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  • Citi proprietary

    The Future of Digital Money

    London, UK, January 2013

    Don Callahan

    Chief Technology & Operations Officer

  • DATE -1-

    Every morning, as the sun rises over the African plains, a

    gazelle wakes up and knows it must outrun the fastest lion or

    risk being killed…

    …. And every morning, a lion wakes up and knows it must

    outrun the slowest Gazelle or risk starving to death.

    It does not matter whether you are the Lion or the Gazelle….

    ….when the sun comes up, you’d better be running

  • The emergence of a Digital Information Age - A profound redefinition of human

    connection and community

    -2-Source: Portio Research, Institute of Physics (2012), Internet World Stats , FacebookJanuary, 2013

    ConnectivityDigitization

    Law 1: Moore’s Law Law 2: Metcalfe’s Law

    +

    Visualization of Facebook’s network –

    more than 1 billion users within 8 years

    20131981

  • Digital Money has the potential to not just transform commerce, but to transform

    communities

    January, 2013 -3-

    Mobile Payment Users (by region, M)

    Mobile Payment Transaction Value (by region, Bn)

    Source: Gartner

    500

    200

    400

    User

    (#M)

    300

    100

    0

    448

    384

    324

    267

    212

    160

    112

    70

    North AmericaAsiaLatAm EuropeMiddle East and Africa

    59 26

    700

    600

    500

    Value

    ($Bn)

    400

    300

    200

    100

    0

    617

    473

    353

    256

    172

    106

    2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016

  • The ecosystem is slowly maturing and concentrating - but not everywhere

    -4-January, 2013

    Handset

    Makers Differentiated by Brand

    not Technology

    Digital

    Money Many players, many

    solutions, no answer

    OS

    Providers Increasingly

    Concentrated

    Mobile

    Operators Controlled by a few,

    dominant players

    http://www.google.com/imgres?imgurl=http://athriftymom.com/wp-content/uploads//2010/11/coupons.com-logo.jpg&imgrefurl=http://athriftymom.com/2010/11/new-coupons-to-print/coupons-com-logo-3/&usg=__N0HZTetIGBOiQnEvihNsuRJ53rU=&h=304&w=484&sz=28&hl=en&start=1&zoom=1&um=1&itbs=1&tbnid=iqCoTC833i7S9M:&tbnh=81&tbnw=129&prev=/images?q=coupons.com+logo&um=1&hl=en&sa=N&rls=com.microsoft:*&tbs=isch:1&ei=RM9_TbnvGYaUtwfYrMTxCA http://www.google.com/imgres?imgurl=http://blogs.kqed.org/bayareabites/files/2008/07/yelplogo.jpg&imgrefurl=http://blogs.kqed.org/bayareabites/2008/07/04/yelp-no-thanks-for-sharing/&usg=__6NWQnRpHJe3WYavY7L3vf1MvOF0=&h=171&w=300&sz=17&hl=en&start=13&zoom=1&um=1&itbs=1&tbnid=qnX37kVjUzBKyM:&tbnh=66&tbnw=116&prev=/images?q=yelp+logo&um=1&hl=en&sa=X&rls=com.microsoft:*&tbs=isch:1&ei=DgZ5Tem1PKqV0QGBvPjVAw http://www.google.com/imgres?imgurl=http://images3.wikia.nocookie.net/__cb20110105223614/logopedia/images/archive/1/1a/20110109072259!Starbucks_logo_2011.png&imgrefurl=http://logos.wikia.com/wiki/File:Starbucks_logo_2011.png&usg=__uS_4BFvdD6riA7NDQJ2SCzrNfVg=&h=237&w=244&sz=66&hl=en&start=7&sig2=3yzfcQItzTls1AGOnQyGdQ&zoom=1&um=1&itbs=1&tbnid=L1IFMJN3VqjuvM:&tbnh=107&tbnw=110&prev=/images?q=starbucks+logo+2011&um=1&hl=en&sa=X&rls=com.microsoft:*&tbs=isch:1&ei=3aV-TZXvG5PltgfgyuzECA http://www.google.com/imgres?imgurl=http://blogs.kqed.org/bayareabites/files/2008/07/yelplogo.jpg&imgrefurl=http://blogs.kqed.org/bayareabites/2008/07/04/yelp-no-thanks-for-sharing/&usg=__6NWQnRpHJe3WYavY7L3vf1MvOF0=&h=171&w=300&sz=17&hl=en&start=13&zoom=1&um=1&itbs=1&tbnid=qnX37kVjUzBKyM:&tbnh=66&tbnw=116&prev=/images?q=yelp+logo&um=1&hl=en&sa=X&rls=com.microsoft:*&tbs=isch:1&ei=DgZ5Tem1PKqV0QGBvPjVAw http://www.google.com/imgres?imgurl=http://images3.wikia.nocookie.net/__cb20110105223614/logopedia/images/archive/1/1a/20110109072259!Starbucks_logo_2011.png&imgrefurl=http://logos.wikia.com/wiki/File:Starbucks_logo_2011.png&usg=__uS_4BFvdD6riA7NDQJ2SCzrNfVg=&h=237&w=244&sz=66&hl=en&start=7&sig2=3yzfcQItzTls1AGOnQyGdQ&zoom=1&um=1&itbs=1&tbnid=L1IFMJN3VqjuvM:&tbnh=107&tbnw=110&prev=/images?q=starbucks+logo+2011&um=1&hl=en&sa=X&rls=com.microsoft:*&tbs=isch:1&ei=3aV-TZXvG5PltgfgyuzECA http://www.google.com/imgres?imgurl=http://enzosilva.com/blog/wp-content/uploads/2009/08/SCVNGR_logo.png&imgrefurl=http://enzosilva.com/blog/2009/08/27/scvngr-build-scavenger-hunts-and-augmented-reality-games/&usg=__wu9VipVbnXKWM9M-sgrTEBYNf38=&h=70&w=215&sz=24&hl=en&start=4&sig2=0nvCL64zQQVrMMaTKMx3QA&zoom=1&um=1&itbs=1&tbnid=aJ-rUw4-BSrJ2M:&tbnh=35&tbnw=106&prev=/images?q=scvngr+logo&um=1&hl=en&sa=N&rls=com.microsoft:*&tbs=isch:1&ei=AKV-TZa4GZO2twfF5oD0CA

