Mobile Financial Services

Thomas Bostrøm JørgensenBusiness Advisor

+47 92032078

thomas.bostrom.jorgensen@gmail.com

Mobile Monday Norway

6th December 2010

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Credentials

CEO, Luup from 2006-2010

Luup is an international leader in domestic and cross-border mobile payments

Key achievements:

Built a successful B2C mobile- and online payments business in UK and Germany

Redefined the company strategy from B2C to B2B

Expanded sales organisation to cover Europe, Middle East and Asia.

Secured global strategic partnerships with Deutsche Bank, and MoneyGram.

Recruited and built a world-class executive team based on top talent from organisations like MoneyGram, RBS, IBM, Visa and Mastercard.

Raised a significant amount of capital from existing to fund the international expansion

Speaker at key industry event like MMT, IPS, Financial Services Club etc.

Market drivers

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Mobile phones

POSATMsPost Offices

MoneyGram Bank branches

With an estimated 7 billion mobile phones in use by 2015, traditional payment providers are now moving aggressively into the mobile payments space

180k 500k 650k 1m 25m 4bn

7 billion by 2015

Mobile payments opportunity driven by continued growth in mobile phone penetration

Mobiles provide a new channel for banking, payments & transfers with greater reach than traditional bricks & mortar locations.

90% of the world’s population has network coverage & 60% has a mobile phone.

By 2015 total number of mobile phones estimated to be 7bn.

Of these subscribers in 2015, 1.5bn are expected to be using their phones as a banking tool.

How big is the payments market?

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... and the mobile payments market?

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Source: Edgar Dunn & Company Forecasts 2009

Recent survey predicts the value paid by mobile to surpass $500 billion by 2015

However …

The mobile payments market has proven to be elusive…

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Source: Innopay, Mobile Payments 2010

The 4 Market playsB

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Developed Countries Less Developed Countries

Social and economic inclusion

Bringing all into the locally advanced financial

system

Leveraging and leapfroggingMaking mobile part of the

economic fabricThese plays influence.... Propositions Technology Ecosystem structure Ecosystem players Economics

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Less developed countries

Unbanked and migrant populations driving demand

2 billion people unbanked

Remittances to developing countries

totalled $247bn in 2008

Over 4 billion mobile phones in useSE Asia remittances

received (2008): $60bn

Africa remittances

received (2008): $31bn

South America

remittances received

(2008): $57bn

India remittances received

(2008): $45bn

Global remittances in 2008 totalled

$305bn

Estimated 215 million migrant

workers worldwide (3% of world pop)

Over 2.5 billion people under-banked

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The developed world demands convenience

Mobile enables anytime, anywhere value-add services

Sources: CheckFree survey, Yankee Group Research World Bank

55% of mobile banking users

have smart-phones

Mobile banking services primarily

used by 20-34 year olds – Generation Y

57% of m-banking users see convenience &

anytime access as primary usage driver

90% of phones in Japan

have NFC capabilities

Mobile Financial Services - ecosystem

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Customers and Merchants

Micro Finance Companies

Money Transfer Organisations

Original Equipment Manufacturers

Mobile Financial Solution providers

Mobile Network Operators

Government Sponsored Organisations

Non Government Organisations

Banks

Schemes / Payment Service Providers,

SIs, BPOs

Developed Countries Less Developed Countries

Dominance of the Mobile ecosystemB

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OEMs

MFSs

MNOs Banks

Banks

OEMs

MNOs

GSOs

MFSs

OEMs

MFSs

MNOs

GSOs

Banks

MFIs

MTOs

OEMs

MFSs

MNOs GSOs

NGOs

Dominant

Following

MNOs are in the driving seat –banks lag, and are vulnerable

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Live services and solution providers are emerging globally

Americas SP Monitise

Fundamo

Mcom (Fiserv)

Paymate

M-Foundry

Americas live services Obopay

JP Morgan Chase

Bank of America

PayPal Mobile

Africa SP Mi-Pay

Fundamo

Paybox (Sybase)

Fronde Anywhere

Africa live services M-Pesa (Safaricom)

Zap (Zain)

Beem

Paybox

Western Union

Orange

Middle East SP Luup

Fundamo

Mi-Pay

S.E. Asia live services Jibun Bank

Globe Telecom (GCash)

Western Union

SK Telecom

Middle East live services

NBAD

National Bank of Kuwait

Zap (Zain)

Globe Telecom GCash

Paybox

South Asia live services Barclays “Hello Money”

Obopay

mChek

Europe SP Luup

Monitise

Paybox (Sybase)

Mi-Pay

Macalla

European live services Deutsche Bank

NatWest

M-Pesa (Safaricom)

Caisse d’Epargne

MoBank

Beem

Visa PayWave Asia SP Luup

Fundamo

Paymate

Mcom (Fiserv)

The industry is maturing

Time

Benefits

Pote

ntial

Socialisation

Proof of Concept

Proliferation

Industrialisation

Consolidation

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Mobile Financial Services – what are they?

