An overview presentation from 2010 around mobile money

1. CITI MOBILE UPDATE
MARCH 24, 2010
Dion F. Lisle
Executive Vice President
Citi Growth Ventures

2. Full Disclosure
• I work in Citi Growth Ventures
• I am not a real banker – I just work at a bank
• I worked for Obopay – a mobile payments startup
• I belong to 12 different mobile groups on LinkedIn
• I have worked in technology as a non-technologist for 20 years and the
past 10 in startups.
• I love gadgets (my iPad is already on order)
2

3. Time Flies
I will There is
Google Elapsed Time = 1 Year
an app
that for that

4. Mobile Background

5. Phone Interaction
SMS
160 Character limit APPLICATION
Download to Phone
Not guaranteed delivery
Simple Requires Discoverability
No download to phone High level of functionality
Brand able
App Stores changed
WAP everything
Wireless Internet
Covers 60% of phones
Not easy to use
Doesn’t require Phone
Carrier Cooperation
5

6. Phone OS Wars
This is NOT the PC Wars
– Eventually you will wish it was
6

7. What Makes a Smartphone Smart ?

8. Smartphone Vendors

9. Good Business for Apple
Apple’s iPhone is 6% of the market
but 32% of profit

10. Unabashed Commercial for the
Greatest Mobile Device Ever
No I am not a Paid Spokesperson – just a fan

11. Thoughts Before Apple Launched the iPhone
“We’ve learned and struggled for a few “$500? Fully subsidized,
years here figuring out how to make a with a plan? It is the
decent phone. PC guys are not going most expensive phone
to just figure this out. They’re not in the world and it
going to just walk in.” doesn’t appeal to
business customers
because it doesn’t have
a keyboard…….So, I
kinda look at that and I
say, well, I like our
“”The iPhone is nothing more than a
strategy, I like it a lot.”
luxury bauble that will appeal to a few
gadget freaks.”
“Apple is slated to come out with a new
phone….And it will largely fail.”

12. 1 2 3
Fly to NYC Kill Time on
Check email for Flight Video
Check Weather
UAL Alerts Game and
for NYC
Music
Find Train from
Take Pictures JFK to Mid-
and email to 7 4
Town
Family
5
Text Look Up
Kids Restaurant on
and go LocalEats
Recharge Check Into
to Bed Hotel
6 iPhone and
8 Listen to
Music
12

13. iTunes as an App Delivery Mechanism
Total Active Apps (currently available for download): 159,611
Number of Active Publishers in the US App Store: 32,183
App Submissions
This Month (Games): 2,009 ( 84 / day )
This Month (Non-Games): 14,387 ( 599 / day )
This Month (Total): 16,396 ( 683 / day )
Current Average Overall Price: $2.85
Most Popular Categories
1 - Books (28705 active)
2 - Games (24551 active)
3 - Entertainment (20656 active)
4 - Education (11056 active)
5 - Utilities (9788 active)
13

14. iPhone Drives Mobile Web Usage
Activity iPhone Smartphone Market
Any news or info via browser 84.8% 58.2% 13.1%
Accessed web search 58.6% 37.0% 6.1%
Watched mobile TV and/or video 30.9% 14.2% 4.6%
Watched on-demand video or TV programming 20.9% 7.0% 1.4%
Accessed Social Networking Site or Blog 49.7% 19.4% 4.2%
Listened to music on mobile phone 74.1% 27.9% 6.7%
Source: M:Metrics

15. AT&T Investment Pays Off
• 30% of US consumers who purchased Apple iPhone 3G in the summer
of 2008 switched from other mobile carriers to join AT&T,
– 47% switched from Verizon Wireless
– 24% switched from T-Mobile
– 19% switched from Sprint.
• 3G iPhone Impact on the SmartPhone Market
– Pre-3G iPhone – Apple’s share was 11%
– Post-3G iPhone – Apple’s share was 17%
15

16. Not just in the USA
Japan has enjoyed
the most advanced
mobile phones for
years – with the
exception of Apple –
every phone in their
top 10 list is made in
Japan

