1 7/2/2014 Mobile financial services, NFC & HCE positioning June 2014 Susanne Molkentin-Lacuve, Head of Solutions Marketing July 1 st , 2014
1 7/2/2014
Mobile financial services,
NFC &
HCE positioning
June 2014
Susanne Molkentin-Lacuve, Head of Solutions Marketing
July 1st, 2014
2 7/2/2014
OT, A WORLD LEADER IN DIGITAL SECURITY SOLUTIONS FOR THE
MOBILITY SPACE
EVERY YEAR
650 MILLION SIM
CARDS PRODUCED
500 MILLION BANKING
CARDS PRODUCED
HIGHLY
SECURED
LOGICAL & PHYSICAL
FACILITIES CERTIFIED
BY VISA,MASTERCARD,
DISCOVER &
AMERICAN EXPRESS
TELECOM
>400+ MOBILE OPERATORS (INCL.8 OF TOP 10)
IDENTITY
>100+ REFERENCES
PAYMENT
>2 000+ FINANCIAL INSTITUTIONS
>140+ SOLUTIONS REFERENCES
SECURE END-TO-END SOLUTIONS
3 7/2/2014
4 7/2/2014
• TRENDS FOR MOBILE FINANCIAL SERVICES
• NFC DEPLOYMENTS AND CURRENT STATUS
• WHY HCE IS DISRUPTING NFC SE MODELS
AGENDA
5 7/2/2014
MOBILE FINANCIAL SERVICES ARE GAINING MOMENTUM
Cloud Wallets
Tokenization Framework
SIM eSE HCE
$721B MOBILE PAYMENT MARKET
BY 2017 (1)
1.2B NFC-ENABLED PHONES SOLD
BY 2018 (3)
300+ Mobile initiatives
around the world (2)
(1) Source: Gartner, 2013 (2) Source: Mastercard 2014 (3) Source: HIS Technology, 2014
40 M users of Mobile Money
in Africa 60% lack access to banking services in Latam, while mobile penetration is >90%
$1 bn worth of transactions generated by Starbucks mobile wallet in 2013
> 50% countries with NFC initiatives
are in Europe
6 7/2/2014 6
DIFFERENT APPROACHES FOR DIFFERENT MARKETS
Mobile Money & Mobile branchless banking
EMV emulated proximity payment
(mainly NFC, secure element based)
Alternative Payments (cloud based,
QR codes, HCE etc.)
Mature markets: to revamp the shopping experience
Developing economies: to expand banks reach and develop usage
of commerce services
7 7/2/2014
MOBILE SHOPPING IS NOT ONLY MOBILE PAYMENT:
IT COVERS THE WHOLE SHOPPING CYCLE
Product search (Extended packaging)
Price comparator
Self-scanning
Mobile e-commerce
pre-ordering
Mobile Payment
Mobile Check-out
Mobile Loyalty card
Mobile advertisement and couponing
Mobile shopping list
8 7/2/2014
• Multiplication of Mobile payment initiatives and Omni-channel shopping
• Online wallet for one-click payment
• Growth of prepaid market and need to increase reach to under banked
• Rise of simple p2p / money transfer solutions
• Margins shrinking and need to play OTT
• Multiplication of Mobile Money deployments
• High mobile penetration - need to develop customer stickiness
• Customers taking the mobile turn (banks and retailers)
• Merchant closed-loop programs with embedded loyalty and rewards
• Need to address growing under banked and prepaid markets
• Omni-channel shopping
• Multiplication of closed-loop programs
• Increasing usage of mobile marketing services such as couponing, loyalty and localization
Banks Mobile Network Operators
CHALLENGES AND TRENDS THE MFS ECOSYSTEM IS FACING
Processors Retailers
9 7/2/2014
• TRENDS FOR MOBILE FINANCIAL SERVICES
• NFC DEPLOYMENTS AND CURRENT STATUS
• WHY HCE IS DISRUPTING NFC SE MODELS
AGENDA
10 7/2/2014
NFC MARKET INSIGHTS
MNOs taking the
lead
BANKs starting
deployments
• Commercial launches in major NFC markets (France, Spain, US)
•Revenues expected…
•Pilots for alternative models?
