Demographic, economic, technological, social, legal and political factors were analyzed for Mexico. Key points include a population of 114 million, GDP growth of 3.8%, telecom penetration of 18%, Roman Catholic majority, Spanish language, civil law system, and a federal republic government. Remittances and mobile usage are increasing. The banking sector is dominated by large commercial banks yet penetration is only 54%. Opportunities exist for mobile money due to lower costs, convenience and financial inclusion.

1. E-CASH - MOBILE BANKING IN MEXICO
Didier Gutierrez Luis Morales Nokwazi Mzobe Takayuki Saito Ashish Tandon Irene Zubillaga
March 6, 2012

2. MACRO-ENVIRONMENTAL FACTORS
Technological Social & Cultural
Economic Legal
Mexico
Demographic Political
Demographic Economic Technological Social & Legal Political
Cultural
•114,975,406 populati •Real GDP growth rate •VoIP has gained huge •76.5% Roman •Legal System: civil •Federal republic,
on for 2011; 11th in 3.8%; composition: popularity Catholics; 5.7% law system with US with three main
the world 3.9% Agriculture, •Teledensity stands at Protestants constitutional law parties: PRI, PAN &
•Approx. 78% of the 32.8% Industry, and 18%; ranging from •92.7% Speak Spanish theory influence; PRD
people live in urban 63.4% Services 41% to 5% •60% Mestizo; 30% judicial review of •Considered to be
areas •2011 Unemployment •Triple play service Amerindian; 9% legislative acts politically stable, yet
•Literacy rate 86.1% rate 5.1%; Labor has started in Mexico Caucasian; 1% •Accepts ICJ there is a ‘civil war’
•Age Structure: 0-16 force of 47.77 million (TV Cable, Telephone unspecified jurisdiction with against drug dealing
=28.2%, 15-64 = •Inflation rate 3.5% and Internet) •Literacy rate 86.1% reservations; accepts
65.2%, +65 = 6.6% •Gini Index: 51.7 •ADSL, is one of the ICCt jurisdiction
•Immigrants to the (2008) fastest growing
US: 11.5 M (including •After oil, the second telecom markets
temporal residents) source of income for
the state, is US
remittance 21,271
million dollars
•Part of NAFTA

3. Banking Industry Mexico
INDUSTRY ANALYSIS
1% 1% • Banking sector is dominated by commercial banks
1% BBVA
8%
Banamex • Four foreign-owned banks dominate the commercial
4%
30% Santander
banking sector
6% Banorte
Inbursa
• Services: online banking, loans, home and life
8%
Scotiabank insurance, credit cards, savings
HSBC deposits, promotions, transfer of funds, lease of
17% ING
transportation, foreign trading and purchase/sale of
24% Bajio
dollars, investments and mutual funds through its large
Others
Economist Intelligence Unit 2011
branch network and ATMs.
Mobile Banking Trends Opportunities for mobile money in Mexico
• Mobile banking is emerging as a key electronic channel • The acceleration of mobile remittance services alongside new
for the global banking and financial services industry mobile payments highlights the opportunities for the mobile
phone to redefine the movement of money by:
• Global customer base projected to reach 1.1 billion by
• Lowering costs
2015
• Increasing convenience
• Growing demand for microfinance, mobile remittances
• Reducing fraud
and micropayments services from un-banked population
in developing countries is also expected to boost uptake
of mobile banking services
• Banking penetration in Mexico as of 2010 is around
54%

4. Family Remittances Mobile Subscribers Forecast
INDUSTRY ANALYSIS
30 80 100%
Billions
Millions
70
25 95%
60 115 117
107 111
20 102 90%
50 96
91
15 40 85%
30
10 80%
20
5 75%
10
0 0 70%
2010 2011 2012 2013 2014 2015 2016
1995
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Dollars Number of Transactions Subscribers (Million) Penetration
Banxico 2012 Monitor 2010
Evolution of Payment Methods in Mexico Highlights
100% • Mexico has 91.363 million of cell phone users in 2010
16%
80% 35%
16% • 11th in comparison to the world
60%
297
• Only 54% of the Economically Active Mexicans had a bank
40% 44%
67% account in 2010.
200 20%
19% • Evolving from 35% in 2003
166 0%
2002 2010 • 297M Interbank Electronic Transfers where made in 2011
118
Checks • 98% on the international transfers to Mexico were made by
Debit Cards electronic sources
Transfers • Less than 1 million transactions were made offline
2007 2008 2009 2010
Automatic Charges
Operations (Millions)
Banxico 2012

