121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Building blocks for the Mobile Financial Services Ecosystem in Emerging Markets

Editor's Notes

1. 1. Mobile Transfer aka P2P or mobile money transfer services - MMT
2. Social Economic Context Depending on the social and economic factors, MFS providers could identify the consumer groups and the mobile services pertaining to that group. As for the Gini Index, it measures the income/wealth distribution equality in a country. A 0 index means perfect equality. In the context of MFS, Gini index and urbanization level could help in pushing the expenditures towards target services. Singapore is a highly urbanized country, with high income disparity. But since the facilities and services are available to people, the major task is to identify the segment of potential consumer. It helps assess the spending patterns of the population as it helps create a virtual distinction between the income groups. Access to financial services: Banking services penetration in a country helps in assessing the availability of basic financial services to the people. Lack of it requires the service providers or the government to expand those services or provide with alternate solutions. And mobile banking could be the alternate solution to the unbanked low income population in the economy.
3. Product Idea is an idean for a possible product offering to the market Product Concept is a detailed version of the idea stated in meaningful consumer terms Product Image/Branding is the way consumers perceive an actual or potential product
4. India: Within the current framework of MFS, advanced financial services and loan payment services are not available through mobile applications (of banks as well as of MNOs/third party) Through the mobile apps for banking institutions like State Bank Freedom, only account transfer (of the same bank as well as other banks through NEFT scheme of RBI), balance inquiry, airtime top-up, bill and retail payments can be made. No financial services of bank can be performed through those applications. Mobile money transfer in allowed only for domestic transactions. International money transfer is not available. With a variety of government disbursement and payment schemes, mobile technology could become an alternate service to explore. There are tie-ups between commodity exchanges and mobile service providers for the dissemination of crop information through text messages Indonesia: At present, Indonesia provides similar mobile financial services as India. With a variety of government disbursement and payment schemes, mobile technology could become an alternate service to explore. Malaysia: Apart from bill payment, P2P transfers, basic banking services and retail payments, Malaysia offers public service access through mobile phone. There have been significant improvement in contactless infrastructure like ‘Touch n Go’ in the country. With inbound cross border remittance forming ~0.5% of the GDP, Maxis, the leading mobile operator, has tied up with western union to bank on the cross-border remittances. Philippines: Bill payments, retail payments, banking services and money transfers(including remittances) One problem that exists is the non-interchangeability of mobile wallet money. Currencies of the two major mobile wallets Globe and Smart are not interchangeable. One distinct feature of MFS in Philippines is the G2P payments. Conditional cash transfers are also made through mobile phones. Transactions are processed through Green Bank’s mobile banking facility and Globe’s GCash platform. Singapore: Singapore is the most developed in terms of MFS, it rolled out mass deployment of NFC based payment services last month.
5. Regulation: In order to assess the regulatory situation for the mobile financial services, the openness and certainty of each country is judged. Openness: Openness suggests the extent to which a country’s legal, policy and regulatory environment is conducive to innovation. Certainty: Certainty defines the stability of the regulatory environment. Position 1: High certainty, high openness: Best position for innovation. Position 2: High openness, low certainty: Requires strong motivation and risk-taking approach. Position 3: High certainty, low openness: Need regulation reforms Position 4: Low certainty, low openness: Need regulation reforms India:   Payment in India is divided into closed, semi-closed, semi-open and open instruments. The first two are applicable for banking and MFIs and do not permit cash withdrawal or redemption by the holder. Semi-open is allowed to MNOs as it allows purchase of goods, airtime recharge and mobile prepaid services.   Relaxation in transaction limit from 50,000 per day to unlimited. Allowing non- banks to offer banking services as business correspondents appointed by banks only and limited involvement of MNO in providing services. MNO’S cannot operate by themselves to provide the services. Citizens can soon open a ‘mobile linked no frill account for financial transaction. The controversial government distribution of 2G licenses has created an environment of uncertainty and regulatory setback and Uncertainty . India is rated low in the scale of ease of doing business, thus relatively lower openness than other countries. Indonesia: This shows the low openness relative to other countries, but Indonesia has better stability as per the government involvement is concerned. Philippines: Below average in measures like burden of government regulations in business and having well developed laws of IT and communication. Government involvement in MFS initiatives like tax and social security distribution provides certainty of the environment and growth of the sector. Tax benefit schemes for MFS providers by government create promotes the industry and creates a stable and certain environment. Value of mobile wallets can be considered as deposits indicating openness in the services. There are no international mobile money transfer regulations. The cross-border mobile remittances are allowed but without regulations, the market becomes risky. Malaysia: Malaysia has high financial sector liberalization and openness in the economy, relative to India and Indonesia. The taxation on mobile services is also lower at 5% while India has a tax regime of 12% and Indonesia 8%.
