Sanjoy Sen - World Cards Conference - Key Note Presentation - Global Trends & Innovation in Cards & Payments - March 2012
•
1 gostou•598 visualizações
Recomendados
Recomendados
Mais conteúdo relacionado
Mais procurados
Mais procurados (20)
Semelhante a Sanjoy Sen - World Cards Conference - Key Note Presentation - Global Trends & Innovation in Cards & Payments - March 2012
Semelhante a Sanjoy Sen - World Cards Conference - Key Note Presentation - Global Trends & Innovation in Cards & Payments - March 2012 (20)
Mais de Sanjoy Sen
Mais de Sanjoy Sen (12)
Último
Último (20)
Sanjoy Sen - World Cards Conference - Key Note Presentation - Global Trends & Innovation in Cards & Payments - March 2012
- 1. Presented by: Sanjoy Sen Managing Director & Head of Consumer Bank – MENA Innovation in Cards & Growth Opportunities within the New Generation Payment Systems Presented at: The World Cards and Payments Summit 2012 Dubai, 22-Feb-2012
- 2. Agenda 2 The State of the World Conclusion Drivers of Innovation The Opportunity The New Realities
- 3. State of the world – Change in customer behaviour 3 Increasing number of under-banked Rise of alternative lending Write-offs remain high Credit card write off as % of outstanding Projection Deleveraging customers (UK) Total lending (£bn) Adjusted growth rate Source: Bank of England Customers are deleveraging; write-offs remaining high. Tightening of bank policies fosters the rise of alternative lenders such as payday lenders
- 4. State of the world – Change in the payment landscape 4 While payments continue to grow, debit growth is happening at the expense of credit in an increasingly tightly regulated world Payments still growing Decline of Credit Cards Rise of debit Tightened Regulation Greater capital requirements Consumer protection Retail ring fence Interest rate / pricing caps Source: British Bankers’ Association (BBA), Mintel Debit and Credit Cards, July 2011
- 5. New Realities 5 Innovative new business models are emerging which could help banks to sustain competitiveness as the payment and consumer credit markets open up Credit card going through midlife crisis Mobile payments will be common place Mobile payments Mobile banking Mobile marketing Tipping point for digital transformation P&L item Outlook Observation + interest, IC, fees + Interchange, fee APR at all time high, regulatory pressure - Cost of fund All time lows - Cost of credit Depends on recovery - Acquisition costs Intensified competition - Operating Expense Regulation Customers gearing up for easier switching 50% 35% More than 1 banking relationshipLikely to switch bank E&Y Survey among GCC customers More than 1 banking relationship Likely to switch bank Source: Ernst & Young, PWC
- 6. Payment Channels 6 A) Point-of-Sale (POS) B) Online Shopping C) Mobile Payment D) Person-to-Person (P2P) Payment battlefield is expanding
- 7. Payment Trends 7 Internet users (millions) % population 1.1 1.3 1.7 2.3 3.2 3.8 4.4 30% 40% 49% 66% 72% 80% 2000 2006 2008 2010 31% 297 318 443 420 456 471 2006 2007 2008 2009 2010 2011 3 4 6 8 10 14 13 14 14 15 1 2 3 4 9 8 9 10 11 2003 2004 2005 2006 2007 2008 20092010 2011 2012 Credit ($ bn) Debit ex ATM($ bn) A) Point-of-Sale (POS) B) Online Shopping 3.5 4 15 19 19 0.2 1 3 5 10 2008 2009 2010 2011 2012F Africa Middle East C) Mobile Payment D) Person-to-Person (P2P) Growth across all channels; highest growth in online and mobile payments
- 8. What is the customer need? 8 Safety Convenience Credit Rewards Status Having a Credit Card is NOT a customer need
- 9. Banks will stay 9 Banks move slowly and resist disruption of their core business Technology companies are likely to develop work around solutions Banks can be exposed to full disintermediation Banks cannot compromise on security, reliability and reputation Banks rarely have all systems / capabilities in place to compete in this fast evolving markets. Acquisitions and partnerships are a way out.