17. What Apple Taught Us
A Great User
Experience is Key
Build a Complete
Ecosystem
Partner with the
Carriers

18. The Network
2G
2nd Generation
GSM or TDMA/CDMA 3G
Digitally Encrypted 3rd Generation
Digital NOT Analog GSM / EDGE / UMTS and
CDMA2000
1G Signal could decay slowly
Capable of Data and
4G Voice Simultaneously
100% IP Packet Enabled Being rolled out now
Smoother roaming and
transitions between
networks
Still mostly being
developed by standards
bodies

19. The Downside to Success
• AT&T has taken a great deal of grief for their network speed
• Verizon took advantage of the opening with an ad that plays up the
weakness of AT&T 3G
• Note: The iPhone accounts for most of the traffic usage on AT&T

20. Global SMS v 3G - Disparity
120
Singapore
Philippines
100
United States
Hong Kong
SMS Usage – SMS Sent per
80
U.K.
Subscriber per Month
60
India
Canada Spain
40
Mexico
20 Czech
Brazil
0
0% 5% 10% 15% 20% 25%
3G Penetration – As a % of All Subscribers
20

21. Mobile Sensitivities
Sensitivities for Each Attribute
PERFORMANCE SECURITY FUNCTIONALITY
• Caching • Encryption • Business Rules
• Concurrency • Intrusion Detection • Expectations
• System Throughput • Code Security • User Experience
• Thin Client: Avg,. Web • Role Based Security
page size • Authentication
• Thick Client: Data refresh • URL Spoofing
rate
• Audit Trail
VARIABILITY MODIFIABILITY PORTABILITY
• Product Scalability • 3rd Party Integration • Hardware Compatibility
• Hardware Scalability • Change Configuration • OS Compatibility
• Application Compatibility
21

22. Carriers Want……
New Revenue Sources
Avoid being a big dumb pipe
Less churn – more customer loyalty
Less Regulation
Reduction in CapEx – big investment in networks
New customers – often at the expense of current customers

23. Mobile Money

24. Mobile Money Taxonomy
Mobile Commerce Mobile Banking
Mobile Mobile Bank Account BillPay By
M-Coupons
Advertising Payments Services Phone
Proximity Remote
Payments Payments
NFC or
Contactless
Transit P2M P2P P2M
Money
Transfers

25. A Three Level Basis to Offer Mobile Financial Services
Platform
Progression
Technology Enablers
Handset
III. Network Capability
Development
Advanced:
location-based
Handset
Modification services (LBS), Most networks not 5-10% of Phones
contactless capability, yet enabled for Equipped to handle
full-featured browser, Advanced Services Advanced Services
mobile social networking
50-60% coverage
II. of wireless data 40-60% of Phones
Thick/ Progressive: connections already equipped to
Thin Peer-to-peer payments, sufficient to support handle Progressive
investments/trading, richer Progressive Services
rewards management services
I. Most networks
~95% of Phones
support Basic
SMS Basic Consumer Mobile Financial Services:
Equipped to handle
Services; SMS is a
Account balances, bill presentment/payment, Basic Services
standard feature
marketing response, basic rewards
Service Progression

26. Mobile today is a cluttered arena with multiple stakeholders
Regulators Technology
Finance Drivers
Mobile
Ecosystem Ecosystem
Geographies
Pvt
GTS Cards Retail Bank

27. Mobile Money Ecosystem
Payment
Networks
Chipset Handset Card
Maker Processor
Maker Associations
Card
Issuer
SIM Mobile
Merchant Card
Card Carrier Acquirer
Software Consumer POS
Developer Mobile Vendor
Applications

28. Around the World

29. Across the Globe – Mobile Financial Services are Growing
The number of consumers using Mobile Financial Services across the world is forecast to
grow to nearly 1 Billion by 2014 Market Leader
Market Leader
15 Million
Market Leader U.S. consumers use
mobile banking services
each month 100% Growth
In number of customers using mobile to
access Barclays’ banking services in
the U.K. in the first 6 months of 2009
3.5 Million
Bank of America customers
are active users of BofA’s
mobile banking services
35 Million
Mobile handsets with Osaifu-Keitai
NFC payments and eWallet
capabilities in Japan
$61 Million
Market Leader Was deposited by USAA Federal
Savings Bank customers via mobile $200 Million
check capture in only 6 weeks
$140 Million Handled per month by GCash and Smart
Money in the Philippines by the end of 2008
Value of transactions handled
3 Years by M-Pesa in Q3 2008
Before mobile banking is Market Leader
predicted to surpass Internet
banking for Banco do Brasil Market Leader

