Rolling out of New Mobile Banking Business in Zambia...

Celpay Partners PresentationNovember 2007

Rolling out of New Mobile Banking Business in Zambia and DRC

Presented by:LAZARUS MUCHENJE

CEOCELPAY HOLDINGS LIMITED

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What does Celpay do?

Celpay ..…

Mobile banking services and payment solutions

The Principle uses ....

- Mobile phone as basic instrument for payment instructions

- Menu options for users to send payments to others

- Money is taken from deposit accounts. No credit

24 June 2008PDF created with pdfFactory Pro trial version www.pdffactory.com



Introduction

ALWAYS BEAR IN MIND THAT YOUR

OWN RESOLUTION TO SUCCEED IS

MORE IMPORTANT THAN ANY OTHER

ONE THING.

Abraham Lincoln




CELPAY GROUP STRUCTURE




Group Structure

FIRSTRAND FACTS

• One of RSA,s largest integrated financial institutions

• R772bn ($119bn) worth of assets

• R37.8bn (5.3bn) net asset value

• Employs 40,000 people

• Retail franchise footprint of 680 branches and 4,185 ATM’s and 50,000 card acceptance devices

• Top 10 listed companies on JSE Securities Exchange

• World famous brands under FirstRand include;• Rand Merchant Bank, the number one

merchant bank in South Africa• First National Bank, among the top 3

commercial banks• Wesbank number 1 asset financing company • Discovery, number 1 in health care

insurance• Outsurance, Number 1 short term insurer • Momentum, one of the top 3 insurer in

health plan management

Celpay Zambia Limited

CELPAY HOLDINGS (PTY) LTD

FIRSTRAND GROUP

Celpay DRCsprl

Celpay Holdings

BV




Where is Celpay?




What does Celpay Do?

“3-channel” electronic access to a bank account§ Mobile phones § Internet§ Point of Sale Devices

Partners with banks and Network Operators

Facilitates electronic financial transactions§ Real time§ Mobile§ Safe§ Convenient

Value added services/third party applications§ Individual electronic auto top-up§ Wholesale airtime distribution§ Stock ordering§ Telephone recharge§ Payment requests/Bill payments§ Payroll payments§ Corporate distribution payments facilities




ENVIRONMENT REVIEW




BANKING ENVIRONMENT

Sophisticated markets (e.g. South Africa)

Well established and strong banking sector;Good penetration;

Banking a trusted sector;High level of technology

and innovation.

Developing markets (e.g. Zambia):

Banking established for a significant period;Processes bureaucratic and old-fashioned;

Technology limited and developing.

Conflict/post-war (e.g. DRC):

Lack of trust in the banking sector;Low level of savings;

Marred by inaccessibility;Lack of services and infrastructure;

Corruption: environment of distrust.




Regulatory Framework

n Bureaucratic procedures in the enactment of new laws

n Fragmented laws relating to the financial sector

n Lack of guidelines and directives under principal Acts

n Lack of adequate legal framework for regulating foreign currency

transactions

n Lack of financial sector consumer protection laws

n Inadequate skills for enforcement of the law relating financial crimes

n Tendency not to report financial crimes to the relevant law enforcement

agencies

2006: World Bank Paper




Zambia and DRC relative to Africa




Banking in Zambia & DRC

15%

8%

11%

66%

Formal Bank

Formal Other

Informal

Financially - Excluded

Source : Finscope: Measuring Financial Access In Zambia (November 2006)

ZAMBIA

DRC

98% of the population are unbanked in 2008

Less than 2 % are banked in 2008




Opportunity?




Existing Conditions

n LOW BANKING PENETRATION LEVELS

n RAPID GROWTH IN MOBILE TELEPHONY TAKE UP

n MOBILE SUBSCRIBERS AT LEAST 5 TIMES BANKING

POPULATION

n POOR BANKING INFRA STRUCTURE DUE TO HIGH COSTS

n HIGH CASH USAGE FOR TRANSACTIONS




CELPAY BUSINESS MODEL




Business Models for Mobile Banking

• Additive model:

– Existing banked customers;– Additional channel;– Alongside or as part of other channels (e.g. internet).

• Transformational model:– Beyond existing banked;– Products meet known needs of the unbanked – Wizzit, Celpay

Source: DFID report (2007)




Celpay Business Model

Banks

Bank A

GSM

Network Operator 1

POS DEVICES Merchants

INTERNET Merchants & Individuals

CELL PHONE Individuals

CHA

NN

ELS

Bank B

Bank C

Network Operator

2

Network Operator 3

Multi-banked

MNO

Multi-channel

No monthly charge

No minimum balance

No bank account




Technology Choice

WIG/SIM TOOLKIT

USSD

SMS

WAP




Key Partners




Key Clients & Bank Partners (Zambia &DRC)

Customer BaseCustomer Base

Bank Partnerships

$20m Transaction Value Monthly




CELPAY SERVICES




Celpay Services to Customers




Product Mix

PREPAID AIRTIME SALES ARE THE LEADING SERVICE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Payments Transfers Prepaid Balance Enquiries Other




Challenges




Environmental Challenges

Legislative

Market Readiness

Costs

Illiteracy




Business Challenges

Account opening process

Depositing/ withdrawals

Co-operation from Partner banks

Customer and Agent training

Profitability, Profitability, Profitability




Celpay Successes




Celpay Successes

• B2B transactions highly succesful

• G2P - DDR project in DRC

• Previously unbanked informal traders

• C2B adoption – starting to take up now

• Over 100 POS devices in Zambia and 75 POS devices in DRC

accepting payments from mobile phones

• P2P payments showing some adoption

Product well received by both formal and informal players




Celpay Successes – Transaction Throughput

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2002

2003

2004

2005

2006

2007

2008

2009

Year

Valu

e (U

S$)

Projected




Initiative to service the unbanked

• Investing in a Cash Point network

• Initiative approved by Bank of Zambia (BOZ)

• In partnership with Post office

• Payroll for workers who currently get paid in cash

• Withdrawals and remittances at cheaper outlets




Key Lessons Learnt

Payments not savings

Initial market resistance to technology take up

Security very important

Difficult to stimulate transaction quantities

Adaptability / Versatility in each market

Corporates and SMMes early adopters

Acquiring at merchants – minimal take up

Prepaid airtime – Best seller!!




AML & CFT




AML

Full KYC procedures for each client

How do you register customers as a m-fs provider?

Who should register customers the m-fs or the the bank?

How do you make sure that people do not make transactions higher than

the threshold after which one needs to identify themselves in a bank

branch?




CFT

n Celpay not an attractive avenue for funding terrorism

(daily total transactions= US$40)

n Customer due diligence conducted (KYC)

n Compliance with all Regulatory measures in place

n Need for clear regulation for m-fs.




Concluding Remarks




ALL PROGRESS OCCURS BECAUSE

PEOPLE DARE TO BE DIFFERENT

Harry Milner




THANK YOU



Rolling out of New Mobile Banking Business in Zambia...

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