- 10. Who is driving innovation? Type and level of innovation Continuous, Incremental Game changer Step Change Market Player Banks / Issuers 1 Processors Technology providers4 Retailers2 Visa / MC3 New Entrants, Others5 Legend: Very innovative Observing 10 Game changers will not come from existing players but from new entrants
- 11. Payroll Card 11 Continuous, Incremental Game changer Step Change An electronic payment solution An electronic account which is pre-funded by a corporate or government client Individuals receiving payments use the prepaid card to draw on the funds No credit allocation: simply a better way to pay an individual Not a bank account: beneficiary cannot add funds to the card Solution fully complies with the Wages Protection System (WPS) regulations in the UAE Migration from credit to debit What is it? Benefit Market Player Issuer1
- 12. Mobile Banking 12 Continuous, Incremental Game changer Step Change Allow customer to access banking services from the mobile device Convenience Service at their fingertips What is it? Benefit Market Player Banks / Issuers 1
- 13. Gift Card / Loyalty Card 13 Continuous, Incremental Game changer Step Change Closed-loop / open-loop Pre-Paid Card Cards made for every occasion No expiration date No service or maintenance fees What is it? Benefit Market Player Retailer2 Closed loop Open loop
- 14. Continuous, Incremental Game changer Step Change Visa SimplyOne 14 A multi-application chip card that combines Debit and Credit in one Card Similar to MasterCard Flex Debit card issuers: Opportunity to cross-sell a convenient and appealing credit card Consumers: One card Retailers and businesses: Debit customers have access to credit What is it? Benefit Market Player Visa / MC3
- 15. Continuous, Incremental Game changer Step Change Contactless and Mobile Payment Convenience Auto-top-up feature for transit cards 15 What is it? Benefit Market Player Banks / Issuers 1 3 Visa / MC Contactless Card for payments and transit
- 16. Mobile Innovations target each component of the retail experience 16 Source: McKinsey Mobile to generate demand, consummate transactions and broadcast to social network
- 17. Continuous, Incremental Game changer Step Change Mobile Payments via Zong Mobile payments service for online games and social networks Allows Users to make micro payment via internet, if they have post paid mobile phone Payment solution for the unbanked – added directly to customer’s mobile bill No exchange of financial information Only one-time PIN is provided via SMS By-passes the banking system 17 What is it? Benefit Market Player 4 Tech provider
- 18. Continuous, Incremental Game changer Step Change Mobile Credit Card POS with Square 18 Proprietary application turns smart phones/tablets (iPhone, Android, iPad) into smart POS machines Accept credit card payments anywhere where internet / WIFI is available Lower costs; easy set up Eliminate needs for merchants What is it? Benefit Market Player 4 Tech provider
- 19. Continuous, Incremental Game changer Step Change PayPal Easy and secure Internet and Person-To-Person (P2P) payments No need to exchange credit card numbers or account details Solves the mistrust problem: Customer gets promised goods and merchant gets the promised money Fast / instant, secure, easy, global 19 Pay Online Shop for what you want quickly and secure Send Money Send money to just about anyone with an email address Get Paid Accept online payments for items you sell What is it? Benefit Market Player Tech provider 4
- 20. Continuous, Incremental Game changer Step Change M-PESA 20 What is it? Benefit Market Player 5 New entrant Mobile P2P payment by SafariCom (Vodafone Affiliate) Vodafone partnered with Citi Transaction Services for international remittance No bank account required, just a mobile with SMS / text messaging capability
