Mobile money o2 digital futures by smart421 on 15-december-2011
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Mobile money o2 digital futures by smart421 on 15-december-2011
- 1. © 2011 Smart421 LtdMobile Money Mobile Money Andrew Smale 15th December 2011
- 2. © 2011 Smart421 LtdMobile Money Contents Channels, Services and Architectures Ecosystem architectures Emerging markets What is mobile money? Mobile Money Developed economies Where are we now? Where are we going?
- 3. © 2011 Smart421 LtdMobile Money What is Mobile Money? Introduction and Context 05 July 2013 3
- 4. © 2011 Smart421 LtdMobile Money Hype or Here to stay? 05 July 2013 4
- 5. © 2011 Smart421 LtdMobile Money Financial Services in a Mobile World 05 July 2013 5
- 6. © 2011 Smart421 LtdMobile Money Quick App-Store Search 05 July 2013 6
- 7. © 2011 Smart421 LtdMobile Money Free to download “Finance” Apps 05 July 2013 7
- 8. © 2011 Smart421 LtdMobile Money What is Mobile Money? 05 July 2013 8 Ignoring standalone “budget” / “expenses” type apps Not just mobile banking... (balance, statement, transfer) or Mobile commerce (eBay, Paypal, Simply tap) - Mobile ticketing - Mobile coupons - Mobile money transfer (person to person) -Mobile microfinance -Wealth management
- 9. © 2011 Smart421 LtdMobile Money Mobile Money on the hype cycle (Gartner July 2011) 05 July 2013 9 Mobile Banking Peak of inflated expectations Trough of disillusionment Slope of enlightenment Mobile Money Transfer Mobile Payments NFC Payment 5-10 years 2-5 years Less than 2 years to mainstream adoption Mobile Coupons Mobile Ticketing
- 10. © 2011 Smart421 LtdMobile Money Historical Context - Communications Banking 05 July 2013 10 3000-2000 BC Development of Banking Mesopotamia ~1800 BC First Banking Laws Babylon ~1200 BC Cowries as money China 1000-500 BC Metal model currencies China, Lydia, Greece ~400 BC Athenian banker Greece (10% rate) 300BC-500AD Deposit banks Egypt & Rome ~600AD Saxons produce gold coins (GB) 1000-1300 The Crusades Funding/tax ~900AD Paper notes In China 1566 AD Royal Exchange English banking 1694 - 95 Bank of England Bank of Scotland ~1700-date Modern banking 3500-2900BC Development of First alphabet (Phoenicians) 1959 Bank networks 2000 Online banking ~1400 BC Chinese Writing on bone 3000-1800BC Hieroglyphics (Egypt) ~1270 BC Encyclopedia (Syria) ~1775 BC Greek phonetic alphabet ~900 BC First Postal Service (China) ~775 BC Pigeon post (Athens) ~530 BC Library (Greece) 500-100BC First portable writing (Papyrus) ~100 AD Paper invented (China) 1455 Printing press (Gutenburg) 100 AD - 1200 Books produced 1200-1400 Newspapers Appear (Europe) 1700-1850 Long distance signalling (Morse) 1900 Radio (Marconi) 1950-date Computers And phones 1990 WWW History of Communications History of Money / Banking (Source: Wikipedia and others)
- 11. © 2011 Smart421 LtdMobile Money Recent History – evolution of mobile payments 05 July 2013 11 2009 Mobile Money transfer 1960s ATM Core Network 1999 Internet Banking 2001 Mobile Internet 1990s Growth of Mobile Telephony 2005 Mobile Banking 1980s World Payment Card networks 1970s Mobile Networks Banking with communications technologies Developments since WWII 2012 Mobile Wallets 1950s Plastic Cards 1940s World Telecoms Network (GSM) Developed markets Emerging markets
- 12. © 2011 Smart421 LtdMobile Money Mobile Banking Services, Channels and Architectures 05 July 2013 12
- 13. © 2011 Smart421 LtdMobile Money Mobile Money services Developed, Western economies • Led (branded) by high street banks • Register for SMS Alerts, balance, etc • Secure Apps. Downloaded by device • Top-ups, transfers Emerging markets (Africa, India) • Simple, functional, text-based service • All mobiles on GSM network • Cash In/Cash Out • Send money, top-up mobile • Small business loans/microfinance • Agent supported • Led by mobile operators 05 July 2013 13