5. Market Segments
CUSTOMER ANALYSIS
Corporations Small Business Personal Users
• Policies • Need of receipts and • Less than 30 transactions
per month
fiscal compliance
• ERP Integrations
• Looking for convenience
• More than 30
• High volume of • Low price sensitivity
transactions per
transactions • Considering the ceiling
month established by Banxico

6. Personal Users
Persona # 1: Juan Perez Persona # 2: Mary Lopez
CUSTOMER ANALYSIS
Mexican resident who owns a cell phone. Mexican in a foreign country, and owns a cell
Appreciates the convenience of making a phone. Works in a foreign country and need
transfer to another Mexican resident with his to send remittances to her family or relatives
cell phone. And the practical fact of withdraw in Mexico.
his transferred money in any convenience
store around the country.
Mary’s Needs:
Juan’s Needs: • Not having to open a bank account
• Not having to open a bank account • Send remittances to their families and
• Saving time (not going to a bank) relatives in Mexico.
• Convenience: Immediate Money and • Convenience: Immediate Money and
Speed Speed

7. BUSINESS MODEL – E-CASH
e-cash
International Operators Mexican Operators
Retail Stores BANKS
T-MOBILE AT&T Telcel Movistar

8. PURCHASE PROCESS
Online Registration
SMS Registration
Text Message Code
Security Configuration

9. E-Cash comparison - strengths & weaknesses
COMPETITOR ANALYSIS
• No need to be face to face to do the transaction
• Create your currency denomination
Cash & • E-Cash is new, thus it needs to get customer's trust
Traditional • Check accounts do not generate interest
Banking • Traditional banks offer a wider range of services, hence possible expansion to offer
wider range of services
• Reduce the cost of international transactions
• No need for Internet connection
• No need to have a bank account
Internet Banking
• Add the option of international transactions
• Possible Hacking remains a weakness for both
E-Cash comparison - opportunities & threats
• Growth rate of mobile users + market size
Cash & • More services could be embeded in the application
Traditional • Offer an easier way to transfer money internationally
Banking • International laws and regulations
• Offer an easier way to transfer money internationally
• Barriers of entry will be erected through the partnerships
• Reduce Partnerships uniqueness by approaching everyone in the market
Internet Banking • Share the same risk in terms of acceptance of new technologies by costumers
• Open a new channel for illegal international and national transfers
• E-cash has the threat of higher partnership risks
• International laws and regulations

10. Marketing Objectives
MARKETING STRATEGY
$120 Revenues and Transactions 120
$100 100
Marketing Objectives
$80 80
$60 60
• Achieve 18% of the Telephone
$40 40
users in 5 years
$20 20 • Industry Experts expects that
$0 0 mobile banking reach 15% of the
2012 2013 2014 2015 2016
bank users in the next three years
International National Transactions
National 2016 • That 3% of the transactions from
Mobile Users 117
Between 15 and 55 yrs old 99.45
US to Mexico are made through
Market Share 18%
Clients 17.9
Avg. Trans per Month 6
our solution
Avg. Price per Transaction (USD) 0.5
Revenues ($M USD) 53.7
• $98M USD in 2016
International 2016
Electronic Remittances 75 • $53M USD from National
Market Share 3.0%
Transactions 2.2
• $45M USD from International
Avg. Price per Transaction (USD) 20

11. Brand Map
MARKETING STRATEGY
• Energetic, fast, precise, family
Personality oriented, community oriented
Message • Affordable
• Convenient
• Practical
Promise • Trustworthy
Provide our customers the most secure and
convenient way to transfer money
Vision
Substitute the use of cash in 2050
Positioning
For Mary and Juan who want to transfer money anywhere, any time.
E-Cash is a unique service that provides a simple and secure way to send and receive money.
Unlike Traditional Banking, E-Cash delivers an easy to use mobile money solution.

