Congreso de Acceso a Servicios Financieros, Sistemas y Herramientas de pago Cartagena– March 2010 Aprendiendo de los diferentes modelos de banca móvil.

Congreso de Acceso a Servicios Financieros, Sistemas y Herramientas de pago

Cartagena– March 2010

Aprendiendo de los diferentes modelos de banca móvil en el mundo

Implementing new mobile money strategies to increase revenues for Banks, MNOs and

Retailers

YellowPepper provides mobile financial services that allow consumers,

businesses and institutions to effectively conduct monetary and financial

informationaltransactions using a cell phone.

YellowPepper

Current Status

The Company

• The Company has successfully penetrated the banked market in six countries.

• Presently handles more than 5,300,000 transactions per month.

• Addressing over 1,700,000 unique users in those six countries.

Ecuador

Colombia

Bolivia

Peru

Guatemala

Panama

Soon:Dominican Republic

Current Partner Operators

Ecuador

Colombia

Bolivia

Perú

Guatemala

Panamá

Cooperativa Alianza Minas

Clients: Financial Sector

Nuestros Clientes:Sector Comercial

All regions:

Colombia:

Partners

Banked and Unbanked

Access to Financial Services

Source: Felabanc

Us Market: Share of Payments by type

World is moving towards electronic money…

Just 3 emerging Markets above:Over 65% of population; only 9.5% of electronic transactions. HUGE GAP!

Emerging Markets Share of electronic / card transactions :

Emerging markets lag behind…

Just one aspect of electronic money infrastructure – Cards(plastic e-wallets)

Emerging markets have not embraced electronic payments yet.

Opportunities are large and growing.

For banks, retailers, governments,Telcos, processors, others (e.g. Fbook, Skype, Microsoft, etc.)

Payment cards per person – top 20 countries

2.69

0.03

Lots of room … lots of opportunity

• Electronic money no longer a wish or fantasy – now a requirement for modern life

• E-Commerce / m-commerce driven demand; physical distance between service / product providers and consumers keeps increasing

• Virtual / dematerialized goods and services (are propelling a self servicing society or lifestyle);

• Retail automation allows and requires electronic money; organized retail prefers not to handle cash

• Less and less cash issued (governments, businesses pay through banks, payment cards)

• Technology advances in terms of (a) “last mile connectivity” and (b) lower cost of terminals

• Advances in mobile technology promises that this newest extension of the payment infrastructure, presents a large opportunity (note: architecturally and functionally, it is not entirely new territory).

IFC Key drivers:

• Electronic money brings transparency, inclusion, speeds up economic processes [WBG AGENDA: reduce corruption, money laundry, grey economy]

• Electronic money is deposited money – it is “saved” money and it is “investable” money. [WBG AGENDA: Savings Mobilization]

• Electronic payments infrastructure allows for the “last mile” connectivity between financial institutions and clients bringing down servicing cost and improving interaction; [WBG AGENDA: Access 2 Finance]

• The commercial opportunity is also large given the enormous gap that needs to be filled…[IFC AGENDA: Demonstration of commercial success]

IFCWhy does the World Bank

Group / IFC care

Comparison of the cost of a banking transaction by channel in a bank in S.A.

and % transaction migration to the mobile channel in 2 years:

Bank Strategy

Bank Channel Cost per Transaction

Savings Vs mobile %

Migration to Mobile

Mobile $0.04

Teller $0.87 95% 23%

Call Center $0.39 90% 50%

ATM $0.20 75% 10%

IVR $0.32 88% 50%

Online $0.07 40% 2%

Remittance Collection $5.00 99% 0%

Regulatory Advisory infoDev / CGAP [EPIS] Payments Practice Financial Services

11 22 33 44 55 66

Develop Payments -

friendly Regulatory Framework

Develop Payments -

friendly Regulatory Framework

Develop the necessary

echo-system(A2F)

Develop the necessary

echo-system(A2F)

