Mobile Banking Thoughts, webinar December 15, 2010 by Hannes van Rensburg

Leaders in Mobile Banking and Payments

T A K I N G T H E W O R L D B Y S T O R M :

M O B I L E B A N K I N G

0 2 W h y P l a n n i n g F a i l s

Leaders in Mobile Banking and Payments

T A K I N G T H E W O R L D B Y S T O R M :

M O B I L E B A N K I N G

H a n n e s v a n R e n s b u r g

M o b i l e b a n k i n g t h o u g h t s

D e c e m b e r 2 0 1 0

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© 2009 Fundamo. All rights reserved.

Some background on Fundamo

Founded in 2000 and one

of the pioneers of mobile

banking

Leading industry experts

Oldest deployment still

operational: Celpay

Zambia (2002)

Major brands incorporate

Fundamo as part of their

offering: (Gemalto,

Accenture, IBM, S1, etc.)

Five years of consecutive

spectacular growth

Clients in thirty-five

countries and offices in five

Mobile banking is probably the most important revolution in the history of banking


Sufficient data can be found from analysts

to show that consumers prefer mobile

banking and that this is growing

Mobile phones changed the way that we

live, work and interact with each other

spectacularly and fundamentally

The role of banks as the guardians of

money are not as protected by regulations

anymore

The roles of banks and their relevance are

being questioned by all stakeholders

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Banking will change during the next few years


Successful banks will redefine their business

model, others will disappear

New business and operating models

Non-traditional competition

Stronger weight for emerging market players

Domestic consolidation in developed markets

New sources of revenue growth

Robust customer management

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Banking 2012: Time for Bold Moves. New Operating Models to Rebuild Bank Profitability - Accenture research

Mobile banking is not another form of online banking


Implementing online banking solutions on a mobile phone form

factor cannot be seen as mobile banking

Reach a much bigger percentage of the population

Serve the needs of consumers without any constraint of time or

location

Message-based transactional architecture rather than session

based, content-rich service

It is possible to implement much higher levels of security on

mobile phones

Utilising the unique characteristics of mobile phones rather than

porting existing services to a phone

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Unique characteristics of mobile phones that can be leveraged by banks


The majority of mobile banking solutions have not incorporated

many of the unique features of mobile phones

A few alternative channel to internet connectivity

Ideal platform to implement dual authentication

A convenient and cost-effective way to distribute bank-grade

encryption keys

The most effective way to associate a very unique and personal

identification of consumers to their banking portfolio

Ability to integrate services with other banking channels

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Banks are competing with non-banks for market-share


Regulatory dispensations are not going to provide the same

level of protection any more

Mobile network operators have the means, the opportunity and

the track record to provide financial services and they see this

as a means to retain consumer revenue

Digital companies are extremely well-positioned to offer

payment services to a large market segment that will define their

future banking relationships

Foreign banks can offer financial services remotely into

traditional markets of existing banks

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So, how important is NFC?


While one cannot ignore the importance of NFC, the hype

surrounding it is distracting attention from the important issues

The business model for the investment required is at best

marginal

The infrastructure required to ensure mainstream adoption is

further into the future than most observers predict

The complexity of the security architecture and the contractual

liability is not defined well enough to be deployed as a

mainstream solution.

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Aug 2006 Technology Review published by MIT predicts that 50% of new phones shipped in 2011 will be NFC enabled

What are the secrets that nobody tells you about NFC?


NFC solutions are not simply a matter of starting to issue a new

type of payment instrument

Banks will most probably have to implement new (or at least

upgrade existing) back-office payment infrastructure

The existing AML and compliance management systems will not

be able to cope with the new profile of transactions

Back office procedures will require a major re-design to cater for

concepts like personalisation, secure element management etc.

Approaching the reality of mobile banking in a well-architected

way, utilising state of the art payment platforms will prepare

banks best for NFC

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The emerging market revolution

End of

Year

Access Subs

2008 60 10

2009 150 35

2010 280 65

2011 450 110

2012 670 180

2013 1 000 300

2014 1 200 5002008 2009 2010 2011 2012 2013 2014

Massive growth in subscriber numbers and transaction volumes in many emerging countries

Learning and applying new business models, regulatory dispensations and technology solutions

A major driver for financial empowerment

Lessons from emerging markets for first world countries


Emerging markets were the perfect testing ground for

many of the techniques and concepts of modern

mobile banking

Technology platforms could be tested and refined to

cater for the extremely high volumes of transactions of

these deployments

New business models emerged that can be applied in

first world markets to generate profits and reduce

costs

Emerging markets are often tightly integrated to

developed markets through trade and migrant workers

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Show me the money


Mobile banking without a clear strategy to meet business

objectives should not be attempted

Develop new sources of revenue through new types of

transactions and the retention of funds

Reduce costs by fundamentally redefining business processes

Increase consumer loyalty and grow market-share especially in

non-traditional market segments

Build networks with other banks and third parties to entrench

value contribution

Reduce fraud and increase security, by managing specific risks

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I thank you for the opportunity to share this with you

Hannes van Rensburg

CEO: Fundamo

http://www.fundamo.com

[email protected]

http://mbanking.blogspot.com

@Rensburg on Twitter