12. e-Cash

13. Research Plan
MARKETING STRATEGY
Pre-launch Research
Primary Research How Where Objective
1 Surveys Survey on Facebook Facebook
Questionaires at Government offices/ Segmentation, Consumer habits & Needs
Post offices/ Grocery Stores Mexico & US
Gathering opinions, beliefs, and attitudes about
Randomly select potential users, invite issues of interest to your organization; Testing your
2 Focus Groups Mexico & US
them to provide feedback assumptions; Encouraging discussion about Mobile
Money
Secondary Research How Where Objective
1 Bench-Mark Study Articles, Research Journals, Blogs E-Cash offices Get Best Practices i.e. with M-Pesa in Kenya
2 Competitor Analysis Articles, Research Journals, Blogs E-Cash offices Understand Competitor plans and objectives
3 Industry Trend and Analysis Articles, Research Journals, Blogs E-Cash offices Understand size of Market, Potential for growth
Testing platform How Where Objective
1 Beta testing with Focus group Monitor and test userbility Mexico & US Test platform and get firsthand consumer feedback
Post-launch
Primary Research How Where Objective
sms based survey after 1st transaction,
1 Survey Mexico & US Gathering opinions, attitudes, areas of improvement
then after every 10th transaction
Randomly select users, invite them to
2 Focus Groups provide feedback. Every 3 months Mexico & US Gathering opinions, attitudes, areas of improvement

14. MARKETING CAMPAIGN
Campaign dates: April 1 – October 1
Campaign objectives
• Create awareness of mobile banking and E-CASH in
Mexicans inside and outide the country Juan Mary
• To actively inform people the advantages and solutions
of our service Print Ads: Print Ads:
• Get people to visit our website, and take advantage of •Buses •Buses
our introductory product •Trains •Trains
• Get Mexicans to feel their transactions are safe and •Retail stores •Retail stores
immediate
• Become known as the best and trustable way to make TV: 2 major networks TV: Spanish networks
transfers •8:00-9:00 pm Soap Opera
•9:00-10:00 pm News
Touch point strategy: Social Media: Social Media:
• Announce: Create mass awareness of E-Cash introduction •Facebook (4hrs/week) Facebook
to the market •Twitter Twitter
• Educate: Educate Mexicans on how convenient and safe is LinkedIn
our service. Also educate our partners on how this will
continuously increase their profitability Road shows: Radio
• Act: Create engaging consumer & mobile banking to bring •Smaller Towns
E-Cash to life. Also create engagement with our partners
and leverage on them to grow fast Soccer Games: Church and Community
•Stadiums Centers
Media insights regarding target consumer:
• Heavy Radio Listeners & TV watchers with preferred consumption of
Spanish and Latin channels and stations
• Public transportation users (commute)
• Heavily influenced by culture and peer pressure giving Word of Mouth a
critical role for their lives

15. EXHIBIT 1 – FINANCIALS
Strategy Objective Method
TV Reach and impact massively Commercials, sponsorship on targeted
while educating the programming. Combine with partner’s TV
customer commercials
Social Media Create awareness, Through the Social Media: Facebook,
education and continuous Twitter, LinkedIn and Partner’s web sites.
engagement
Print Ads Create awareness & Spaces on public transportations and
education billboards in heavy traffic highways
POS Create awareness & Print Ads in partner’s retail stores (Walmart,
education Oxxo, Telcel, etc)
Radio Create engagement and Activations at key radio stations- that have
excitement at launch critical reach
Communications Continuously educate and Continuous investment on Print Ads and
(Church/Communities highlight the convenience of workshops in churches, community centers,
our service etc.
Consumer Activation Exhibit the differentiators Promotions with partners in order to offer
benefits and drive consumer the trial
engagement by actual trials

16. OVER
MARKETING STRATEGY
Offering
+ Money transfer service
+ High Security
Value
+ Transfer money any time, any where
+ Simple and secure
Experience
+ Control your finance at the tip of your fingers
+ Efficient use of your time
+ Easy to use
Relationship
+ Trusted Advisors
+ SMS Based Survey

17. Sales Enablement
MARKETING STRATEGY
1. Sales training session:
• Materials
• Feedback, etc.
2. Incentives and Compensation
3. Customer Analysis Data
• Customer behaviors
• Customer feedback
4. Buyer Personas
5. Directory of Technical Experts: Customer Service
6. Pre-Written proposal for our partners and customers

18. 2,500,000
2,000,000
Our Break-Even point is 1.3M
1,500,000
Transactions
1,000,000
500,000
-
1 2 3 4 5 6 7 8 9 10 11 12
Sales Fixed Cost Variable Cost Total Cost