Research and experimentat

ion

Research and experimentat

ion

Fund seed-stage

companies or initiatives

Fund seed-stage

companies or initiatives

Fund early/growth

stage companies

Fund early/growth

stage companies

Scale through

main-streaming

Scale through

main-streaming

IFC Core Business(help design, develop and grow

commercial opportunities)

Pro-progress,

competition friendly policies

[Under development]

Advisory, consultative services and research

IFCWorld Bank Group Offering:

• World Wide tendency for both: Banked and Unbanked population

• The purpose is to increase the access to financial services • Solution implementation has depended on available

technology (Handsets + MNOs infrastructure) • Most of the current solutions include mix architectures

(Several technologies) • Compare with other e-channels two new elements must be

considered: The MNO and the handset• The solution must consider a constant evolution base on

environment requirements (New Business Models, New Technology, New actors, etc.)

Current MFS Situation

• New environment (Banks/Solution Suppliers/MNO/End users/)

• Different risks base on the technology and Business Model chosen

• Regulatory Policies

• Cultural differences and needs for the different countries in Latin American region.

• Integration into already existing monetary/transactional systems

Challenges ahead (1/2)

• Balance between technology and operational controls

• Registration of customers.

• Adoption of the services offered in the mobile channel

• Different technologies for different users

• Agent (Cash-in/Cash-out) network – M-Wallet

• Integration of major sector of the economy, like: utilities, retailers, distribution of mass consumer products, etc.

Challenges ahead (2/2)

Available Technologies

• M-Banking– Saving and Checking account– Credit card payment– Accounts balance request– Money Transfer– Utilities service payment– Other Bank e-services

Service Options

• M-Wallet• M-Payment• B2B (Purchases)• B2C (Purchases)• Mobile POS (Purchases)• Remittances (Money

Transfer)

M-I

nfo

M-B

anki

ng

M-C

omm

erce

To

p-U

ps

M-P

aym

ent

M-B

2B

M-C

omm

erce

Virt

ua

l PO

S

M-W

alle

t

M-R

emitt

ance

Tools The standard handset features are used

The handset web services features are used

Custom application are developed for the handset

A secure enviroment provided by the MNO is used

Available Technologies

SMSVoz/IVRUSSD

HTTPS Normal browserWAP

J2ME - Applications SIM Toolkit WIB (Wireless Internet Browser) . S@T. Java Cards

Riesgos None encripition, the information could be monitored

Same risk of an Internet access. (Clonning, Hijacking, Malware, Virus, Man in the middle. Phising)

Same risk of a resident application in the PC. Application authenticity and integrity

None

Features available in

All Handsets High End Handsets High End Handsets In all SIM with the applications

Dependence of the MNO

None - The handset and network features are used

None- The WEB/WAP service access is used

None -The WEB service access is used

Yes

Objective Market

Developing Markets Developed Markets Developed Markets Developing Markets

21

Total Picture

Source: Bankable Frontier Associates

•Banks•Cost Reduction•Operating Expenses Reductions•Fraud Reduction•Revenue from the use of funds

•MNOs•Significant Increase in SMS volume•Increase in use and relevance of smart phones and mobile phones in general•Stimulate transition to electronic top-ups

•Retailers•New form of payment•Reduction of cash and checks handling•Expand e-Commerce

M-Banking - Benefits

•Banks•Increase in deposits•Source of viable new customers for the bank•New business opportunities like B2B services•New revenue from the use of funds

•MNOs•Brand assertion and relevance to customer base•Increase ARPU and reduce churn •Stimulate transition to electronic top-up

•Retailers•New form of payment•Reduction of cash•Expand e-Commerce•Increase revenue from Cash-out, sales of kits, and increased traffic of consumers

M-Wallet -Benefits

Conclusion

“The challenge for the nascent Mobile Money industry in Latin America is to successfully forge the alliances and cooperation needed to build the Ecosystem with innovative business models that will work for all the stake holders and ultimately that would benefit the end-user”

YellowPepper