  • Powerful technology and behavioral trends are fuelling the adoption of digital

    money – but we are still a few years off

    Source: Citi Digital Strategy Team, Gartner -5-

    Digitization

    Connection

    Consumer

    Choice

    Looking Forward

    Past FuturePresent

    January, 2013

    Evolution of Sports: leverage technology to

    change behaviour

    Target: help people

    achieve physical health

    Evolution of Banking: leverage technology

    to provide products and services

    Target: help people

    achieve financial

    health

  • Today, consumer are not yet adopting en masse and payments have not yet ignited

    -6-

    Early Majority

    Early

    Adopter

    Innovators

    Laggards

    Late

    Majority

    Next 12-24 months

    > 24 months

    Developed Market – Mobile Payments

    Too many useful things creates

    too many useless people - Karl Marx

    Entertainment Empowerment

    Source: Mobile Interest Survey Forrester Research (2012)

    1% - Already Use

    17 % Interested in

    Using

    ‘Interest in using mobile

    for in-store payments)?’

    13% Neutral

    69% Not Interested

    January, 2013

  • Consumers will need to be convinced that the new solutions will work effectively

    and safely before they will adopt

    -7-

    Interoperable & Available Solutions must be interoperable and widely

    accepted in order drive adoption and usage

    Intellectually Compelling Solutions must address an essential need,

    deliver value, work consistently and reliably

    Emotionally Compelling Trusted… Aspirational…Enjoyable

    1

    2

    3

    For new technology to replace old it has to have ten times the benefit

    - Peter Drucker

    January, 2013

  • Compelling solutions will require front end innovation operating on industrialized

    financial platforms with clear 'rules of the road'

    -8-January, 2013

    Industrialized Back Office Platform-oriented

    Innovative

    Front Office Consumer-oriented

    Clear Rules Regulation

  • At Citi, we are building on our existing momentum and working to capture digital

    opportunities across our consumer and corporate businesses

    -9-January, 2013

    Consumer

    Clients

    Corporate

    Clients

  • Our partnership with America Movil illustrates the importance of leveraging

    partnerships to connect end-to-end flow across consumer and corporate segments

    -10-January, 2013

    Wk

    37

    Wk

    35

    Wk

    33

    Wk

    31

    Wk

    29

    Accounts

    (K)

    Wk

    27

    Wk

    25

    Wk

    23

    Wk

    21

    Wk

    19

    Wk

    17

    Wk

    15

    Wk

    13

    Wk

    11

    Wk

    9

    Wk

    7

    Wk

    5

    Wk

    3

    Wk

    1

    Wk

    19

    Wk

    17

    Wk

    15

    Wk

    13

    Wk

    11

    Wk

    9

    Wk

    7

    Wk

    5

    Wk

    3

    Wk

    1

    Balance

    (MXP)

    Wk

    37

    Wk

    35

    Wk

    33

    Wk

    31

    Wk

    29

    Wk

    27

    Wk

    25

    Wk

    23

    Wk

    21

    EOP Balance (in MXP)

    EOP Balance (Debit cards only)

    Registered Accounts

    Massive uptake when we

    integrated government

    payments

    Balance

  • -11-

    This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. - Sir Winston Churchill

    January, 2013