20. Cash Traditional Banking Internet Banking
ANNEX 1 - COMPETITOR ANALYSIS
• Ease to use • Customer Service • Rapid growth of Mobile and wireless
• Portable • Full range of services market
• Widely accepted to the customer. • Substantially better interest rate than
Strength • More securer than those offered at traditional banks
mobile banking • Protect our environment by using e-
banking.
• Secure to keep it by ourselves • Need to go to the • Lack of awareness about the new
• Does not generate interest branch channel among the mobile users.
• Easy to falsify • Time limitations • Security concerns about the new
• Transaction has to be done in • International channel
person transactions are • No Personal Customer Service (when
Weakness • Devaluation risks complicated and costly we faced troubles and questions)
• Hacking, spyware program, computer
virus and breaking online password
are the weakness of e-banking or
online banking.
• New technologies to produce • Geographic expansion • Rapid increase in the Mobile user
safer bills base and acceptance of the Mobile
• Ecofriendly bills technology even in Rural areas makes
a bigger market available for mobile
Opportunity banking to expand.
• With technology advancements in
Mobile handsets rich features can be
embedded in the application.
• Newly joining companies • Newly joining • Acceptance of new technology by
• Traditional banking, Mobile companies users.
banking
Threat • Internet banking

21. Telcel / Banamex Telefonica / Mastercard E-Cash
ANNEX 1 - COMPETITOR ANALYSIS
Transfer
• Telcel has more 80% of • Telefonica is the 2nd • Easy to use
the Cell Phone Market largest Cell Phone • No need to have a bank
Share in Mexico Operator in the country account
Strength • Banamex is the second • Partnership with • No need for Internet
largest bank in Mexico Mastercard • Functions in all Cell Phone
• Strong security Providers
• Bad customer service • Need to have a bank • People need to learn how to
• Bad reception in some account use it
areas • Still need to interact • People need to learn to trust
with your bank it
Weakness • You need a credit/debit • Hacking, spyware program,
card computer virus and breaking
• No compatible with online password are the
American Express weakness of e-banking or
online banking.
• Will offer the services • Partnerships with Online • Market size
to the unbanked stores • Faster and easier way to
Opportunity transfer money
internationally
• Market value
• They don’t develop • Fierce competition with • Partnerships
their own software Telcel • Harder to regulate by the
Threat government

22. E-Cash PnL Best Case
ANNEX 2 - FINANCIALS
Year 1 Year 2 Year 3
Net Sales 16,873,220 25,271,550 38,039,107
Cost of Goods Sold 2,530,983 3,790,733 5,705,866
Fixed Costs 5,061,966 5,061,966 5,061,966
Operating Costs 2,580,000 2,627,155 3,903,911
Depreciation & Amortization 1,518,590 1,518,590 1,518,590
Total Costs 11,691,539 12,998,443 16,190,333
Operating Income / Earnings Before Tax 5,181,681 21,125,806 32,616,607
Less Tax (30%) 0 6,337,742 9,784,982
Net Income 5,181,681 14,788,064 22,831,625
% Margin 31% 59% 60%
E-Cash PnL Worst Case
Year 1 Year 2 Year 3
Net Sales 5,624,407 8,423,850 12,679,702
Cost of Goods Sold 843,661 1,263,578 1,901,955
Fixed Costs 5,061,966 5,061,966 5,061,966
Operating Costs 2,580,000 2,527,155 3,803,911
Depreciation & Amortization 1,518,590 1,518,590 1,518,590
9,160,556 9,107,711 10,384,467
Operating Income / Earnings Before Tax -3,536,149 4,378,105 7,357,202
Less Tax (30%) 0 1,313,432 2,207,161
Net Income -3,536,149 3,064,674 5,150,041
% Margin -63% 36% 41%

23. Model for Chapter 11, Basics of Capital Budgeting 12/12/08
ANNEX 2 - FINANCIALS
NPV
Data on Projects S and L
WACC for both projects: 10%
Initial Cost: After-Tax, End of Year Net Cash Inflows, CFt: Total
Years: 0 1 2 3 4 Inflows
Project S: -$2,480,000 $16,873,220 $25,271,550 $38,039,107 $0 $80,183,878
(Text Section 11-2)
Project S 0 r = 10% 1 2 3 4
-2,480,000.00 16,873,220 25,271,550 38,039,107 100
15,339,290.91
20,885,578.89
28,579,344.42
0.00
NPVS = $62,324,214.22 Sum = NPV for Project S