30. Kenya
• Kenya has a population of 40 million people
• Kenya has 300,000 landlines
• Kenya has nearly 4 million internet subscribers
• Kenya has nearly 20 million mobile phone subscribers
• Kenya has a Per Capita income of $1,400
• Kenya has nearly 9 million mobile money users
– It is estimated that 40% of Kenyan Adults use the MPESA
service.
• MPESA has changed the financial lives of millions of Kenyans.

31. The Secret to MPESA’s success in Kenya
• Nearly 14,000 Agents
– By the time you read this it has probably grown by 5%
• A Human ATM Network across Kenya – Rural and Urban
Reality – Mom goes
Brochure – Send Mom to an agent to pick up
Money Anywhere the Money

32. Be an MPESA Agent
Research by: Mark Pickens, Sarah Rotman,
Ignacio Mas, Olga Morawczynski

33. Mobile Payments in ME and Africa to Rise to $5 + Billion in
2013

34. The Philippines
• The Philippines has 2 successful mobile money systems
– Gcash – offered by Globe Communications
– Smart Money – offered by SMART Communications
• Like MPESA in Kenya – the Philippines relies on a network of incented
and trained agents
• Unlike Kenya – the central bank was very involved in the design and
rollout of Mobile Payments in the Philippines.
– In accordance with BSP Circular 471, which was issued in January 2005,
non-bank agents must first attain a Remittance Agent license to perform
cash in/out.
• The Philippines has been a Texting country since the advent of their
mobile phones – this Texting literacy made the transition much easier.

35. India – The RBI Weighs In
• Mobile Payment in India - Operative Guidelines for Banks
• 2.1 Only such banks which are licensed and supervised in India and
have a physical presence in India will be permitted to offer mobile
payment services to residents of India.
• 2.2 The services should be restricted to only to bank accounts/ credit
card accounts in India which are KYC/AML compliant.
• 2.3 Only Indian Rupee based services should be provided.
The RBI only took 12 pages to outline what can and can’t be done with
mobile payments in India.

36. Osaifu-Keitai (Mobile Wallet)
• Japan is the most advanced Mobile Money Market in the World !
• NTT DoCoMo drove the entire ecosystem to deliver a complete Mobile
Wallet
– Get on a train, buy a soda, pay at a store………
• It is the unique dynamics of the Japanese Market that allowed such a
complete solution to be delivered
• Even with NTT driving – it took 10 years
• 30 million users out of a subscriber base of 60 million
• Osaifu Keitai is accepted at 700,000 retail locations

37. Felica Market in Japan
30%
27% 2007
2008
25%
22% 22% Prepaid
(plastic)
20%
17% Ministry of Internal
Affaires, 2009
15% Prepaid and eMoney
usage (to total
10% 9% population)!
7%
5%
0%
eMoney Prepaid eMoney (mobile)
eMoney Holder IC card Mobile
(mobile) (plastic)
60 Suica, Pasmo… Edy Others Total 56
50
50 45 14
39 13
40 36 4
34 12
Felica Market Size 4
12
both Prepaid 30 12 3
12
(plastic) and 2
1 2
eMoney (mobile)! 20 38
33
30
22 25
10 21
0
2005 2006 2007 2008 2009 2010
B USD
Yano Institute, 2008
C Media, 2006

