Disruptive innovation or technology enabler? Mobile payments Alex Lee Director, Payments Markets,...

Disruptive innovation or technology enabler?

Mobile payments

Alex LeeDirector, Payments Markets, Asia Pacific, SWIFT

8 April 2011

Mobile Payments - a banks’ perspective

2

Disruptive innovationthat will disintermediate banks?

Technology enablerfor banks to serve the unbanked?

Inspired by thinkmobilemoney

Let’s develop our thinking in five thematic steps

1. Everybody’s talking about mobile payments2. Incl. for person-to-person international money transfers3. But now, MNOs are at centre of the eco-system and if

m-wallets interconnected, where does that leave banks?4. Before achieving global adoption, some things to sort out:

regulation, cooperation, interoperability

5. What is the ideal model for global interoperability of mobile payments eco-systems, and who can take us there?

PS: hurry up - the world is changing around us

3

4

Many types of ‘mobile payments’

Mobile banking

Use mobile phone to access your bank

account

Mobile commerce

Use mobile phone to buy products

(digital / physical, remote / proximity)

Mobile money transfers

Use mobile phone to send money to someone

5

Mobile payments are ‘hot’Every week, a new mobile payments project

Some of the 360+ examples

The irresistible ubiquity of the mobile phone for payments

6

6.9 bn

people on this planet

75%

mobilephone

(5.2 bn)

30%

bankaccount

(2.1 bn)

Mobile payments grow significantly

7

Source: Gartner, May 2010

By 2014

• USD 245 billion

• 340 million users = 5% of mobile subscribers

What if all mobile wallets interconnected?

8

Source: GCASH

Global interconnectivity as seen by MNOs. There is no bank in this picture …

Clear business case for MNOsMNOs: Mobile Network Operators

9

Source: Greenwich Consulting

Value for a bank in an MNO-led model?

10

Within bank eco-system

Connecting eco-systems

Banks can lead mobile payments

11

Eco-system Bank Eco-

systemMNO

Eco-systemMTO

Eco-systemBank

Eco-system Bank

MNO: Mobile Network Operator MTO: Money Transfer Operator

Two different worlds create

Huge space for co-operation

• Reliability -> in banking: 99.9x% up, in telco: “nobody cares when you drop a call”• Security -> banks and telcos do not think the same way• AML/KYC -> in banks: heavy, big cost; at telco: in proportion to currently limited amounts• Margins -> in banking: basis points; in telco: “90%” on an SMS• Tacking -> in telco: you know where person is, when ‘payment‘ got there

12

RobustnessAgility

Build an open community,

with standards

What is the ideal model of interoperability?for international mobile money transfers

13

Paymentsclearing

Settlement

Financialmessaging

Eco-system

Eco-system

MNO

MTO Eco-systemMNO

Eco-system

Eco-system

Eco-system

Bank

MTOBank

Put mobile on top

2

4

Enable existing

channels for mobile instructed payments

3

Use existing

processes

1

Mobilemessaging

“Who can bring all parties together,

Who will be the SWIFT for mobile payments?”

• The MNO world (eg GSMA)… but can they bring Banks to the table?

• The Bank world (eg SWIFT)… but do they have the ‘agility’ mind set and can they bring MNOs to the table?

• A platform vendor (some)… but since commercial venture, can they be inclusive enough?

• A mobile standardisation body (eg Mobey Forum)… but do they have world-wide execution capability?

• An international standardisation body (eg ISO)… but can they drive adoption?

14

Final thought and sense of urgency, as the world is changing around us

Who will you compete with next

15

PayPal

P2P networksSocial networks

and e-commerce sites

Amazon American Express

Credit card companies

In conclusion

• Mobile payments are reality, will become bigger• Require Banks and MNOs to work together• The ideal model builds on existing processes• Open in participation, with standards

• Banks can deploy innovative services

•Urgency to act

16

Thank you