- 21. Continuous, Incremental Game changer Step Change Social lending 21 What is it? Benefit Market Player 5 New entrant Marketplace for money Borrowers get low-cost loans Lenders get high returns No bank in the middle
- 22. Leveraging Social Media 22 Earning trust, building relationships and empowering communities Increase brand awareness Communicate to customers Understand preferences / needs Listen to complaints Define Objective Social Networks, Blogs, Micro Blogs, Online Videos, Widgets, Product casts, Financial Social Networks Examples Live Chat Define Delivery Channel
- 23. Agenda 23 The State of the World Conclusion Drivers of Innovation The Opportunity The new realities
- 24. If Facebook was a nation 24 Banks have to think and act like a digital company while retaining a strong focus on security and reliability
- 25. Conclusion 25 Safety Convenience Credit Rewards Status Banks won’t go away, BUT ….. Customer needs: Payment channels: A) POS B) Online Shopping C) Mobile Payment D) P2P Watch out for new entrants and disruptive innovations Broaden digital capabilities Create a platform for innovation Get success through strategic partnerships
Notas do Editor
- Allow me to start with the changed customer behaviorTop left:Customers are deleveraging across the worldAs you see on the chart, the UK total lending volume stagnates since the beginning of the crisis, same applies to the Middle EastTop right:Write-offs came down significantly from peak levels but are still high compared to the long term averagesBottom left:Increased write-offs during the crisis led to a wide-spread deterioration of credit scoresThis in combination with banks across the globe tightening their credit policies resulted in an increasing number of under-banked Bottom right:With the broad decline in credit scores, alternative lenders emerged: payday lenders, pawn brokers, credit unions or home credit.
- Top left:The payment market in contrast is still growingTop right:Regulators post crisis across the world are tackling financial services: Greater capital requirements, fostering competition among market players, ring fencing retail operations and pricing / interest rate caps as we have seen in the Middle EastBottom left:As we discussed on the previous slide, customers are deleveraging and the number of credit cards as well as the their outstandings are declining in the developed worldBottom right:One clear winner of deleveraging is debit
- Top left:Credit cards are going through a midlife crisis. Interest rates are at all time highs and regulators pressure rates and feesCost of funds are at all time lows with little downward potentialGood news on cost of credit which stabilized due to improved environmentWith moving towards the more affluent segments, acquisition costs are expected to increase given the intensified competitionIncreased regulation will impact Operating Expense Top right:More and more customers have banking relationships with more than one bank and the likelihood to switch is increasingTop reason for customers to switch is serviceBottom left:Mobile payments will become realityBottom right:And the digital transformation will reach its tipping point
- Before we discuss the opportunity, let’s define the battlefieldOffline and Point-of-Sale transactions have still by far the biggest payment volumeOnline as we will see is growing fast across the world with the Middle East still to catch upLike Online, Mobile Payments is an area that is growing fastLast but not least, Person-to-Person Payments
- POS is growing again – as we discussed earlier, debit cards are outgrowing credit cardsOnline Shopping is gaining momentum in all parts of the worldMobile Payments are growingP2P is growing slowly
- Questions:Are card issuers really the only players that can meet these customer needs?Big internet players such as Amazon already entered the payment space in the US with Amazon Checkout for B2C. How could Apple change the consumer payment landscape?How much of the payment space could be stolen by Telecoms entering the field?