6. High financial literacy and access to financial services could help in defining the extent of need of MFS. If the financial services through traditional modes have reached most of the population, then MFS gets positioned as a complimentary service . People can use the traditional as well as mobile services with similar ease. But when the banking is limited to a certain percentage of people, MFS provides an alternative solution to reach the untapped population . Financial literacy among people would then help in identifying the kind of services that consumer friendly. ATM and payment card users would have to made to switch to MFS. Non-users of payment cards would be less reluctant in using MFS since there is no opportunity cost for them and they have not identified the advantages of using a card. India: With low ATM and Payment cards penetration, composite access to financial services (includes services by banks, MFIs) is at 48%. Though the numbers have improved over the last 7 years with the popularity of micro-finance institutes and financial inclusion correspondents, banks still hesitate to invest in risky territories. Indonesia: It is higher than India on financial literacy but access to financial services is limited to only 40% of the population. Thus the demand for services is already there. Malaysia: Malaysia has a higher banking penetration than the other countries, except Singapore but half the mobile penetration levels. More than half the population in Malaysia has composite access to financial services. With higher access to banking services and payment card penetration relative to India, Indonesia and Philippines, it is necessary to move the card holders to mobile services. Philippines: Philippines, similar to Indonesia and Malaysia has 65-70% financial literacy rate with 27% banking penetration rate. High literacy rate combined with high mobile penetration rate allows leveraging for the absence of banking facility. Since the majority of consumers are financially aware, there awareness and needs could be met through mobile services (with 96% mobile penetration). Singapore: Singapore has the highest financial literacy rate among the five countries (higher in global ranking also).
7. The state of mobile market influences the m-money sector in two ways: The competitiveness and health of the sector determines the appetite and capacity of MNOs to invest in an m-money business, The dominance of a single operator can be conducive to an m-money business, whereas a more competitive market needs to address the issue of interoperability to create economies of scale. The HHI Index Herfindahl-Hirschman Index is a standard measure of competitive intensity in a market, based on the number of players in the market and their respective market shares. Markets are measured on a scale of 0 to 1, where markets close to 1 have the lowest competitive intensity while those close to 0 are the most competitive India is a highly competitive market in terms of existing MNOs in the country, which could lead to decreasing revenues of the companies. With more than 10 companies competing for the consumer base, gaining economies of scale is a tough task. The major MNOs have managed to that till now, but reaching saturation in urban years. To make profit in the long run and sustain the customers (and reduce churn rate), they need to move into new horizons and markets. At present, mobile service providers offer basic financial services like airtime recharge, balance enquiry, transaction statements and bill payments. Indonesia also has a highly competitive market with ~10 players existing in the market. But the majority share of the market is retained by the major players like Telecomsel, Indosat and XL. Malaysia, Philippines and Singapore have lesser number of players in the market with 3 players dominating the market share. Philippines have Globe and Smart which have taken over a lot of small companies reducing the competition in the markets. This allows both the companies to provide the services more according to their business plans     Comparing the competitiveness with broadband data: India and Indonesia have a relatively competitive market than Malaysia, Philippines and Singapore, yet India has one of the lowest mobile broadband speeds. According to a study by Google, measuring the internet speeds across 50 countries as the average (median) time for loading webpages, India and Philippines were the lowest among the five countries with 16.4 and 16.9 seconds respectively. Also, even with highly competitive mobile operator markets in India and Indonesia, POS device penetration is very low at 5% and 1% respectively. Even when the competition is high, penetration levels are low providing ample opportunity for the operators to gain economies of scale with the existing unreached population. On the other hand, Philippines, which have the lowest competition in the mobile operators market, suggest the highest POS penetration. At Google, we are passionate about speed and making the web faster, and from first hand experience, we are glad to see that many website owners share the same goal. A faster web is better for both users and businesses - faster pages lead to better user experience and improved conversions. Global Site Speed Overview: How Fast Are Websites Around The World The first step in optimizing any process is to establish and obtain an accurate set of measurement data. In the context of optimizing the user experience on the web, it means that we need to measure the speed of a page as seen by your real users: users network, device type and speed, geographic location, cache sizes, and a dozen other factors all come into play. 
