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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
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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
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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