- We have different players in the industry:Banks / IssuersProcessorsRetailersAssociations (Visa / MasterCard)Technology providers and new entrantsThe type and level of innovation varies by player. Banks and issuers have been focusing on continuous and incremental innovations. Associations have been very innovative in step changes. However, Game Changers will come from new entrants from other industries
- Retailers have been focusing on innovations such as loyalty and gift cards . They can be open-loop or closed-loop.Closed-loop means: Gift card only works at one particular merchant or one group of merchantsOpen-loop means: PrePaid cards utilising Visa / MasterCard, hence are accepted worldwideCiti supports open-loop prepaid cards in various markets, e.g. the USCard can be made for any occasion, birthday, bridal shower, anniversary …High end retailers have custom packaging as well which can really take thegift to the next level and it can add a personal touch to a gift that is often thought to be impersonal. Gift Cards can also be open-loop, which means they can be used anywhere where Visa/MC is acceptedOther Benefits for retailer:Consumers spend more with gift cards 77% of gift card recipients reported spending more than the initial value of their gift card with an average increase of $39178% of consumers have purchased or received a gift card in the past 12 months2The average gift card buyer has purchased 4.7 cards in past 12 monthsEnhance brandConnect with customers and build your brand awareness A gift card recipient is receiving an endorsement of the merchant from the card purchaserGift cards attract new customersKeep profits in-houseSome merchants opt to use “store credit” via gift cards for merchandise returnsBalance on activated cards is held by the merchant until redemptionReduces fraud and is inexpensive to accept as a form of payment
- Another example is mobile banking which brings Citi’s banking services to the customers fingertips. The Middle East is leading in terms of mobile penetration, for example we have 2 handsets per inhabitant in the UAECustomers can either download an application or use their embedded mobile internet browser to access all banking services that they can do online (check accounts, transfer locally / internationally, pay bills etc.)As additional mobile feature they can also locate the nearest branch
- Retailers have been focusing on innovations such as loyalty and gift cards . They can be open-loop or closed-loop.Closed-loop means: Gift card only works at one particular merchant or one group of merchantsOpen-loop means: PrePaid cards utilising Visa / MasterCard, hence are accepted worldwideCiti supports open-loop prepaid cards in various markets, e.g. the USCard can be made for any occasion, birthday, bridal shower, anniversary …High end retailers have custom packaging as well which can really take thegift to the next level and it can add a personal touch to a gift that is often thought to be impersonal. Gift Cards can also be open-loop, which means they can be used anywhere where Visa/MC is acceptedOther Benefits for retailer:Consumers spend more with gift cards 77% of gift card recipients reported spending more than the initial value of their gift card with an average increase of $39178% of consumers have purchased or received a gift card in the past 12 months2The average gift card buyer has purchased 4.7 cards in past 12 monthsEnhance brandConnect with customers and build your brand awareness A gift card recipient is receiving an endorsement of the merchant from the card purchaserGift cards attract new customersKeep profits in-houseSome merchants opt to use “store credit” via gift cards for merchandise returnsBalance on activated cards is held by the merchant until redemptionReduces fraud and is inexpensive to accept as a form of payment
- Visa and MasterCard have big scale and the required muscle for innovations. One example is Visa SimpleOne which combines Debit and Credit in just on physical chip enabled cardMasterCard offers a similar service under the name MC FlexVisa and MasterCard have many more innovations, be it Verified-by-Visa / 3D-Secure to secure online shopping payments or Chip-Cards to reduce fraud. All these innovations are then brought to the market in collaboration with one or usually multiple issuers
- Another example of innovations between Associations and Banks are contactless cardsCiti launched Contactless Card in IndonesiaCiti launched Transit Cards in Singapore, Hong Kong, Delhi, Washington DC and Moscow - all functioning as contactless wallet with auto top-up feature Citi trialed NFC in Bangalore and Singapore There are talks that Apple might integrate NFC with its iPhone5. If this happens and it will be smoothly integrated with iTunes, then Apple has the potential to shakeup the payment industry as well. More on NFC will be covered in a dedicated speach
- We need to watch out for mobile innovations along all elements of the value chain starting from pre-visit over decision making, transaction and then post-visit.The Actual transaction is just one element
- Zong is a Technology Provider in the Mobile Payment space that focuses on the new segment of purchases for online games and social network .What is it?Operates in almost 30 countries and connected to over 100 mobile carriers Allows users to buy goods from gaming and social networks through mobile phonesPurchase charge are added to monthly phone bill or deducted from prepaid planThis completely bypasses the banking systemBenefitPayment solution for the unbanked – purchase billed directly to carrier’s monthly invoice or deducted from prepaid balanceZong+ can be linked to a credit / debit card as an additional payment method
- Service currently only available in the USRemove complexity of accepting payments from cards by eliminating need for contract with merchantsAvailability anywhere explicitly helpful for services sector, e.g. house repair visits, outdoor stands, …Lower costs: no set-up, no minimum contract period, better interchange and faster payments to merchantsEasy set up process via download from iTunes app store. The actual hardware is mailed by courier
- Easy and secure Person-To-Person (P2P) payments over the internet without the need to exchange credit card numbers or account detailsSolves the mistrust problem: Customer gets promised goods and merchant gets the promised moneyFast / instant, secure, easy, globalOpened its API to developers Similar services are offered byAlipay and Google Checkout . More than 153 million accounts worldwide. Available in 190 markets and 23 currencies around the worldPayPal has received more than 20 awards for excellence from the internet industry and the business community -most recently the 2006 Webby Award for Best Financial Services Site and the 2006 Webby People's Voice Award for Best Financial Services Site.PayPal was founded in 1998 and was acquired by eBay in 2002.