8. The state of mobile market influences the m-money sector in two ways: The competitiveness and health of the sector determines the appetite and capacity of MNOs to invest in an m-money business, The dominance of a single operator can be conducive to an m-money business, whereas a more competitive market needs to address the issue of interoperability to create economies of scale. The HHI Index Herfindahl-Hirschman Index is a standard measure of competitive intensity in a market, based on the number of players in the market and their respective market shares. Markets are measured on a scale of 0 to 1, where markets close to 1 have the lowest competitive intensity while those close to 0 are the most competitive India is a highly competitive market in terms of existing MNOs in the country, which could lead to decreasing revenues of the companies. With more than 10 companies competing for the consumer base, gaining economies of scale is a tough task. The major MNOs have managed to that till now, but reaching saturation in urban years. To make profit in the long run and sustain the customers (and reduce churn rate), they need to move into new horizons and markets. At present, mobile service providers offer basic financial services like airtime recharge, balance enquiry, transaction statements and bill payments. Indonesia also has a highly competitive market with ~10 players existing in the market. But the majority share of the market is retained by the major players like Telecomsel, Indosat and XL. Malaysia, Philippines and Singapore have lesser number of players in the market with 3 players dominating the market share. Philippines have Globe and Smart which have taken over a lot of small companies reducing the competition in the markets. This allows both the companies to provide the services more according to their business plans     Comparing the competitiveness with broadband data: India and Indonesia have a relatively competitive market than Malaysia, Philippines and Singapore, yet India has one of the lowest mobile broadband speeds. According to a study by Google, measuring the internet speeds across 50 countries as the average (median) time for loading webpages, India and Philippines were the lowest among the five countries with 16.4 and 16.9 seconds respectively. Also, even with highly competitive mobile operator markets in India and Indonesia, POS device penetration is very low at 5% and 1% respectively. Even when the competition is high, penetration levels are low providing ample opportunity for the operators to gain economies of scale with the existing unreached population. On the other hand, Philippines, which have the lowest competition in the mobile operators market, suggest the highest POS penetration. At Google, we are passionate about speed and making the web faster, and from first hand experience, we are glad to see that many website owners share the same goal. A faster web is better for both users and businesses - faster pages lead to better user experience and improved conversions. Global Site Speed Overview: How Fast Are Websites Around The World The first step in optimizing any process is to establish and obtain an accurate set of measurement data. In the context of optimizing the user experience on the web, it means that we need to measure the speed of a page as seen by your real users: users network, device type and speed, geographic location, cache sizes, and a dozen other factors all come into play. 
9. 3 rd party US eBay’s PayPal, US Obopay and US Cashedge
10. Answers to the above questions provide a start-point for preparing a statement that clearly positions the company in the minds of key stakeholders and customers What products and services do we deliver? This is a mobile payment service called mobile wallet that will act as a complement payment for cash in online e-commerce purchase such as food delivery, fashion and clothing delivery. Where and when do we deliver our products and services? Upon the successful payment transactions service in 1 min, the e-commerce customer (i.e. merchant) will deliver the product to the customers doorstep Which customer groups are our primary groups? The customers are users (mobile subscribers) and business owners (i.e. online merchant ) Where are our primary customers Segmentation for Early Adopters (EA) and Mass Market (MM) What tangible value do our products and services deliver to customers? Convenient, Fast, Easy, Remote for customers What is our competitive advantage? Access to 20 million mobile subscribers and 1,000 ecommerce online merchants What additional community and environmental benefits do we generate? After each goal has been clearly formulated develop a set of supporting objectives and strategies. Objectives define the best pathway for achieving each goal. Strategies define the pathway for achieving each objective. Objectives and strategies are also written using the SMAAART acronym - Specific, Measurable, Action-orientated, Affordable, Achievable, and Time-bound. The final step in developing an interacting hierarchy/network of focussed action is the Task plan. This plan allocates people and resources to completing those tasks required for achieving each strategy. Vital budget and resource considerations are integrated in to the overall planning process to ensure all planned actions are affordable .   The interacting hierarchy/network of action for achieving the aim of the plan is illustrated below. The hierarchy/network of focussed action is not a rigid structure and, where possible, should be adapted to the each situation to ensure it provides fast, effective and relatively simple action pathways for delivering results of significance .
11. Goal One . The 1 st cross-border mobile wallet provider across 3 countries in Asia Pacific in 5 years Goal Two To simultaneously launch mobile wallet access to 50% mobile subscriber for 3 countries as an alternative payment for e-commerce online purchase, domestic money transfer and information access for banking facility in 6 months. To grow the mobile wallet access from 3 countries to 6 countries in 2 years Goal Three To enable the mobile wallet service with cross border facility to 3 countries in APAC in year 1 To enable and grow the cross border facility the countries from 3 to 6 in year 3.
12. After each goal has been clearly formulated develop a set of supporting objectives and strategies. Objectives define the best pathway for achieving each goal. Strategies define the pathway for achieving each objective. Objectives and strategies are also written using the SMAAART acronym - Specific, Measurable, Action-orientated, Affordable, Achievable, and Time-bound. The final step in developing an interacting hierarchy/network of focussed action is the Task plan. This plan allocates people and resources to completing those tasks required for achieving each strategy. Vital budget and resource considerations are integrated in to the overall planning process to ensure all planned actions are affordable .   The interacting hierarchy/network of action for achieving the aim of the plan is illustrated below. The hierarchy/network of focussed action is not a rigid structure and, where possible, should be adapted to the each situation to ensure it provides fast, effective and relatively simple action pathways for delivering results of significance .