
Category
Documents
-
view
1.483 -
download
6
description
Transcript of Mobile Money
CITI MOBILE UPDATE MARCH 24, 2010
Dion F. Lisle Executive Vice President
Citi Growth Ventures
2
Full Disclosure
• I work in Citi Growth Ventures
• I am not a real banker – I just work at a bank
• I worked for Obopay – a mobile payments startup
• I belong to 12 different mobile groups on LinkedIn
• I have worked in technology as a non-technologist for 20 years and the past 10 in startups.
• I love gadgets (my iPad is already on order)
Time Flies
I will Google
that
There is an app for that
Elapsed Time = 1 Year
Mobile Background
5
Phone Interaction
SMS
160 Character limit
Not guaranteed delivery
Simple
No download to phone
APPLICATION
Download to Phone
Requires Discoverability
High level of functionality
Brand able
App Stores changed everything WAP
Wireless Internet
Covers 60% of phones
Not easy to use
Doesn’t require Phone Carrier Cooperation
6
Phone OS Wars
This is NOT the PC Wars – Eventually you will wish it was
What Makes a Smartphone Smart ?
Smartphone Vendors
Good Business for Apple
Apple’s iPhone is 6% of the market but 32% of profit
Unabashed Commercial for the Greatest Mobile Device Ever
No I am not a Paid Spokesperson – just a fan
Thoughts Before Apple Launched the iPhone
“We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.”
“$500? Fully subsidized, with a plan? It is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard…….So, I kinda look at that and I say, well, I like our strategy, I like it a lot.”
“Apple is slated to come out with a new phone….And it will largely fail.”
“”The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks.”
12
1
Check email for UAL Alerts
2
Check Weather for NYC
3
Kill Time on Flight Video Game and Music
Check Into Hotel
Find Train from JFK to Mid-Town
4
5 Look Up Restaurant on LocalEats
6 Recharge iPhone and Listen to Music
7 Take Pictures and email to
Family
Text Kids
and go to Bed
8
Fly to NYC
13
iTunes as an App Delivery Mechanism
Total Active Apps (currently available for download): 159,611
Number of Active Publishers in the US App Store: 32,183
App Submissions This Month (Games): 2,009 ( 84 / day ) This Month (Non-Games): 14,387 ( 599 / day ) This Month (Total): 16,396 ( 683 / day ) Current Average Overall Price: $2.85 Most Popular Categories 1 - Books (28705 active) 2 - Games (24551 active) 3 - Entertainment (20656 active) 4 - Education (11056 active) 5 - Utilities (9788 active)
14
iPhone Drives Mobile Web Usage
Activity iPhone Smartphone Market
Any news or info via browser 84.8% 58.2% 13.1%
Accessed web search 58.6% 37.0% 6.1%
Watched mobile TV and/or video 30.9% 14.2% 4.6%
Watched on-demand video or TV programming 20.9% 7.0% 1.4%
Accessed Social Networking Site or Blog 49.7% 19.4% 4.2%
Listened to music on mobile phone 74.1% 27.9% 6.7%
Source: M:Metrics
15
AT&T Investment Pays Off
• 30% of US consumers who purchased Apple iPhone 3G in the summer of 2008 switched from other mobile carriers to join AT&T, – 47% switched from Verizon Wireless – 24% switched from T-Mobile – 19% switched from Sprint.
• 3G iPhone Impact on the SmartPhone Market – Pre-3G iPhone – Apple’s share was 11% – Post-3G iPhone – Apple’s share was 17%
Not just in the USA
Japan has enjoyed the most advanced mobile phones for years – with the exception of Apple – every phone in their top 10 list is made in Japan
What Apple Taught Us
A Great User Experience is Key
Build a Complete Ecosystem
Partner with the Carriers
The Network
2G
2nd Generation
GSM or TDMA/CDMA
Digitally Encrypted
Digital NOT Analog
1G Signal could decay slowly
3G
3rd Generation
GSM / EDGE / UMTS and CDMA2000
Capable of Data and Voice Simultaneously
Being rolled out now
4G
100% IP Packet Enabled
Smoother roaming and transitions between networks
Still mostly being developed by standards bodies
The Downside to Success
• AT&T has taken a great deal of grief for their network speed
• Verizon took advantage of the opening with an ad that plays up the weakness of AT&T 3G
• Note: The iPhone accounts for most of the traffic usage on AT&T
20
Global SMS v 3G - Disparity
0
20
40
60
80
100
120
0% 5% 10% 15% 20% 25%
United States
Canada
Mexico
Brazil
U.K.
