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Slide is only showing the bars at first. Then appear the date of the first bar and then the PC. >Then the second date,….. Either as quiz or just as presentation. Message: PC has been key for social network and inclusion, cards are a sign of financial inclusion and mobile (covering 5 of the 6.8 billion people on earth) is playing a key role socially and is becoming a key device for financial inclusion.
Interesting is that mobile is having its growth in developing countries Smartphone have reached 20% of sales and become an increasing player in mobile arena. Data for smartphone is probably even higher in Gulf region.
A key evolution in mobile for the financial industry is that it has evolved from a static channel (intenrt site via the mobile) to interactive channel (apps) onto a stand-alone product for Mobile Money (such as mobile wallets ) and mobile payments. Moving from a channel positioning to a payment device is both increasing customer value and business value to the financial industry. Channel where more seen as a cost where as payment solution are seen as revenue generation propositions.
Starting with Mobile banking: Evolution from SMS based solution (request balance) to fully fledged apps (still a minority of banks are offering this). Technology Challenges in mobile is drastically different from internet browsing as there is no such thing as the standard internet explorer /browser for mobile. 4 main mobile OS are sharing the market. The newcomer having already a third of the market share in terms of sales in Q4 2010 is Android (launched by Google). In terms of web/app usage, Apple is clearly THE leader but again Android is already becoming number 2 while long standing OS such as Symbian (Nokia initiated) are most likely going to give place to Android based OS phones. Mobile technology is moving extremely fast and newcomer can get impressive market share rapidly as demonstrated by Android. This requires players active in the mobile banking field to use agile technology solution and to continuously monitor emerging technologies.
QNB mobile banking initiatives started back in 2004 and has always been at the forefront of the mobile innovation in Qatar. Latest Mobile application is unique in the market covering both iPad and Iphone and being the richest in terms of functionalities (account, card info, payments intl and domestics, bill payments Kahram, telco and top-ups)
Mobile Money and Mobile Payment are still in an emerging stand. Starting with close loop mobile wallet solutions (SMS based) moving into more open payment solutions using NFV contactless technology. While the technology is there, commercial deployments are still not there due to different factors: Market readiness on mobile handset and POS that are not yet upgraded to NFC (and leading to a chicken and an egg story: no bus case to upgrade phones if no POS and vice-versa) Business model that are challenging to implement. I will come back to this in the next slides and the above despite heavy promotion and investments in pilots (100+ worldwide) by organisations such as Visa, Mastercard and Telco operators
Mobile wallet has been mainly initiated by telco operators being keen to enter the financial area. Well known success of m-pesa in Kenya. However not replicated in other countries (the story is that Kenya went through a period where cash not available, shifting people to be very keen to rely on their mobile phone!) O2 in the uK announced this month the implementation of a wallet solution BICS from Belgacom offering remittance gateway for telco operators Business case for Telcos is in general 2 fold: Revenue on remittances (good margins) Increase custo,er intimacy and loyalty to their brand
QNB initiatives in the mobile money space: Eazy pay in 2010 Eazy cash in 2011
Self explanatory Very convenient service. Can be even used to send money to yourself to withdraw cash if you don’t have your wallet with you!
With the mobile expansion (remember the first slide), there is a clear opportunity or ambition to make the mobile the successor of the plastic card… The enabling technology privileged so far by internaitonal players (visa, mastercard,…) is based on the NFC contactless technology As mentioned earlier, the issues are of 2 nature: technology roll-out (and standardisation) as well as business model… Thin revenue of the retail payments make the business case to perform huge market deplaoyment investments unclear for the differnet stakeholders (banks, telcos, merchants,…) Let’s talk about this business model for mobile payments
TO understand how business model might evolve, it is important to understant the different models that exist to implement the NFC technolgoy: Teclo centric: the payment application is implemented on the SIM and control the secure element as it is called. I.e. the telco is “renting” to for example banks space on its SIM Teclo independent (or agnostic): payment application is loaded on a secure element independent of the SIM (SD card, chip embedded in the phone,…). This way, the telco is “out of the loop” …
Teclo centric is the most contemplated model so far because of the SIM being already distributed by them and the technology readiness to provison the SIM over the air (OTA personalisation) The model needs to be open so that all customers can use it on any POS The telco needs to be remunerated. We will not talk about the telco independent model as so far still in experimental stage and is not yet considering the market powers of Telco to counter such approach (in many countries, telcos dictate which devices are sold as they subsidises handset against long-term post-paid contracts)
This slide is providing an overview of the different roles and actors required to achieve a fully open mobile payment solution, using NFC - SIM based implementation. The personalisation of the customer SIM by the issuer (i.e. the bank of the customer) where the TSM (Trusted Service Manager) and the teclo (MNO- Mobile Network operator) play a key role to ensure a secure personlisation of the SIM with for example a NAPS/VISA/Mastercard chip application for NFC. The transaction itself is then performed in a very classical way, similar to how cards are processed today, only difference is that the chip application is in the mobile instead of the card. Putting the above ecosystem is a complex process and as mentioned earlier, the thin margins on payments are making incentives for the parties to invest unclear….