- 14. © 2011 Smart421 LtdMobile Money Channels and Technologies • SMS • USSD • SIM Toolkit • WAP • Mobile Internet (browser) • Java J2ME App • BlackBerry App • iPhone App • Android App • Windows 7 App • BREW • Symbian • Voice/IVR • Satellite phone! 05 July 2013 15
- 15. © 2011 Smart421 LtdMobile Money Mobile Banking Architecture 1.0 • Banks saw text services as different to application services • Separate platforms, often managed independently with different registrations • Not joined up (can’t edit alert settings from within the App!) DUH! • Paranoid about security and not convinced with 3rd party partners • Mobile operators not seriously engaged or included, nor manufacturers 05 July 2013 16 Text Banking interface Java Client BankingApp(s) Browser Banking interface SMS /USSD Aggregator Application “Core Banking” infrastructure Java Server Banking Application Web Server Banking Application Offline Balance Data ATM Switch Shared i/f Online Banking iPhone Client BankingApp “iPhone” Server Bank Application Android Client BankingApp POS/Card Terminals i/f Bank accounts Card accounts BlackBerry Client BankingApp “Android” Server Bank Application Sign-up and manage on web TextBanking interface Java Client BankingApp(s) Browser Banking interface SMS /USSD Aggregator Application “Core Banking” infrastructure Java Server Banking Application WebServer BankingApplication Offline Balance Data ATM Switch Shared i/f Online Banking iPhone Client BankingApp “Smartphone” Server Bank 1 Application Android lient BankingApp POS/Card Terminals i/f Bank accounts Card accounts BlackBerry Client BankingApp “Smartphone” Server Bank 2 Application Sign-up and manage on web BANK NUMBER TWO TextBanking interface Java Client BankingApp(s) Browser Banking interface SMS /USSD Aggregator Application “Core Banking” infrastructure Java Server Banking Application WebServer BankingApplication Offline Balance Data ATM Switch Shared i/f Online Banking iPhone Client BankingApp “Smartphone” Server Bank 1 Application Android lient BankingApp POS/Card Terminals i/f Bank accounts Card accounts BlackBerry Client BankingApp “Smartphone” Server Bank 2 Application Sign-up and manage on web BANK NUMBER THREE TextBanking interface Java Client BankingApp(s) Browser Banking interface SMS /USSD Aggregator Application “Core Banking” infrastructure Java Server Banking Application WebServer BankingApplication Offline Balance Data ATM Switch Shared i/f Online Banking iPhone Client BankingApp “Smartphone” Server Bank 1 Application Android lient BankingApp POS/Card Terminals i/f Bank accounts Card accounts BlackBerry Client BankingApp “Smartphone” Server Bank 2 Application Sign-up and manage on web BANK NUMBER FOUR
- 16. © 2011 Smart421 LtdMobile Money Integration Challenges of mobile money • Security • Reliability • Interoperability • Trust Operators Manufacturers App Stores Network vendors 05 July 2013 17 Banks Card schemes Payment networks ATM networks Merchants Software Applications Integrators
- 17. © 2011 Smart421 LtdMobile Money The Trust and Security issues 05 July 2013 18
- 18. © 2011 Smart421 LtdMobile Money Mobile API Standards (Parlay-x) Mobile network Aggregator Interface Mobile Banking Architecture 2.0? • Banks consolidate to core set of web services • Mobile operators open APIs for easier standard integration • Standard accepted security applied • Channel agnostic Identity and Access Management 05 July 2013 19 Core Phone Services Browser Banking interface “Core Banking” infrastructure ATM Switch Shared i/f iPhone App Standards-based Banking Application interface (iFx) Android App POS/Card Terminals i/f Bank accounts Card accounts Integration and Business Process layer ? HTML5 Browser
- 19. © 2011 Smart421 LtdMobile Money Mobile money in the emerging market economy 05 July 2013 20
- 20. © 2011 Smart421 LtdMobile Money M-PESA take up in Kenya 05 July 2013 21 http://www.mit.edu/~tavneet/M-PESA.pdf X
- 21. © 2011 Smart421 LtdMobile Money The Agent ecosystem 05 July 2013 22 MVA Mobile Virtual Account Could be operator branded or third party. Must be backed by a “Trust” account at a real, licenced bank.