Spain
Hong Kong
Singapore
0
20
40
60
80
100
120
0% 5% 10% 15% 20% 25%0
20
40
60
80
100
120
0% 5% 10% 15% 20% 25%
United States
Canada
Mexico
Brazil
U.K.
Spain
Hong Kong
Singapore
SM
S U
sage
– S
MS
Sen
t per
S
ubsc
riber
per
Mon
th
3G Penetration – As a % of All Subscribers
India
Czech
Philippines
21
Sensitivities for Each Attribute • Caching • Concurrency • System Throughput • Thin Client: Avg,. Web
page size • Thick Client: Data refresh
rate
PERFORMANCE SECURITY • Encryption • Intrusion Detection • Code Security • Role Based Security • Authentication • URL Spoofing • Audit Trail
FUNCTIONALITY • Business Rules • Expectations • User Experience
• Product Scalability • Hardware Scalability
VARIABILITY • 3rd Party Integration • Change Configuration
MODIFIABILITY • Hardware Compatibility • OS Compatibility • Application Compatibility
PORTABILITY
Mobile Sensitivities
Carriers Want……
New Revenue Sources
Avoid being a big dumb pipe
Less churn – more customer loyalty
Less Regulation
Reduction in CapEx – big investment in networks
New customers – often at the expense of current customers
Mobile Money
Mobile Money Taxonomy
Mobile Commerce Mobile Banking
M-Coupons Mobile Payments
Mobile Advertising
Bank Account Services
BillPay By Phone
Proximity Payments
Remote Payments
P2M P2P
NFC or Contactless
Money Transfers
P2M Transit
A Three Level Basis to Offer Mobile Financial Services
III. Advanced:
location-based services (LBS),
contactless capability, full-featured browser,
mobile social networking II.
Progressive: Peer-to-peer payments,
investments/trading, richer rewards management
I. Basic Consumer Mobile Financial Services:
Account balances, bill presentment/payment, marketing response, basic rewards
Service Progression
Platform Progression
SMS
Thick/ Thin
Handset Modification
Technology Enablers
Network Capability Handset Development
Most networks not yet enabled for Advanced Services
5-10% of Phones Equipped to handle Advanced Services
50-60% coverage of wireless data connections sufficient to support Progressive services
40-60% of Phones already equipped to handle Progressive Services
Most networks support Basic Services; SMS is a standard feature
~95% of Phones Equipped to handle Basic Services
Mobile today is a cluttered arena with multiple stakeholders
Mobile Ecosystem
Regulators Technology Drivers Finance
Ecosystem
GTS Cards Retail Pvt Bank
Geographies
Mobile Money Ecosystem
Card Issuer
Handset Maker
Mobile Carrier
Software Developer
Chipset Maker
Payment Networks
Card Acquirer
Processor Card Associations
SIM Card
Consumer
Merchant
Mobile Applications
POS Vendor
Around the World
Across the Globe – Mobile Financial Services are Growing
The number of consumers using Mobile Financial Services across the world is forecast to
grow to nearly 1 Billion by 2014
15 Million U.S. consumers use mobile banking services each month
3.5 Million Bank of America customers
are active users of BofA’s mobile banking services
$61 Million Was deposited by USAA Federal Savings Bank customers via mobile check capture in only 6 weeks
$200 Million Handled per month by GCash and Smart Money in the Philippines by the end of 2008
$140 Million Value of transactions handled by M-Pesa in Q3 2008 3 Years
Before mobile banking is predicted to surpass Internet banking for Banco do Brasil
100% Growth In number of customers using mobile to
access Barclays’ banking services in the U.K. in the first 6 months of 2009
35 Million Mobile handsets with Osaifu-Keitai NFC payments and eWallet capabilities in Japan
Market Leader
Market Leader
Market Leader
Market Leader
Market Leader
Market Leader
Kenya
• Kenya has a population of 40 million people
• Kenya has 300,000 landlines
• Kenya has nearly 4 million internet subscribers
• Kenya has nearly 20 million mobile phone subscribers
• Kenya has a Per Capita income of $1,400
• Kenya has nearly 9 million mobile money users – It is estimated that 40% of Kenyan Adults use the MPESA
service.
