Mobile banking and innovative payments - technologies, trends, strategies

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Presented on Axiom Groupe conference "Innovative payments, Security and Cards 2014" in Brussels, march 2014

Text of Mobile banking and innovative payments - technologies, trends, strategies

  • Mobile banking & innovative payments technologies, trends and strategies Special for Axiom Groupe - 4th Innovative Mobile Payments, Security & Cards conference, Brussels Alexey Kazakov Head of Electronic banking, OTP bank, Russia March, 2014
  • Is a Mobile bank is ONE MORE "window" to client's account? NO! - Mobile world - Mobile apps - M-wallets - M-payments - M-commerce
  • Mobility landscape in Russia 3 184% - Mobile penetration in Russia 36% - Mobile internet penetration (0.6-1% monthly growth) 6,6 mln Russians pay from mobile at month LiveInternet, May 2013 Markswebb Rank and Report e-finance User index 2014 37% - Smartphone penetration in Russia 18,5 mln. devices were sold in 2013 (51% yearly growth) Wearesocial.sg, 2014 Svyaznoy research, 2014 Sources: - Nielsen report - Mobile consumer, Global snapshot, Feb 2013
  • Mobile - Incredible opportunity for banking 4 Smartphone is always with a client Mobile internet connection, and SIM access Hard/Software interfaces (BT, NFC, QR) Geo-positioning and geo-location data (GPS) Social media (SM) and text- messaging APPs Unique user experience across Apps IN OPPOSITE TO WEB- BANKING Mobile banking have advantages, based on unique combination of hardware technologies, are native for Smartphone and universality of Mobile Apps
  • P2P and P2B transactions in a chat/messaging fashion Bill payments from service providers Scheduled transactions in one-click-action Physical goods purchasing on QR-codes/NFC or other technologies Special offers and discounts with a usage of geo-location data E-invoicing - bank fills up a payment bill with received requisites, and client just may to accept or decline it in one click 5 Mobile Apps - born to do sales Instant P2P transfers on QR, BUMP, or Card-2-Card Discounts and special offers in physical shops nearby Extra quick payments on templates WITHOUT authentication EXAMPLES: SHARED PRACTICES in sales:
  • Mobile wallet client acquisition channel Electronic wallets (EW) become finally legal in 2011, and in 2013: 16 mln. Russians use EW for everyday purposes (56% of internet audience) 7 mln. - do regular online transactions/payments using EW $4500 mln. total yearly turnover on EW (72% - growth) 6 ELECTRONIC WALLETS technical account in IT systems, with prepaid balance, which might be opened, credited and debited without KYC. There is a huge own self-serviced network (kiosks, etc.) being utilized (e.g. Russian Standard Bank, QIWI) Permanent focus to e-commerce development is present Payments business is developed enough to become attractive for non-clients There are partners with significant P2P traffic for cash (e.g. money transfer services like Western Union, etc.) OR if there is a brilliant marketing idea Sources: - Markswebb Rank & Report, e-finance User index 2014 - ARG . 2013 - Price free agency 2013 / www.futurebanking.ru ELECTRONIC or MOBILE WALLETS to be launched if: Providing absolutely free payment tool for non- identified users of Tinkoff Mobile Wallet, TCS bank attract new clients for Credit and Debit Cards, are delivered by couriers directly to a client BEST CASE Tinkoff credit systems
  • Mobile operators out of the game 7 M-PAYMENTS without MNO is a todays reality: Host Card Emulation No SIM or particular device dependency (only OS is matter) No Mobile network operator dominating Any Interface: NFC or QR Any Applications; Finance transactions, Loyalty programs, Couponing - First bird: PRIVATBANK (UA) had presented own HSE wallets on FinNext 2014 in February Banks cloud BEST CASE Privatbank (UA)
  • Mobile NFC - dead on arrival PAYPAL have announced its technology in Q413: No additional equipment - "beacon" is connected to USB (and Bluetooth exists in each Smartphone); Hands-free payments it is enough verbally confirm a payment from PayPal account Individual offers and discounts right at a time when they may excite the customer (based on inside- building geo-positioning) Safe (it's PayPal!) APPLE had featured IOS 7.0 with BLE support, shell we expect mobile payments system from TOP1 player on technologies market? 8 M-PAYMENT APP with a BLE (Bluetooth low energy) technology support is a revolutionary solution of lack of infrastructure issue in contactless