- 22. © 2011 Smart421 LtdMobile Money Example transaction 05 July 2013 23 Andy “buys into” MVA with £900 £ 100 P 2 P 70 P 28
- 23. © 2011 Smart421 LtdMobile Money • Global signalling standard for all GSM phones • Does not use SMS or GPRS • “Free” even when roaming • Emerging markets used extensively Unstructured Supplementary Services Data, e.g. *#06# +SEND Relies on core network integration USSD Gateway -> IP world/XML 05 July 2013 24 USSD Network
- 24. © 2011 Smart421 LtdMobile Money Mobile Payment using Contactless Cards (NFC) 05 July 2013 25
- 25. © 2011 Smart421 LtdMobile Money Is NFC Over-hyped? 05 July 2013 26
- 26. © 2011 Smart421 LtdMobile Money Google Wallet 05 July 2013 27
- 27. © 2011 Smart421 LtdMobile Money Logical interfaces on NFC-enabled phone 05 July 2013 28 In principal, this need not be NFC but could be camera taking picture of QR code
- 28. © 2011 Smart421 LtdMobile Money EMV Working Group – Global Platform 05 July 2013 29 The pace of delivery depends on • Speed of market development • Adoption of contactless mobile payment technology • Inter-industry cooperative models • Migration of provisioning systems to open standards • Multi-application, multi-user, multi-brand systems
- 29. © 2011 Smart421 LtdMobile Money30 Wallet Accounts • Apply through the phone • Standard secure mobile App • High security (key exchanges) • Communicates through Trusted Service Manager (TSM) Services • Defined trust relationship with Secure Element on phone
- 30. © 2011 Smart421 LtdMobile Money31 Customer Use-case for Provisioning account TSM Platform FI “myBank”New Card Application Core platform Access Layer Certificate Authority Customer DB Internet Customer Mobile Network Mobile Access Layer Contactless Prepaid Provision Card Check Value Preferences View History Check Balance Disable Card Delete Card Reload Card Secure element The new virtual card package is downloaded to the mobile and installed on to the secure element decrypting with the exchanged keys The new virtual card package is created, encrypted and sent to the TSM to deliver to customer securely Card emulator securely provisioned
- 31. © 2011 Smart421 LtdMobile Money32 NFC Tag UICC (Smart card in device) Secure element Carrier USIM SIM App Secured User Data RFID in device Secure App Installed App Any NFC-capable Device Embedded Application Proximity of NFC Tag triggers communication through RFID to an application on the device that is registered to receive the message MIDP App sends Funds- Transfer request to server to top up Prepaid Card balance Insufficient balance on prepaid card. Could generate “auto-top-up” request to provider Customer Use-case for Card Payment
- 32. © 2011 Smart421 LtdMobile Money Mobile Wealth Management Services 05 July 2013 33
- 33. © 2011 Smart421 LtdMobile Money Wealth management and technology 05 July 2013 34 Source: Aite Group Survey of 201 financial advisers in July 2008
- 34. © 2011 Smart421 LtdMobile Money Mobile microfinance in emerging markets 05 July 2013 35 Financial services to low-income individuals Little access to traditional banking services. Lifting out of poverty Micro-investors have >95% recouped
- 35. © 2011 Smart421 LtdMobile Money Wealth management services 05 July 2013 36 Market movements Portfolio Analysis Assets – net wealth Performance vs Benchmark Risk Analysis Peer competition Customer information
- 36. © 2011 Smart421 LtdMobile Money Mobile financial tips 05 July 2013 37
- 37. © 2011 Smart421 LtdMobile Money Conclusions Needs a lot of integration expertise More regulation Impact on network services Developed economies Notable progress – still a way to go Wallets part of “core” mobile offering Need interoperability Emerging markets Overcome security blockers Cooperation and Trust
- 38. © 2011 Smart421 LtdMobile Money Strategy - Shield or Cloak? 05 July 2013 39 • Why did the Starship Enterprise have a shielding device when the Klingon “Bird of Prey” had a cloaking device?