• MPESA has changed the financial lives of millions of Kenyans.
The Secret to MPESA’s success in Kenya
• Nearly 14,000 Agents – By the time you read this it has probably grown by 5%
• A Human ATM Network across Kenya – Rural and Urban
Reality – Mom goes to an agent to pick up
the Money Brochure – Send Mom
Money Anywhere
Be an MPESA Agent
Research by: Mark Pickens, Sarah Rotman, Ignacio Mas, Olga Morawczynski
Mobile Payments in ME and Africa to Rise to $5 + Billion in 2013
The Philippines
• The Philippines has 2 successful mobile money systems – Gcash – offered by Globe Communications – Smart Money – offered by SMART Communications
• Like MPESA in Kenya – the Philippines relies on a network of incented and trained agents
• Unlike Kenya – the central bank was very involved in the design and rollout of Mobile Payments in the Philippines. – In accordance with BSP Circular 471, which was issued in January 2005,
non-bank agents must first attain a Remittance Agent license to perform cash in/out.
• The Philippines has been a Texting country since the advent of their mobile phones – this Texting literacy made the transition much easier.
India – The RBI Weighs In
• Mobile Payment in India - Operative Guidelines for Banks
• 2.1 Only such banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer mobile payment services to residents of India.
• 2.2 The services should be restricted to only to bank accounts/ credit card accounts in India which are KYC/AML compliant.
• 2.3 Only Indian Rupee based services should be provided.
The RBI only took 12 pages to outline what can and can’t be done with mobile payments in India.
Osaifu-Keitai (Mobile Wallet)
• Japan is the most advanced Mobile Money Market in the World !
• NTT DoCoMo drove the entire ecosystem to deliver a complete Mobile Wallet – Get on a train, buy a soda, pay at a store………
• It is the unique dynamics of the Japanese Market that allowed such a complete solution to be delivered
• Even with NTT driving – it took 10 years
• 30 million users out of a subscriber base of 60 million
• Osaifu Keitai is accepted at 700,000 retail locations
22%
17%
7%
27%
22%
9%
0%
5%
10%
15%
20%
25%
30%
eMoney Holder IC card Mobile
2007
2008
Prepaid and eMoney usage (to total population)!
21 22 2530 33
38
4
4
1212
12
12
13
14
3
221
3436
39
45
50
56
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010
Suica, Pasmo… Edy Others Total
B USD
Felica Market Size both Prepaid (plastic) and eMoney (mobile)!
Ministry of Internal Affaires, 2009
C Media, 2006
Prepaid (plastic)
eMoney (mobile)
eMoney (mobile) Prepaid (plastic)
Yano Institute, 2008
Felica Market in Japan
Service type Vendor Issued(MM)
(in mobile,MM) #shop (M)
Monthlytransaction
(MM)Charging touch point (pre-paid) Negative points note
Edy Pre-paidBitwallet(RakutenGroup)
48.4 8.0 132.0 22.5
Credit card, Bank, POS, Charger,Point exchange
5000 websites accept Edy forpayment. Rakuten obtained over50% of Bitwallet shares in Nov.2009.
Suica Pre-paid JREast 27.5 1.5 63.2
42.9
Creditcard, Bank, POS, Ticketvending machine, Point exchange,USB Reader/Writer with JRE creditcard, Auto top up with JRE creditcard
Mobile Suica requires 10USD forannual service fee.