  • Is your Bank ready for NEW challenges in online business? NEW - clients - financial behavior - lifestyle - process innovations - user experience - business models - market players
  • New clients & new ideas 10 Like to do payments on regular basis Have a lot of needs in banking products during life (card -> cash / auto loan -> mortgage -> PFM ) Will become an affluent in close future Might be on-boarded easily regarding innovative technologies or products Spread out new banking experience on others (friends, parents) and influence them A lot of Banks worldwide focused on getting new, young, active client segments, because they: BANK should earn Y-GEN respect on a new ideas, but not on adaptation of old ones NEW CLIENTS have no loyalty and trust to old (granny) brands
  • New financial behavior 11 NEW CLIENTS do not ever think (or have no time) about financial planning. They are thinking about financials, but backward BANKs dont even try to give them living advice, just provide a honest support and fancy solution: BEST CASE - Westpac bank (NZL) How to sell term deposits widely - make a virus App 1. Download the application to your Smartphone 2. Open deposit account remotely 3. . 4. Press the RED button, and top up you deposit on $5 instead of "impulse buying during shopping 5. Share your success with friends thru Social media
  • New lifestyle 12 BANK should provide them familiar workflow: funds transfers as a text messaging, balance check as social media follow NEW CLIENTS bring first online experience out of finance area That is why Facebook acquires WhatsApp!
  • Innovations pipeline 13 BANKs should follow up simplicity, and proper market positioning of online tools proposing APPs supermarkets: NEW CLIENTS are looking for killing feature but not universality of financial tool Alfa bank propose different online tools and Apps under separate trademarks for different audience, but all solutions based on general technologies, invented in Alfa Innovation LAB BEST CASE AlfabankNEW CLIENTS change their minds rapidly, always request for an new innovations BANK should be ready to accomplish cool-not-cool rhythm and follow up trends.
  • Loyalty rocks! 14 BANKs should do a business on loyalty and brand recognition, but not on direct fees NEW CLIENTS pick up awesome things, which are not highly priced at all BEST CASE - Starbucks 1. $1,4 bln. cumulative turnover on STARBUCKS cards in Q42013 2. 10 mln. ppl uses IOS and Android STARBUCKS Apps worldwide 3. 5 mln. transactions goes thru Apps in a week only in Northern America 4. $146 mln. were embezzled by STARBUCKS in last 3 years (unclaimed balances) 5. STARBUCKS and SQUARE - joined opportunity for mobile payments in 7000 locations in U.S. IF STARBUCKs being a BANK, it would be listed in first 170 retail banks in USA
  • Social media new look Social media are not for DIRECT SALES, because there are no BUYERS in SM HELP, CARE, ENTERTAIN use different social medias for appropriate tasks: for being transparent and getting more respect for teasing and getting customers to be involved for education and advertising KNOW YOUR CLIENTS, be aware where they are staying online and be a friend to them, especially, when advice is needed. GAMIFICATION it is not a GAME, is a power tool to explain complex things (or products!) on a most simple language for widest audience 15
  • E-commerce new era 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Cash Card (AN+secure code) MobilemPOS Card, linked to e-wallet Internet bank (e-invoicing) Card, linked to account 41% 34% Innovative e-commerce Classic e-com Sources: - e-commerce User index 2014, Markswebb Rank and Report Online experience: do the deal like on Apple or Google (i.e. built-in purchase) Convenience: no need to remember a lot of digits & letters Secure (mentally): no need to fill up card details Secure (visually): 3DS + additional personal controls In ONLINE SHOPPING world card branding is disappearing 16 Client chooses better:
  • New merchants MERCHANT is a major customer for payment innovations Merchant resists to payment innovations in acceptance, if there isn't long-term and transparent value (lower MDR, loyalty features) Any acceptance equipment brings freedom restriction for a Merchants and exchange it to a dependency on external factors (internet connection, physical damages, etc.) Customers Merchants BanksBanks Devices (HW) Devices (HW) Issues Acquirers Apps (SW) Apps (SW) Card systems Banks MS, Chip, NFC Alternative PS 17 U.S. and Canada based payment acceptance network, with extra low fees (FREE for