- 39. © 2011 Smart421 LtdMobile Money Questions? Andrew Smale (asmale@smart421.com) @smaley 15th December 2011
Notas del editor
- What (really) is Mobile Money? Banking? Payments? Commerce?Why mobile banking?In emerging/developed economies
- Spot of naval-gazing perhaps but this is taken from the Barcelona keynote presentation currently on the MWC website“Incredible success” ???“proliferation of NFC-enabled handsets” ???
- Majority of these apps categorised under finance actually are more like specialised spreadsheets and have little or no integration with any core financial services. Some may take feeds of data such as exchange rates or share prices and others just provide a simple way for budgeters to enter expenses to get a better idea of what spare cash they have each month – a very worthy and useful service but not really novel.
- A slightly closer look at the free iPhone finance apps shows a few official, branded bank applications allowing simple “ATM-style” services like balance enquiry, ministatement and in some cases intra-account transfers (Lloyds, NatWest, HSBC) so it would appear there is a strong desire for these services over and above those budgetting or information apps.
- Reflects the remainder of the presentation – adjust as necessary
- No “Where are we now and what’s coming?” section would be complete without a Hype Cycle so here’s mine (subset from Gartner 2011)So what about the future of mobile banking.“Mobile Banking” has come through the hype and, since 2010, the disillusionment phases (not helped by global banking crisis generally) and into the upwards slope of enlightenment. This is being led by financial industry themselves with companies like Visa and Mastercardinvesting considerably in technology enabling platforms like Fundamo and Monitise mobile money managerMobile ticketing has almost bottomed out and there are definite signs in Paris metro and other places (outside Japan) where tickets are going mobile using in some cases fairly simple technologies like camera or SMS to get the tickets (see NFC). Japan got NFC ticketing across the rail network 10 years ago and at the time we implemented i-mode (which supplied the “Felica” flavour of NFC) the Japanese analysts said it would take ten years from the first NFC services for it to become mainstream in UK so the date of 2020 for when we all buy tickets using NFC is about right.Mobile Money Transfer is still up at the inflated expectation level in spite of stellar success in emerging markets it has not taken hold in developed markets and this is the reason why it is not considered universally productive yet – will it bypass the trough and go straight to productivity?Finally the sad story of NFC. Interestingly, Gartner has moved NFC back UP to the very peak of inflated expectations on the hype cycle given some recent increases of the hype of NFC in high profile launches like the Google Wallet and Apple’s entry being strongly anticipated. I think this is right unfortunately as there are a number of threats and issues with adoption of NFC that still cause major concerns and will take another 5-10 years to resolve for mainstream adoption (say Gartner)Other related topics like mobile OTA payments and Mobile coupons are more in the proof of concept and early adopter stage but could quickly overtake NFC given the sudden increase in a technology that’s not actually included on this slide of “QR” or “2D Bar codes” that are appearing everywhere and work with easily downloadable Apps on iPhone and Android.
