Mobile Commerce
Syed Babar AhmadDeputy General [email protected]
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
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