P2P payments

Remittance services

Mobile wallet transfers

Mobile airtime top-up

Bill payments

Loans and insurance

M-payments

Contactless Payments

Smart transit

Merchant payments by SMS

Event tickets

M-commerce

Account balance

Mini-statement

Account limit alerts

Account transfers

ATM/branch locator

M-banking

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Mobile Banking:

Shinginko Bank – the world’s first mobile-only bank

Personalised banking services

Full banking services:

Account opening

Yen deposits

Funds transfers

Loans & insurance

Mobile payments

Targets Generation Y customers

Changing the face of banking in Japan

Won the Best Core Banking Project Award 2008 – Asian Banker

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Mobile Commerce:

MoBank – capitalising on the call for convenience

MoBank is a mobile banking service, which allows users to pay for purchases, check balances.

The user can register one debit or credit card (Maestro, MasterCard, Visa or Visa Debit) to the MoBank account.

The user needs to install a free application on the mobile phone in order to be able to use MoBank

Enables mobile purchases of:

Train tickets

Books

DVDs

Event tickets

Fast food

Generates revenue through commission on purchases

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Mobile Payments:

M-Pesa – capitalising on the unbanked value chain

Safricom, Vodafone’s Kenyan subsidiary, offers an SMS-based payment and money transfer service

Based on SMS and pre-paid accounts.

Through M-PESA a user can deposit or withdraw money, transfer money to another M-PESA customer or send money to a non M-PESA customer, buy Safaricom prepaid airtime and manage the M-PESA account.

In December 2008, Safricom announced an extension of the service with UK-Kenya remittances in cooperation with Western Union.

11.5 million previously unbanked customers (over 40% of Kenya’s adult population)

30% of users save money in their M-Pesa account

Understand the potential for disintermediation

Mobile Payments:

M-Paisa - Mobile Microfinance

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Vodafone and Afghan mobile operator Roshan have launched M-Paisa for microfinance institutions.

In a country where 36% of its people live below the poverty line, Afghanistan is the poorest country in the world outside Africa

It also has a 40% penetration rate of 12 million mobile subscribers out of a population of 30 million

M-Paisa is based on an IVR service which will enable greater use of M-Paisa by consumers who might otherwise be excluded due to high illiteracy rates in Afghanistan

Microfinance

microcredit, savings, insurance, money transfers, and other financial products targeted at poor and low-income people

$25 billion currently at work in microfinance loans & 20 million microfinance accounts globally

India - 188 million accounts (18% of population)

Latin America and Caribbean - 14 million accounts

Africa - 27 million accounts (4% of population)

Mobile Payments:

Osaifu-Ketai – an NFC success

Osaifu-Keitai, literally meaning "Wallet Mobile", is a trademark of NTT DoCoMo, which developed the system.

It refers to the mobile phones integrated with Sony’s Mobile FeliCa ICs, as well as the services provided by the applications on these phones.

Although it is developed by NTT DoCoMo, the system is also supported by other MNOs, making it the de facto standard mobile payment system in Japan.

Osaifu-Keitai services include electronic money, identity card, loyalty card, fare collection of public transits or (including railways, buses and airplains), or credit card

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Current headlines point to the future

NAIROBI, Kenya, Dec 2, 2010 - Financial institutions plan to leverage on mobile money transfer technology to enlist more Kenyans in the formal banking system

New York, Nov 16, 2010 - AT&T Mobility, T-Mobile USA and Verizon Wireless today announced the formation of a joint venture chartered with building ISIS™, a national mobile commerce network that aims to fundamentally transform how people shop, pay and save

India, Dec 1, 2010 - Nokia Stores To Serve As Banking Correspondents For Union Bank of India’s Mobile Payments

Australia, Nov 26, 2010 – Mobile payments taking off. PayPal reports that this year mobile payments took off in Australia

California, Nov 18, 2010 - Google CEO Eric Schmidt revealed that upcoming Android devices would include support for something called Near Field Communication

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In summary

Mobile Financial Services are getting foot-hold everywhere

Roll-out is faster and take-up is higher in less developed countries because if offers the users greater value

Developed countries will see mass take-up and usage with NFC (driven by next gen iPhone and Android?)

Mobile operators are leading the way and banks are lagging

The future is mobile!

Thank you for listening!

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