OEMs are coming
•After SAMSUNG, Meizu, Xiaomi, ZTE
•Europe : Prepaid initiatives by MNOs (Orange Cash, Vodafone SmartPass, TIM)
•GSMA Working stream
Alternatives
& risks
11 7/2/2014
2012: 125 Mu 2013: 276 Mu
Source: ABI
+125%
+62%
NFC eSE 2012: 105 Mu 2013: 170 Mu
Source: Eurosmart + OT estimation
NFC SIM 2012: 38 Mu 2013: 85 Mu
+224%
Source: SIM alliance + OT estimation
IMPORTANT GROWTH IN NFC SIM ROLLOUT
12 7/2/2014
Source: Visa NFC World Congress Sep. 2013 12
Europe
CONTACTLESS PAYMENT STILL A MASSIVE TREND !
13 7/2/2014
OT offers a complete range of NFC solutions
Wallet
Manager
TSM for MNOs TSM for SPs
KMS for OEMs TSM
“standalone”
Embedded
Secure Elements
& NFC SIM Card
14 7/2/2014
• TRENDS FOR MOBILE FINANCIAL SERVICES
• NFC DEPLOYMENTS AND CURRENT STATUS
• WHY HCE IS DISRUPTING NFC SE MODELS
AGENDA
15 7/2/2014
CONTEXT
Rise of alternative
models in the mobile
payment space
• Several recent cloud-based wallet launches provide alternatives to traditional proximity payments
• EMVco recently announced framework to support QR codes, Bluetooth…
• HCE is another step towards the cloud and is gaining momentum
Genesis of HCE
Google announcement
November 2013
• Support of Host Card Emulation (HCE) as a standard feature of Android 4.4 “Kit-Kat”
A LOT OF UNCERTAINTIES IN
THE MFS SPACE
• How to make the right technical choice?
• How to build a future proof solution?
16 7/2/2014
HCE IS DISRUPTING NFC SE MODELS
Service providers can deploy NFC applications without physical Secure Element, hence without contracting with SE issuers (MNO or OEM)
NFC controller
Traditional NFC implementation
Without HCE
Mobile app linked to the NFC application located in the SE
NFC transaction for card emulation performed by the Secure Element, whether SIM or Embedded
NFC Controller NFC controller
New implementation With HCE
NFC transaction for card emulation performed by the Mobile App on the Mobile OS
Mobile app directly linked to the NFC module
17 7/2/2014
Processors getting ready HCE rejected by MNOs
“We obviously wouldn't be doing this technology if we didn't feel comfortable with the security”, Visa SVP Digital "We don't know what that last inch will
be and this is why we went with Secure Cloud as opposed to the SIM,” RBC EVP
“HCE will help distribute NFC in mobile payments”, CEO
“For the first time ever, I saw a glimmer of hope for NFC in some configurations”, President
Contrasted ecosystem’s reaction to HCE
from extremely favorable (FIs) to negative (MNOs)
MARKET INSIGHTS
" NFC SE based is not scalable”
“HCE provides a very attractive way forward to launch an increased number of NFC-based offerings”
“good but not for payment”, “not mature”
“we will force Google to de activate HCE in Orange devices”
“we don’t, and won’t, block services, including HCE.”
HCE endorsed by schemes Banks interested by HCE
18 7/2/2014
OT POSITIONED AS SECURE CREDENTIALS MANAGER
OT trusted by 2000+ Financial Institutions
Sensitive Data Transfer Secret keys, payment credentials
SECURE ELEMENT TYPE AGNOSTIC:
PLASTIC/ MOBILE/ CLOUD
EMV Chip Card Mag stripe Card
Hardware Secure Element (SE)
Secure Element (SE) in the cloud
Host Card Emunation (HCE)
Mobile SE
Plastic SE
Cloud SE
19 7/2/2014