Beyond the complex implementation and economics of mobile payment, it is also a battle about who will gain more control on the customer… Interesting to say this illustration is a typical and classic banker view… telcos are coming to eat in its plate. Some countries (in Europe for example) are setting-up joint ventures with all Telcos and Banks in a given country to work on the emergence of a common solution (most likely as a way to control somehow the competition at stake between telcos and banks) These JV will hurt the same issues of solving the business model that satisfies all parties…. QNB is moving pro-actively on this matter and is more looking into collaborative partnership approach with the telco industry and believe in the complementarities of both industry as both players are not always targeting the same market segments. … Pro-active collaboration will therefore result in unlocking untapped market opportunities
But there is more than the payment..payment is in fact about processing information (customer buying for x amount in Y sotre, buying behavior segmentation,…) Players such as Google, expert in on-line advertising have understood this… and rather than focusing on the payment, focus on the information resulting around the payment… to promote loyalty, customised discounts, coupons,… Business models in that areas are much more comfortable as these customers incentives are today costing a lot of money to retailers and brands. For information, loyalty programs cost around 1% of turn-over to retailers (where the typical net income margin in that industry is between 3 to 5%) Google initiative was announced 6 th of May via Ingenico announcing to be contracted by Google to provide the terminal part of the solution.
While QNB is know as technology innovating banks in the mobiel banking and payment arena, we closely monitor the evolution in the field of NFC. However a number of questions are still to be answered. As Oracle puts it “……..”. Customer will certainly be looking for more convenience but, will this be enough to shift is behaviour from plastic to mobile and… if the business case is not clear… we better challenge ourselves and the industry to look for a real quantum leap!
Mr. Ali Rashid al Mohannadi's presentation at QITCOM 2011
Mobile Banking & Payment QNB Retail Banking 25 th of May 2011
Agenda <ul><li>Introduction: </li></ul><ul><ul><li>Mobile put into perspective </li></ul></ul><ul><ul><li>From Mobile Banking to Mobile Payment </li></ul></ul><ul><li>Mobile Banking </li></ul><ul><li>Mobile Money </li></ul><ul><li>Mobile Payment: </li></ul><ul><ul><li>NFC Models </li></ul></ul><ul><ul><li>Business Model </li></ul></ul><ul><li>Outlook </li></ul>
Mobile put into perspective…. 1.2 2.8 5 Units (Bln) in 2010 2010 figures – Sources: Gartner, EMVco, QNB 1980 1965 1985 Launch year
Mobile put into perspective…. Sources: Forecast: Mobile Devices, Worldwide, 2003-2013 (3Q09 Update) Portio Research Ltd: Worldwide Mobile Industry Handbook, 2009-2014
From Mobile Banking to Mobile Payment Customer Value Mobile “Wallet” Mobile Access Mobilized Website <ul><li>Mobile Banking </li></ul><ul><li>“ App” </li></ul><ul><li>Daily Banking Transactions </li></ul>Mobile Money “ SMS/USSD ” Mobile Payment “ NFC” Mobile as Stand-alone proposition Low High Mobile as an additional convenient channel
Mobile Banking <ul><li>From SMS based to smartphone application based </li></ul><ul><li>Fast evolution of mobile phone OS platforms: </li></ul><ul><ul><li>Symbian </li></ul></ul><ul><ul><li>Blackberry </li></ul></ul><ul><ul><li>Iphone, Ipad </li></ul></ul><ul><ul><li>Android </li></ul></ul><ul><li>No standardized application OS on Smartphone (no equivalence of internet explorer as for internet banking) </li></ul><ul><li>Race for banks to support latest consumer and mobile device trends </li></ul>Source: Canalys.com Share of worldwide 2010 Q4 smartphone sales Share of worldwide 2010 Q4 smartphone usage (internet browsing) Source: http://marketshare.hitslink.com/
Mobile Banking @QNB <ul><li>SMS based Banking since 2004 </li></ul><ul><li>Mobile Banking (app) started in 2008 </li></ul><ul><li>May 2010: new app with more services, extended to iPhones and iPads </li></ul><ul><ul><li>Convenience of ease: </li></ul></ul><ul><ul><ul><li>Registration from Mobile device </li></ul></ul></ul><ul><ul><ul><li>Same login as for internet </li></ul></ul></ul><ul><ul><li>Rich content: </li></ul></ul><ul><ul><ul><li>On-line account and card information </li></ul></ul></ul><ul><ul><ul><li>Transfer of money to anywhere in the world </li></ul></ul></ul><ul><ul><ul><li>Payment of utility bills and top-ups with real-time bill update </li></ul></ul></ul>
Mobile Money & Mobile Payment Diversity of payment services 2008 2010 2012 2014 Emerging (e-wallets, SMS) Expanding (NFC pilots.) Emerging Business Models Maturing
