Session VI: the Role of New Technologies In Enhancing Access to the Payments Infrastructure Global Remittances: New Initiatives in M-banking The Citigroup-Vodafone.

Session VI: the Role of New Technologies In Enhancing Access to the Payments Infrastructure

Global Remittances: New Initiatives in M-bankingThe Citigroup-Vodafone Partnership

May 31, 2007

Nancy Todor, Director

Global PaymentsGlobal Transaction Services

2May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Markets: Various Mechanisms for RemittancesSome origination and distribution channels are more “consumer friendly” than others!

• Origination– Banks

• Branches• Internet

– Money Service Businesses• Branded storefronts and agent locations• Internet

– Mobile telcos• Mobile phones• Stores

• Distribution– Banks

• Account credit, check • Cash• Credit or stored value card

– Money Service Businesses• Cash

– Mobile telcos• Virtual wallet

3May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Trends: New Mechanisms & Market Participants

• Retail channels expanding for origination, distribution of payments

– Banks, non-banks, mobile telcos as financial interface to consumers

• Results

– Increased access by consumers to financial services

– “Take the service to the consumer”

– Supports “General Principle 4”: Competitive Market Conditions*

• “foster competitive market conditions, including appropriate access to domestic payments infrastructures”

Committee on Payment and Settlement Systems and World Bank: Task Force on International Remittance Services 5 General Principles

4May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Trends Support Customer Needs

Emerging market

Living at home with other family members

Sender

Receiver

Developed country

Away from home and family

Needs Dependability / trust Convenience Minimal paperwork Low cost Confirmation payment has reached Customer service on transaction

initiation and funding

Needs

Quick funds availability

Convenience on receiving

No hassles or paperwork

No fees

Customer service on funds arrival and access

5May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Mobile Telecoms, Banks & the Remittances Value ChainPlay roles in registration/origination and disbursement

Consumer Banking Services EnvironmentAccounts, Local Payments, Financing and Credit Cards

Information Service, Exception Handling, Process Tracking for Transparency

Global Network • Account credit

• Cash

• Check/demand draft

• Card

• Mobile account

Core Processing • Convert funds to

destination currency

• Report foreign currency rate and amount (indicative or guaranteed)

• Transfer funds

Traditional • In person• Call center

Innovative• Web • IVR• Mobile phone• POS terminal• ATM

Traditional • Manual withdrawal • Cash over counter

Innovative• Debit / Credit Card• Direct debit• Stored value cards• Mobile account

Re

mit

tan

ce

s V

alu

e C

ha

in

DISBURSEMENT for convenience

FOREIGN EXCHANGE

AND FUNDS TRANSFER

FUNDINGfor convenience

REGISTRATION AND

ORIGINATION for ease

END-TO-END CUSTOMER SERVICE

6May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Case Study: UK Remittances to Kenya

Citi

Sender’s bank

5. Debit sender account

4. Debit card clearing

Citi Kenya

cheque to receiver

account credits

cheque encashed

at Post Bank

6. Convert and send funds to Kenya

7. Payment to receiver in local currency

8. Confirm to sender

Card Settlement

1. Sender registers on a Web portal

2. Sender inputs transaction at Website, mobile phone* or in person

3. Instruction to Citi

Citi / Vodafone

Processing Hub

Mobile account

credit

7May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Steps for Cash Receipt by Receiver

1. receiver goes to registered airtime reseller at destination end

2. identifies himself with National ID

3. provides PIN received from M-PESA

4. reseller validates the PIN with M-PESA via mobile

5. after validation, reseller pays receiver

6. reseller is reimbursed with principal and commission

8May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

Commitment to develop market leading flexible, convenient, secure & cost effective mobile delivered remittance services

Vodafone Profile: Leading brand name in mobile phone services In 58 countries with 200 million subscribers History of innovative mobile solutions

Motivation: Diversify into non-voice businesses Leverage customer acquisition and service

infrastructure for new revenue sources New products to attract migrant communities, retain

existing customers

Motivation: Greater access to remittance flows via new channels Interface with recognized brand for customer

acquisition to promote rapid volume growth Invest once and deploy in multiple markets through

global partner

Citigroup Profile: Leading capabilities in cross-border payments and FX Global presence History of innovative payment solutions

Complementary Strengths Synergistic Objectives

Benefits: Telcos, Banks Working Together

Consumers gain increased access to financial services through convenient channels

9May 31, 2007 ® 2007 Citibank, N.A. All Rights Reserved

In Conclusion

• Opportunity space for remittances is large and continues to grow

• Trend toward taking services to the senders and receivers, seen across all regions

• Driving innovation is key to improving competition and overall service at reduced cost

• Banks and non-banks can play many integrated roles in the value chain– customer acquisition

– relationship builder

– core processor

– sending or receiving agent

• Core competencies can be leveraged by banks and non-banks through a spirit of cooperation and competition: co-opetition– Benefits all parties by working together