ICOCA Pre-paid JRWest 4.7 unavailable 49.2 0.9Charger, Ticket vending machine
PASMO Pre-paid Pasmo 13.5 unavailable 50.0Charger, Auto top up with credit card No mobile service is provided so far. Convertible with Suica.
nanaco Pre-paid Seven I 7.9 0.9 23.5 26.0POS, Seven BK ATM, Charger, IYCard (credit card)
Charging/accept point is limited in Sevengroup shops and cards.
Transaction number is the largestamong eMoney.
WAON Pre-paid Aeon 10.0 n.a. 29.0 25.3Aeon BK ATM, POS, Charger, Autotop up from Aeon bank account
Available at McDonald's
iD Credit Docomo,SMVC.. 10.0 6.4 390* n.a.
- Currently other carriers don't implementiD in their handsets. One handset canhave 2 card numbers of iD.
*Shows # of available terminalinstead of # of shop.
PiTaPa Credit Railway companies inWestern Japan 1.1 unavailable 18.0 0.9 - No mobile service is provided so far.
QUICPay Credit JCB, Toyota 4.6 n.a. n.a. n.a. - AU pre-loads this into some handsets.One handset can have only 1 card
VISATOUCH/SmartPlus Credit MUFJ Nicos 0.8 n.a. 12.8 n.a. - One handset can have 5 card numbers.
Total 128.5 16.8 377.7 118.5
Suica (Kanto area), Icoca (Kansai area),and other e-money issued by traincompanies are becoming interoperableinteroperatable.
eMoney Usage in Japan
Successful – Yes Complex - Definitely
Other Merchants
Transportation companies
Pre-paid (cost reduction)
- Edy (SONY, Rakuten). Transaction fee at payment. Not profitable. Rakuten got 50% of Bitwallet (Edy issuer) shares in Nov. 2009. Rakuten also bought eBank in Feb. 2009.
- Suica (JR East), PASMO and ICOCA (Bus, Subway). Reduce maintenance cost of auto ticket gate and ticket itself. Now JRE is leveraging it to payments (plastic & mobile).
- Nanako and Waon (merchants). Fast cashing and reward points to loyal customers
Post-paid (not widely accepted)
• NTT Docomo launched iD on Docomo handsets. Fee at transaction. They became an issuer of credit card and network provider for other credit card companies.
• JCB provides its electronic credit, called Quick Pay. Available on all 3 carriers.
• VISA and MUFJ also provide its scheme called Smart Plus and its convertible with VISA Touch.
JR group JR compatible
Pitapa is Post-paid
Pre-paid
Post-Paid
Pay pass is still trial in Japan
Felica Types in Japan
Overseas Lessons So Far……
• Carriers offer successful services – so far no banks have been successful
• Regulators have been both active (Philippines) and nearly invisible (Kenya)
• Texting based services rule the day…..so far – This is self-selecting as Smartphones have not yet proliferated in
underbanked countries. – Except Japan
• Low ATM penetration combined with high mobile penetration – Except Japan
• Domestic remittances is the best use case so far. – Except Japan
At Citi
ATM
Primary Bank Relationship
Primary Bank Relationship
Debit C
ard
Money Transfer
Bill Pay
Regular Savings
Auto deposit Payroll
Mobile
Internet
ATM, Mobile and Internet channels allow Citibank to maintain stickiness with customers through their primary bank relationship
The five pillars of Retail Payments and Deposits are supported by the 3 key technology channels
• First major U.S. bank to offer a downloadable banking app
• For Cards-only customers, Cards opened access Oct 2008
through Firethorn app
• Bank and Cards apps available to AT&T and Sprint customers as well as to Verizon, T-Mobile
and Alltel BlackBerry users
• View account info, make transfers, pay bills, find branch/
ATM, connect to Customer Service
Downloadable Citi Mobile (Original)
(aka “Thick Client”) Bank launched April 2007
Downloadable Citi Mobile iPhone app
Bank launched February 2009; Cards-only access coming 4Q09
Mobile Browser (aka “Thin Client” or
“Citi Mobile for smart phones”) Bank launched June 2009;
Cards-only access coming 4Q09, behind joint “front door” with Bank
Text Banking (aka “SMS” for Short-Message Service, or
“MyCiti On Demand”) Cards launched March, 2009; Bank support coming 1H10
• Adapted the original Citi Mobile for use as a native app on iPhone;
support for Cards-only users is being added 4Q09 behind a joint
“front door” with Bank
• Available on iTunes and on the App Store
• View bank/cards account info, make transfers, pay bills, find
branch/ATM automatically, one-touch to reach Customer Service
• Built on Citibank Online and AO technology, but optimized for mobile
browsers
• No downloads, installation, updates or enrollment—sign on with CBOL or
AO User ID and Password
• View more account info (bank / cards / brokerage), transfer funds, add payees, pay bills, self-service
options, find branch/ATM and connect to Customer Service
• Cards customers can request balances, recent activity, locations
• Bank accounts coming 1H10, on same short code of MYCITI (692484)
• Phase 2 (2H10): “Actionable Alerts” (e.g.. “Minimum
payment of $10.00 is due 2/7/09 on loan 574. Reply PAY to make payment.”)
