Mobile Payments Convergence Van Dyke Nokia World Dec 2007

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The Convergence of Mobility and Payments

Kahina Van Dyke

[email protected]

Nokia World 04 December 2007

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Citi Highlights

1812 City Bank opens for business to serve group of New York merchants.

1894 Becomes the largest bank in the U.S.

1897 First major U.S. bank with foreign department; begins FX trading.1904 Lead bank for construction of the Panama Canal1913 First contributor to the Federal Reserve Bank of New York.1914 Becomes 1st American international bank, with the largest overseas branch

network.1921 Extending credit to consumers for the first time1928 First major American bank to offer unsecured personal loans to its depositors.1929 Becomes the largest commercial bank in the world.1936 First NYC bank to offer consumer checking accounts with no minimum-balance.1939 100 offices in 23 countries outside U.S., forming the largest international bank.1950 Diners Club card – first multi-use charge card1961 Invents the negotiable certificate of deposit (CD)1977 Citibank launches Citicard Banking Centers, anchored by ATMs and the

CitiCard. The 24-hour ATMs are for the first time used for more than emergencycash.

1979 Becomes the world's leading foreign exchange dealer.1985 Direct Access® in New York links PCs in homes and offices with Citibank.1986 Introduces touch-screen ATMs in New York City and Hong Kong.1989 Becomes the leading issuer of securitized credit card receivables.1992 Citibank, N.A. becomes the largest bank in the United States. Citicorp's global

reach links branches and offices in more than 90 countries.1993 Becomes world’s largest credit card and charge card issuer and services.1994 Opens 1st fully foreign owned commercial bank in Russia.1995 Opens 1st full service China branch in 45 years+ Vietnam and South Africa.1996 Has most credit cards in Asia.1998 All Citicorp and Travelers Group divisions merge to Citigroup Inc.2000 Creates innovation and eBusiness group in CitiCard2002 Citi introduces Virtual Account Numbers as a core available feature on all US

cards, International rollout of banking Alerts via AMA2003 Citi Identify theft solutions, 10MM+ Online Banking Users in the US2006 Citi introduces PayPass New York Metro Contactless, Singapore SMRT2007 Citi introduces 1st Mobile Banking Applicant and dedicated telecom unit

Innovation is at the core of what we doOur growth has been driven by delivering on untapped market needs

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Mobile MomentumNumerous developments are driving momentum for mobile financial solutions

Technology and Infrastructureo Contactless acceptance infrastructure

o 3G and NFC-enabled handsets

Cross-industry partnerships and pilotso Banks and wireless service stakeholders collaborating in NFC

and Peer to Peer payment pilots

o Banks and transit systems launching new form factor andpayment schemes in major global cities

Customer exposure to new payment methodso Contactless “revolution” has made customers think differently

about their traditional “debit or credit” card as the primaryaccess to their funds

o Transit launches have introduced million of urban commutersto “Tap & Go” behavior

3Source: Fabrizio, McLaughlin & Associates, March 2007

of consumers18-42 would

considerswitching banks

58%

consumersprefer mobilepayments to

appear on cardstatement, ratherthan wireless bill

5:1

of consumers18-42 would consider

switching carriers

64%

of those interested wouldpay more for a device with

payment capability

90%

are interested inmobile payments

57%

Mobility: What customers wantCustomer attitudes vary based on market. Important factors to consider are national

payment systems, online banking adoption & technology infrastructure

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Mobility Consumer TrendsConsumer adoption tipping point on the horizon…

Play Ella Video

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Account ManagementIntegrated user interface

CouponsDelivery of discounts

Alerts/NotificationsCustomer set parameters

Two-Factor AuthenticationReal time authentication

for online purchases

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Financial Management: On the GoOnline banking has become core offer in established and emerging markets, we

believe the same / enhanced services will be expected on the mobile device

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Payment Disruption Delivers Choice

“Card in Wallet” “Bring my Account Anywhere”

“This IS my wallet” and“Manage my Finances Anywhere”

RFID Cards Alternate Form RFID

Behavior Disruption

Customer Learns Tap & GoRFID / NFC creates new form

factors to payments

Value Expansion

Traditional Card Form(I.e. debit, credit, ID cards, transit)

NFC Mobile

RFID Watch

Istanbul, Turkey

Various

Co-Brand RFIDCards

Key Tag

Citi, NYC

6210 NFC Phone

Citi, NYC

Contactless is changing the way customers perceive and use payment devices

RFID Notes: 1) Contactless payment uses ‘RFID’ radio chip to communicate wirelessly with close-proximity merchant terminal, 2) Ticket sizes arelimited at present to £10/$25/€15, 3) Visa/ MasterCard agreed global standard communications protocol. Amex equivalent is ‘express pay’

Market Disruption& ConvergenceWallet <=> Phone

No longer requires bricks or clicks. Suite or core banking products

In the palm of the customer

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Partner: TelcoService Enhancer

Competitive Differentiator

Deeper Customer Engagement Explore new business model opportunity

BankDeeper engagement

Channel Extension

Competitive Differentiation

Retailer / MerchantCash management costs reduced

Higher ticket value than cash

Increase in foot traffic and customerthroughput

Convergence of value will drive adoptionConvergence requires value criteria are met for all stakeholders

CustomerEase of Use: Intuitive User Interface

Yet feels like a “Bank / Payment” experience

More convenient: No need to carry cash

Financial overview at their fingertips

Freedom from PC or ATM Dependency

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Cross-Sector Case Study: Transit & Banking

Washington, DC Metro New York Metro Singapore Metro

TransitPayments

Pay for rides withCiti products

UrbanPayments

Use Citi productsfor all dailypurchases

Distribution

Co-locate Citibranches and

ATM in stations

Financing

Finance transitinfrastructure

Processing

Paymentprocessing for

transit operators

Consumer Facing Business to Business

Leverage of core competencies create sustainable business models &richer customer value

Citibank: Live “Contactless” Pilots with Transit Partners

Play A Day in the Life Video

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Citi View: Leverage technology to provide strategic advantage and market leading value to our customers Continue pilots in key markets to understand customer behaviour shifts - before they happen Leverage our ‘innovation’ experience and global technology platforms to leap frog local competition Deliver same safety and fraud protection on mobile channel as we deliver on all other channels Explore segments in un-/under banked in emerging economies, i.e ‘send-home’ payments Continue collaboration with industry leaders in various sectors (transit, telecommunications, quick

service) - critical to customer education and customer adoption

We will continue to ensure we deliver world class payment and banking services to ourcustomers that fit their changing needs - across all channels, anywhere, anytime

Citi Multi-Channel Strategy: Anywhere, Anytime

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Thank you, anyquestions?