- An innovation clearly meeting thecustomer need for payments in a country with very low banking penetrationOf the 6.9 billion people on our planet, just 30% (2.1 billion) have bank accounts, but 75% have a mobile phoneM-PEAS isa service offered by SafariCom which is aVodafone affiliateM-PEAS was launched in 2007M-PESA is used by 35% of Kenyan adult populationM-PESAhas been a huge success in Kenya. With over 8 million subscribers, it accounted for more than USD 300 million in monthly M-Payment transfers in Nov 2009M-PESA is cost effective compared to other alternatives, i.e. 27% less expensive than the post office’s PostaPayM-PESA has a wide network of over 14,000agent outletsM-PESA has strong security features including PIN protection and value recovery in case of phone lossSimilar service is available in Bahrain called “ME2U Zain Wallet”The Me2U Zain Wallet provides banking facilities directly from the Mobile Phone. Itis a complete banking account that is powered by MODE Bahrain, BMI Bank and Nonoo Exchange, which are all licensed by the Central Bank of Bahrain. Offered services are:Save money in a secure place Receive money electronically in the account Send money to other Me2U account holders Top Up your Zain Prepaid account or any other account (e.g. Wife or children) Send money home at any time, from anywhere Balance enquires 24 hours, 7 days a week Withdraw or deposit money at selected Zain and Nonoo exchange branches
- With the rise of social networks and digital we also see a rise of social lending dis-intermediating banks for creditBorrowers get lower cost loans and lenders are promised higher returns – subject to the borrower actually paying the lenders backZopa started 2005 in the UK and bills itself as the first marketplace for Social Lending, meaning that members of the community lend and borrow money with each other, sidestepping traditional banks. The premise is that both lenders and borrowers get better rates, because Social Lending is more efficient than traditional banks, which have much more overheadsProsper is the world's largest peer-to-peer lending marketplace, with more than 1,240,000 members and over $305MM in funded loans.
- I think everybody has to acknowledge that Social Media is here to stay but the dynamics are different from traditional media. Direct selling does NOT work in Social MediaTo be successful, be clear on the objective, is it:Increased brand awareness?Communication to customers?Understanding of customer preferences?Complaint listening?Only then define the channelSome example:Citi’s Click-to-Chat. Prospect customers and existing customers can visit the website and initiate a life chat with the customer service centreOpen Forum is a social community sponsored by American Express that targets small business owners and provides videos, articles, expert blogs, success stories and advice from other business owners and limited networking opportunities. It functions as a hybrid between a networking community and a conventional portalNew ZealandsASB Bank launched a virtual branch on Facebook
- We looked at the different payment channels and examples for innovationsIt is imperative that you focus on the customer need – again, having a credit card is not a needSo watch out for disruptive innovations from new entrantsContinue to enhance payment functionalities to address customer needs Develop a comprehensive strategy for mobile bankingCreate a solution for contactless payments