Mobile Money : Remittances / P2P <ul><li>P2P type of payment </li></ul><ul><li>Business model is straightforward: </li></ul><ul><ul><li>Profitable remittance business model </li></ul></ul><ul><ul><li>No technology dependency (USSD, SMS type of model) </li></ul></ul><ul><li>Main constraints: </li></ul><ul><ul><li>Regulatory: license to operate payment business </li></ul></ul><ul><ul><li>AML screening and Central bank reporting </li></ul></ul>
Mobile Money at Teco’s: e-wallets <ul><li>Across the globe, leading telco operators are making inroads into the financial area by offering mobile e-wallets to consumers: </li></ul><ul><ul><li>Vodafone (m-pesa in Kenya) </li></ul></ul><ul><ul><li>O2 (Telefonica group) in the UK </li></ul></ul><ul><ul><li>BICS (Belgacom Group): Remittance gateway </li></ul></ul><ul><ul><li>… </li></ul></ul><ul><li>Initiatives mainly targeting P2P payments, but also low value payments (parking, vending machines,…) </li></ul>
Mobile Money at QNB <ul><li>EazyPay (2010): </li></ul><ul><ul><li>QNB customer to QNB customer </li></ul></ul><ul><ul><li>Used to pay at Merchants </li></ul></ul><ul><ul><li>SMS based technology, operator independent </li></ul></ul><ul><li>EazyCash (May 2011): </li></ul><ul><ul><li>Cash to anyone from a mobile </li></ul></ul><ul><ul><li>SMS based technology, operator independent </li></ul></ul>
eazy cash : How it works <ul><li>1. QNB customer (payer) sends SMS to payee in the following format: </li></ul><ul><li>cash < payee mobile number > < amount > </li></ul><ul><ul><li>2 . Payer receives QNB SMS to confirm transaction information </li></ul></ul><ul><ul><ul><li>3 . Payer replies with Ok to confirm or with C to cancel </li></ul></ul></ul><ul><ul><li>4 . Payee receives payment information via SMS upon payer’s confirmation </li></ul></ul><ul><ul><ul><li>5 . Payee cashes payment at any QNB ATM in Qatar </li></ul></ul></ul>QNB EazyCash
Mobile Payment: Replacing plastic <ul><li>Opportunity to replace the plastic with mobile </li></ul><ul><li>Appeal is high: more mobile phones than cards! </li></ul><ul><li>NFC as enabling contactless technology </li></ul><ul><li>BUT… </li></ul><ul><li>Business model is challenging: thin revenue margin on retail payments </li></ul><ul><li>Technology: not deployed at merchants, not standardized (i.e. NFC) </li></ul>
Mobile Payment: NFC models <ul><li>Telco Centric (widest adoption so far): </li></ul><ul><ul><li>NFC integrated in phone with SIM based application </li></ul></ul><ul><ul><li>SIM plug-in: N-flex from Gemalto (piloted in Singapore, Turkey, Japan.. – Q4 2010) </li></ul></ul><ul><li>Telco agnostic: </li></ul><ul><ul><li>SD memory stick </li></ul></ul><ul><ul><li>Dual chip NFC phone (in-built chip, in addition to the SIM) </li></ul></ul><ul><ul><li>RFID sticker (transitional solution) </li></ul></ul>
Telco Centric: Challenges of the Business Model <ul><li>Classic card retail business model is involving 2 players, an issuer and an acquirer, sharing a very thin revenue margin from the merchant service fee </li></ul><ul><li>Implementing mobile payment requires an open architecture to ensure the solution works for all issuers (banks) and with all telcos to ensure full benefits for the consumer </li></ul><ul><li>Mobile payment (telco centric) is introducing a third critical player: the Mobile Network Operator (MNO), i.e the telco, which is also looking for some remuneration </li></ul>
Ecosystem overview (open model) Source: EPC – GSMA Mobile Contactless Payments Service Management Roles Requirements and Specifications Doc: EPC 220-08, Version 2.0 October 2010 Contacless NFC Fulfilment Payment Authorisation Payment Authorisation Payment scheme (domestic/int’l) Provisioning Value Chain
3 industry players are looking at reaping the benefits… and more… <ul><li>In addition the a complex business model, the battle is about who will get more control over the core relationship with the customer (and his wallet ;-) </li></ul>Customer Current ACCOUNT TELECOM OPERATORS HANDSET MANUFACTURERS BANK “ I own the SIM” “ I own the NFC device” “ I own the payments”
Mobile Payment: Beyond payment… <ul><li>Beyond replacing the plastic card, another opportunity is there: integrating loyalty and couponing into consumer phones… </li></ul><ul><li>Latest initiative announced by Google (with Ingenico) </li></ul>
Outlook – the jury is till out… <ul><li>"NFC payments will certainly be quick, but I doubt they'll be much quicker than today's magstripe and smart cards. Does it really matter whether I swipe, dip, or tap my card? So why should anyone care about NFC?" David Dorf – Director of Technology Strategy at Oracle Retail - Oracle </li></ul><ul><li>To succeed, Mobile payment at the check-out will need to embrace unique features that are not offered elsewhere… </li></ul>