38. eMoney Usage in Japan
Successful – Yes
Complex - Definitely
Monthly
Issued (in mobile,
Service type Vendor #shop (M) transaction Charging touch point (pre-
(MM) MM)
(MM) paid) Negative points note
Credit card, Bank, POS, Charger, 5000 websites accept Edy for
Bitwallet Point exchange payment. Rakuten obtained over
Edy Pre-paid (Rakuten 48.4 8.0 132.0 22.5 50% of Bitwallet shares in Nov.
Group) 2009.
Creditcard, Bank, POS, Ticket Suica (Kanto area), Icoca (Kansai area), Mobile Suica requires 10USD for
vending machine, Point exchange, and other e-money issued by train annual service fee.
Suica Pre-paid JREast 27.5 1.5 63.2 USB Reader/Writer with JRE credit companies are becoming interoperable
card, Auto top up with JRE credit interoperatable.
42.9
card
Charger, Ticket vending machine
ICOCA Pre-paid JRWest 4.7 unavailable 49.2 0.9
Charger, Auto top up with credit card No mobile service is provided so far. Convertible with Suica.
PASMO Pre-paid Pasmo 13.5 unavailable 50.0
POS, Seven BK ATM, Charger, IY Charging/accept point is limited in Seven Transaction number is the largest
nanaco Pre-paid Seven I 7.9 0.9 23.5 26.0 Card (credit card) group shops and cards. among eMoney.
Aeon BK ATM, POS, Charger, Auto Available at McDonald's
WAON Pre-paid Aeon 10.0 n.a. 29.0 25.3 top up from Aeon bank account
- Currently other carriers don't implement *Shows # of available terminal
Docomo, iD in their handsets. One handset can instead of # of shop.
iD Credit 10.0 6.4 390* n.a.
SMVC.. have 2 card numbers of iD.
Railway companies in - No mobile service is provided so far.
PiTaPa Credit Western Japan
1.1 unavailable 18.0 0.9
- AU pre-loads this into some handsets.
QUICPay Credit JCB, Toyota 4.6 n.a. n.a. n.a. One handset can have only 1 card
VISATOUCH - One handset can have 5 card numbers.
/SmartPlus
Credit MUFJ Nicos 0.8 n.a. 12.8 n.a.
Total 128.5 16.8 377.7 118.5

39. Felica Types in Japan
Pre-paid (cost reduction) Pre-paid
- Edy (SONY, Rakuten). Transaction fee at Transportation companies
payment. Not profitable. Rakuten got 50% of
Bitwallet (Edy issuer) shares in Nov. 2009. JR group JR compatible
Rakuten also bought eBank in Feb. 2009.
- Suica (JR East), PASMO and ICOCA (Bus,
Subway). Reduce maintenance cost of auto
ticket gate and ticket itself. Now JRE is
leveraging it to payments (plastic & mobile). Pitapa is Post-paid
- Nanako and Waon (merchants). Fast cashing
and reward points to loyal customers Other Merchants
Post-paid (not widely accepted)
• NTT Docomo launched iD on Docomo
handsets. Fee at transaction. They became an
issuer of credit card and network provider for Post-Paid
other credit card companies.
• JCB provides its electronic credit, called Quick
Pay. Available on all 3 carriers.
• VISA and MUFJ also provide its scheme called
Pay pass is still trial in Japan
Smart Plus and its convertible with VISA Touch.

40. Overseas Lessons So Far……
• Carriers offer successful services – so far no banks have been
successful
• Regulators have been both active (Philippines) and nearly invisible
(Kenya)
• Texting based services rule the day…..so far
– This is self-selecting as Smartphones have not yet proliferated in
underbanked countries.
– Except Japan
• Low ATM penetration combined with high mobile penetration
– Except Japan
• Domestic remittances is the best use case so far.
– Except Japan

41. At Citi

42. Primary Bank Relationship
Primary Bank Relationship
The five
Money Transfer
pillars of
Debit Card
Regular Savings
Auto deposit Payroll
Retail
Bill Pay
Payments and
Deposits are
supported by
the 3 key
technology
channels ATM
Mobile
Internet
ATM, Mobile and Internet channels allow Citibank to maintain
stickiness with customers through their primary bank relationship