- For Over 5 thousand years the continuous evolution of communications through society, culture and later technological inventions has enabled the development and growth of banking in the world.Similar growth and development of communications methods, money and banking concepts and practices, throughout the world with spread relatively slow until the 20th Century for worldwide standards.History of communications has always led exploitation of those new inventions by banksThe early symbols and writing developments by the Phoenicians preceded the production of coins with markings to denote different valuesThe invention of paper for communication was quickly followed by using paper bank notes to represent currencyJust as today the mobile banking developments follow developments of the technologies and take up for other servicesbut true world-wide adoption only in last 50-60 years, backed by technology and other factors such as better travel and mobility of people (and peace)For example, the Bank of England has been around over 300 years but central banking in Nigeria, which is not the least economically developed country in Africa only came about in around 1960 (on the other hand, customers of the bank of Nigeria quickly cottoned on to use of email communications and phishing scams ).Still, the majority of emerging nations are considered underbanked or “unbanked” which is where communications and in particular mobile communications is now almost pressing ahead of banks to implement commerce and “payment” networks almost independently of the core banking networks.It feels like we are on the cusp now of mCommerce, which was coined some time back in the 80s or 90s really becoming mainstream and I will explain why we think that is and how to keep ahead of the curve with new developments like NFC contactless payments
- Since the last World War there have been major developments in roughly ten year cycles that have opened both banking networks and communicationsThe laying of transatlantic cables in 1940s opened up intercontinental telephony, around the same time as improvements in switching networks and signalling made world communications easier (leading to telephone exchanges, satellites, transistors, integrated circuits, computers, etc).In banking the first credit cards were coming into use through the 50s to 80s
- What mobile money really meansIn the US, UK and other countries with high majority of people with bank accounts and ~100% mobile penetration“Essential” bank services such as getting a current account balance via SMS, weekly statementMore sensitive services need secure network transmission provided by SSL from installed application.Initially there was only Symbian-based Java MIDP, with some BREW (Qualcomm) then extended to iPhone when it cam out and Android market apps. Development of apps for banks very, very slow and services on the whole still very limited.In Africa on the other hand, there are >80% of population who do not have bank accounts but were instead relying on sending money via money networks like Western UnionPeer to peer paymentsWallets
- Lots of bespoke solutionsText onlyThe iphone only
- There are barriers because of trust and anti-competitive Google – Verizon for example
- Survey carried out by the Future Foundation and Monitise Group found that concerns about security still were the main reason people don’t trust mobile banking. Ironically, the studies showed that the consumers trust operators more than banks.This is interesting as banks themselves put a LOT of preconditions and checks around the services and the services that have been launched in the UK typically don’t have much opportunity for fraud.I don’t know about other platforms but Monitise employed quite sophisticated encryption techniques on handset apps, with switching of keys, MAC security in links to bank networks and private network connections (or co-hosting in a data-centre)
- Approach taken by Monitise, mFoundry and some others is to act as a hub between all the various operators, aggregators and the financial world, bridging it with common platforms and services that are adapted and branded.
- Large, economically developing Country in East Africa 33rd biggest (in population) country in the worldTelecommunications hugely successful contributor to more than half GDPKenya, independence in 1963 from Britain~42 recognised different culturesAs of July 2011 there are 14 million registered M-PESA users in a population of ~41 million people
- How do we explain this success and rapid roll-out?How can M-PESA have more “customers” than there are phones?Recruitment of “Super-agents” in the large cities where there is access to bricks and mortar banks with real cashAgent networks branch into towns where there are people wanting cashSub-agents spring up in smaller towns and even villages to “own” the mobile handset and manage the flows of cashLack of corruption as everyone benefitsOlder money transfer services like Western Union now focus on interoperability and international integrations
- An example of transfer, with fee of 10% (fees are actually usually much lower)
- USSD not found favour in European operators who focus instead on higher services like mobile internet as the infrastructure, handsets and consumers are there.In Africe, India and other emerging markets the roll out of 3G has stalled but GSM services now covering large percentagesTherefore, simple, text-based services are successful due to their ubiquity and reliabilityVisa’s work with Monitise in India was focused very much on USSD as the delivery technology
- Announcements like this have become common-placeAccording to Gartner we are still 5-10 years from maturity of NFC technologyWhy?
- Most of the time the phone interacts through it’s standard (GSM/3G) band radio interface, establishing an IP context for Mobile Internet over the same channel.For NFC there is a different mechanism, based on the RF band around 13.56MHz working over distances up to ~20cmTwo modes of operation: Active and Passive.initial communication speed from the set of 106, 212 and 424 kbit/sBTW – there are also other interfaces like Bluetooth and Infrared to consider (not shown here)
- EMV – Europay-Mastercard-VisaThe main foreseen use for NFC at the moment is to tap and pay for small itemsThe established payment interfaces and point of sale terminals are changing to accept these type of cardsIt is now up to mobile phone users to roll it outThe pace of delivery depends on Speed of market developmentAdoption of contactless and mobile payment technologyInter-industry cooperative modelsMigration of provisioning systems to open standardsMulti-application, multi-user, multi-brand systems
- These are pretty much niche services and can charge quite a lot for real benefitsNot something I have ever had a problem with managing my assets
- What (really) is Mobile Money? Banking? Payments? Commerce?Why mobile banking?In emerging/developed economies