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Mobile Banking & Payment

QNB Retail Banking

25th of May 2011

Agenda

• Introduction: – Mobile put into perspective– From Mobile Banking to Mobile Payment

• Mobile Banking• Mobile Money• Mobile Payment:

– NFC Models– Business Model

• Outlook

Mobile put into perspective….

3

1.2

2.8

5

Units (Bln)in 2010

2010 figures – Sources: Gartner, EMVco, QNB

1980 1965 1985 Launch year

Mobile put into perspective….

4

0

1

2

3

4

5

6

7

2008 2009 2010 2011 2012 2013

in B

ln

Developed Developing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013

Smarphone Basic

Number of Mobile Subscribers SmartPhone Market Share in % of Handset Sales

Sources: Forecast: Mobile Devices, Worldwide, 2003-2013 (3Q09 Update)Portio Research Ltd: Worldwide Mobile Industry Handbook, 2009-2014

From Mobile Banking to Mobile Payment

5

Cu

sto

mer

Valu

e

Mobile “Wallet”Mobile Access

Mobilized Website

Mobile Banking • “App”• Daily Banking

Transactions

Mobile Money“SMS/USSD”

Mobile Payment“NFC”

Mobile as Stand-aloneproposition

Low

High

Mobile as anadditional convenient channel

Mobile Banking

• From SMS based to smartphone application based• Fast evolution of mobile phone OS platforms:

– Symbian– Blackberry– Iphone, Ipad– Android

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• No standardized application OS on Smartphone (no equivalence of internet explorer as for internet banking)

• Race for banks to support latest consumer and mobile device trends

Source: Canalys.com

Share of worldwide 2010 Q4 smartphone sales

Windows Mobile, 1%

Android, 15%

Apple, 66%

RIM, 5%

Symbian, 13%

Apple Android SymbianRIM Windows Mobi le Others

Share of worldwide 2010 Q4 smartphone usage (internet browsing)

Source: http://marketshare.hitslink.com/

Mobile Banking @QNB

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• SMS based Banking since 2004• Mobile Banking (app) started in 2008• May 2010: new app with more

services, extended to iPhones and iPads– Convenience of ease:

• Registration from Mobile device• Same login as for internet

– Rich content:• On-line account and card information• Transfer of money to anywhere in the world• Payment of utility bills and top-ups with

real-time bill update

Mobile Money & Mobile Payment

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Diversity of payment services

2008 2010 2012 2014

Emerging(e-wallets, SMS)

Expanding(NFC pilots.)

EmergingBusiness Models

Maturing

Mobile Money : Remittances / P2P

• P2P type of payment• Business model is straightforward:

– Profitable remittance business model– No technology dependency (USSD, SMS type of

model)

• Main constraints:– Regulatory: license to operate payment business– AML screening and Central bank reporting

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Mobile Money at Teco’s: e-wallets

• Across the globe, leading telco operators are making inroads into the financial area by offering mobile e-wallets to consumers:– Vodafone (m-pesa in Kenya)– O2 (Telefonica group) in the UK– BICS (Belgacom Group): Remittance gateway– …

• Initiatives mainly targeting P2P payments, but also low value payments (parking, vending machines,…)

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Mobile Money at QNB

• EazyPay (2010):– QNB customer to QNB customer– Used to pay at Merchants– SMS based technology, operator independent

• EazyCash (May 2011):– Cash to anyone from

a mobile– SMS based technology,

operator independent

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eazycash: How it works

1. QNB customer (payer) sends SMS to payee in the following format:

cash <payee mobile number> <amount>

2. Payer receives QNB SMS to confirm transaction information

3. Payer replies with Ok to confirm or with C to cancel

4. Payee receives payment information via SMS upon payer’s confirmation

5. Payee cashes payment at any QNB ATM in Qatar

QNB EazyCash

Mobile Payment: Replacing plastic

• Opportunity to replace the plastic with mobile• Appeal is high: more mobile phones than

cards!• NFC as enabling contactless technology

BUT…• Business model is challenging: thin revenue margin on

retail payments• Technology: not deployed at merchants, not standardized

(i.e. NFC)

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Mobile Payment: NFC models

• Telco Centric (widest adoption so far):– NFC integrated in phone with SIM based application– SIM plug-in: N-flex from Gemalto (piloted in Singapore,

Turkey, Japan.. – Q4 2010)

• Telco agnostic:– SD memory stick– Dual chip NFC phone (in-built chip, in addition to the

SIM)– RFID sticker (transitional solution)

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Telco Centric: Challenges of the Business Model

• Classic card retail business model is involving 2 players, an issuer and an acquirer, sharing a very thin revenue margin from the merchant service fee

• Implementing mobile payment requires an open architecture to ensure the solution works for all issuers (banks) and with all telcos to ensure full benefits for the consumer

• Mobile payment (telco centric) is introducing a third critical player: the Mobile Network Operator (MNO), i.e the telco, which is also looking for some remuneration

Ecosystem overview (open model)

Source:EPC – GSMAMobile Contactless Payments Service Management RolesRequirements and SpecificationsDoc: EPC 220-08, Version 2.0October 2010

ContaclessNFC

Fulfilment

Payment Authorisation Payment AuthorisationPayment scheme(domestic/int’l)

ProvisioningValue Chain

3 industry players are looking at reaping the benefits… and more…

• In addition the a complex business model, the battle is about who will get more control over the core relationship with the customer (and his wallet ;-)

CustomerCurrent ACCOUNT

TELECOM OPERATORS

HANDSET MANUFACTURERS

BANK

“I own the SIM”“I own the NFC device”

“I own the payments”

Mobile Payment: Beyond payment…

• Beyond replacing the plastic card, another opportunity is there: integrating loyalty and couponing into consumer phones…

• Latest initiative announced by Google (with Ingenico)

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Outlook – the jury is till out…

• "NFC payments will certainly be quick, but I doubt they'll be much quicker than today's magstripe and smart cards. Does it really matter whether I swipe, dip, or tap my card? So why should anyone care about NFC?" David Dorf – Director of Technology Strategy at Oracle Retail - Oracle

• To succeed, Mobile payment at the check-out will need to embrace unique features that are not offered elsewhere…

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Thank You.