43. Citi Mobile – Current Banking Suite
Building on our 2007 head start, this year is seeing an unprecedented push forward
Downloadable Downloadable Mobile Browser Text Banking
Citi Mobile (Original) Citi Mobile iPhone app (aka “Thin Client” or (aka “SMS” for Short-Message Service, or
(aka “Thick Client”) Bank launched February 2009; “Citi Mobile for smart phones”) “MyCiti On Demand”)
Bank launched April 2007 Cards-only access coming 4Q09 Bank launched June 2009; Cards launched March, 2009;
Cards-only access coming 4Q09, Bank support coming 1H10
• First major U.S. bank to offer a behind joint “front door” with Bank
• Adapted the original Citi Mobile
downloadable banking app
for use as a native app on iPhone; • Cards customers can request
• For Cards-only customers, support for Cards-only users is • Built on Citibank Online and AO balances, recent activity, locations
Cards opened access Oct 2008 being added 4Q09 behind a joint technology, but optimized for mobile • Bank accounts coming 1H10, on same
through Firethorn app “front door” with Bank browsers short code of MYCITI (692484)
• Bank and Cards apps available • Available on iTunes and on the • No downloads, installation, updates • Phase 2 (2H10):
to AT&T and Sprint customers App Store or enrollment—sign on with CBOL or “Actionable Alerts” (e.g.. “Minimum
as well as to Verizon, T-Mobile AO User ID and Password
• View bank/cards account info, payment of $10.00 is due 2/7/09 on loan
and Alltel BlackBerry users
make transfers, pay bills, find • View more account info (bank / 574. Reply PAY to make payment.”)
• View account info, make branch/ATM automatically, one- cards / brokerage), transfer funds,
transfers, pay bills, find branch/ touch to reach Customer Service add payees, pay bills, self-service
ATM, connect to Customer options, find branch/ATM and
Service connect to Customer Service
Citibank Online Business: Citi Mobile Citi Internal Copyright © 2009 43
Citigroup Inc.

44. SMS versus Application
Be Honest – which do you prefer ?
44

45. Citi Mobile – What’s Next
3 Strategic Initiatives:
1 2 3
Location Based Services (LBS) Near-Field Communication (NFC) Peer to Peer Payments (P2P)
Tap &Pay : World’s largest NFC trail in Obopay: A Silicon Valley P2P service that
Bangalore, India. Goal is to validate customer allows clients and customers to send and
acceptance of technology, pioneer definition of receive money using their mobile phones. Citi
and business model for contactless payment made a strategic equity investment in the
ecosystems, and capitalize on resulting brand- company in 2007 (3.1% equity stake) and
shift
partnered with Obopay to bring Citi-Obopay
ventures to market in the US.
Citi wants to be a leader in being Ubiquitous
for our customer’s and client’s financial needs

46. Tradeoffs
• Customers require Easy to • Money transfer products are
Use Services under attack from external
fraudsters
• Customers demand
convenience from their banks • Mobile is an unknown
dimension to a bank’s security
• The average bank customer is teams
NOT an 18 year old heavy
mobile user, but a 38 year old • Banks can not afford negative
light mobile user headlines in regards to mobile
payments.
Easy & Secure
46

47. Mobile Risk Management
• New Risk – most banks don’t have true mobile expertise, but it is
growing
• Old rules don’t always work
– Citibank required a 6 digit alphanumeric PIN as compared to
Obopay’s 4 digit PIN.
• Go Ahead – Try Alphanumeric on your non-QWERTY phone
InfoSec View Business View
47

48. Weekly Mobile Money Project Meetings
• Weekly project call had over 50 participants from INSIDE of Citibank
• To ensure compliance, the team included
– ARR – Audit Risk Review
– Compliance
• Two groups – legal and internal policy
– Information Security
• Two groups – Business and IT
– Financial Accounting
– Legal – 2-3 lawyers every week
– Financial Risk
– Operations
– Marketing of many kinds
– And more…………………………………

49. LBS Fraud Prevention
• Imagine that you have a payment service, such as a benefit card that
can only operate when you are near it.
LBS Based
Fraud Prevention 2 Miles
Rules Away
500 Feet
Radius The system
sees a
Transaction
out of your
Geographic
Range
You get a Text
requesting
Authorization

50. Amazing….but True
• A carrier in Mozambique issued tokens for airtime that became
accepted as Currency because their national currency was devaluing so
quickly.
– There are other examples of airtime as currency
• Nokia says “Nokia should get a percentage of every transaction carried
on one of it’s devices.”
• The MPESA service failed in Afghanistan due to illiteracy
– No one could read the text messages
• A mobile payment service in Latin America claimed 1 million users
– 1 million registrations led to less than 30,000 users