Building on our 2007 head start, this year is seeing an unprecedented push forward
43 Citibank Online Business: Citi Mobile Citi Internal Copyright © 2009 Citigroup Inc.
Citi Mobile – Current Banking Suite
44
SMS versus Application
Be Honest – which do you prefer ?
Citi Mobile – What’s Next
Location Based Services (LBS)
Near-Field Communication (NFC)
Peer to Peer Payments (P2P)
3 Strategic Initiatives: 1 2 3
Obopay: A Silicon Valley P2P service that allows clients and customers to send and
receive money using their mobile phones. Citi made a strategic equity investment in the company in 2007 (3.1% equity stake) and
partnered with Obopay to bring Citi-Obopay ventures to market in the US.
Tap &Pay : World’s largest NFC trail in Bangalore, India. Goal is to validate customer acceptance of technology, pioneer definition of and business model for contactless payment
ecosystems, and capitalize on resulting brand-shift
Citi wants to be a leader in being Ubiquitous for our customer’s and client’s financial needs
46
Tradeoffs
• Customers require Easy to Use Services
• Customers demand convenience from their banks
• The average bank customer is NOT an 18 year old heavy mobile user, but a 38 year old light mobile user
• Money transfer products are under attack from external fraudsters
• Mobile is an unknown dimension to a bank’s security teams
• Banks can not afford negative headlines in regards to mobile payments.
Easy & Secure
47
Mobile Risk Management
• New Risk – most banks don’t have true mobile expertise, but it is growing
• Old rules don’t always work – Citibank required a 6 digit alphanumeric PIN as compared to
Obopay’s 4 digit PIN. • Go Ahead – Try Alphanumeric on your non-QWERTY phone
InfoSec View Business View
• Weekly project call had over 50 participants from INSIDE of Citibank
• To ensure compliance, the team included – ARR – Audit Risk Review – Compliance
• Two groups – legal and internal policy – Information Security
• Two groups – Business and IT – Financial Accounting – Legal – 2-3 lawyers every week – Financial Risk – Operations – Marketing of many kinds – And more…………………………………
Weekly Mobile Money Project Meetings
LBS Fraud Prevention
• Imagine that you have a payment service, such as a benefit card that can only operate when you are near it.
500 Feet Radius
2 Miles Away
LBS Based Fraud Prevention Rules
The system sees a Transaction out of your Geographic Range
You get a Text requesting Authorization
Amazing….but True
• A carrier in Mozambique issued tokens for airtime that became accepted as Currency because their national currency was devaluing so quickly. – There are other examples of airtime as currency
• Nokia says “Nokia should get a percentage of every transaction carried on one of it’s devices.”
• The MPESA service failed in Afghanistan due to illiteracy – No one could read the text messages
• A mobile payment service in Latin America claimed 1 million users – 1 million registrations led to less than 30,000 users