Abrar A. Mir
EVP, Business Development & Strategic Initiatives abrar.mir@ubl.com.pk

• Mobile Banking definition
• Mobile Banking and interfaces
• Pros & Cons of interfaces
• Current models –Pakistan and Globally
• Evolution of Banking channels
• The Way Forward
– Market Opportunity
– Mobile as extension of multichannel strategy
– Convergence of technology and financial services
– Future Business Models
– Mobile banking beyond being extension of internet banking
– Security Dilemma
• Key Take Aways

Mobile Banking and Branchless Banking are not the same

INTERFACES
Browser /WAP
SMS/
MMS
J2 ME
USSD
STK
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Inexpensive entry
Emulation of the online experience
Appeal to mobile professionals
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Speed to market
Broad customer reach
Gen Y/appeal
Frictionless customer interaction
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High-value apps
Rich user experience
Security
Bank retention of display control
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Menu based services
Rich user experience
Security
Available on every handse
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Application has to be downloaded;
SMS based;
Encrypted;
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Network speed
Multiple process steps for log-in
Multi interface
Delivery will remain a minimum necessity to get access to broad
Unsuitability for high-value apps range of target markets
Unsuitability for transactions due to lack of security
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Download can be clumsy
Who owns customer service?
J2ME Compatibility not widespread
Telecom operator dependent
Usability an issue?
New feature additions in application require updates on every SIM

– M-Pesa
– WIZZIT
– ABSA
– MTN Banking
– G cash
– SARAF Mobile
– UBL ORION
There is "nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things" (Machiavelli)
A proliferation of technology and business models has been adopted, with no clear winner in terms of technology or business models as yet.
Regulatory environment is also still evolving

Mobile Banking as an extension of Bank’s multichannel delivery strategy
Will it just be another channel?
OR
Will it transform the way banking is done and result in Transforming the business models both for the bank and it’s customers?
Cost, Efficiency and Convenience key drivers for evolution of various delivery channels
Postal Channel
Branch Call Center
Channels getting more high tech and high touch
Mobile/ Telephony
CUSTOMER
PC Banking
(Private Network)
ATM/ Kiosks
PC Banking
(Internet)
Interactive TV

• Approximately 60 million mobile customers Vs approximately 20 million banking customers
• POS based solutions like Credit Cards and Debit cards have had a very limited market growth. After about 15 years since the introduction of first large scale Credit cards in Pakistan, we today have about
45,000 POS and only about 20,000 outlets in Pakistan accepting the Cards.
• There are only 3500 or so ATMs in
Pakistan
• Most bank call center calls are for: balance, transaction inquiry, funds transfer, or bill payment
• Up to 50% of those calls currently come in from cell phones
• Mobile phone usage highest among consumers under 45 -- same as online banking and bill payment
The case for a “mobile” based “banking solution” is quite evident
• Huge opportunity to sign in to mobile banking among existing bank customers as well as huge opportunity to sign new customers
•
Time for POS and to some extent ATMs may have passed in Pakistan with the opportunity to leapfrog to “mobile banking” and “ mobile payments”
The population of generation Y (born after
1978) in Pakistan, based on the last census is more than 70 million as of today.
Not planning for their needs can only be termed as a death wish

Convergence of technology and Financial services is changing the playing field rapidly with “Mobile” device at it’s centre
Change in competitive Rules. Creation of New Opportunities. Changed Service Focus.
More power to buyers
Personalized vs. Standard products
Emergence of alternative products
New market entry
Cost
Reduction
Customer-
Orientation
Product
Differentiation
Specialization

• Lower research cost
– Time
– Expense
• Greater convenience
• Lower transaction costs
• Broader communication, from one to many
• Real-time access
• Transparent to user
• Wider reach/access
• 24 hours/day, 7 days/week
• Accurate and efficient
Technology is opening up new markets, creating new models of doing business and reinventing the value chain
• Increased customer satisfaction
• Increased retention
• Improved lead generation
• Increased market share
• Increased wallet share
• Expanded sales & marketing channels
• Increased customer knowledge
It is about the SERVICES and not the technology.
Converging technologies are just the enabler that is facilitating “service convergence”

Relational
Market Breakthroughs &
Industry Integration
Level Four
Entrepreneurial Network
Level Three
Strategic Partnering
Business Performance
Improvements
Level Two
Teaming
Enhanced Service
Transactional
Level One
Vendor
Cost Reduction
Cost Efficiency Service Marketing Process
Integration
Expanded Value
Value Chain
Reengineer
New
Vision
Market
Break through

Alliances
Business optimization
Electronic communities
Flat organizational structure
Global branding
Innovation/experimentation
Service excellence
Virtual customer intimacy
Development of strategic alliances to meet customer demands by utilising the core competencies of other providers
Use of the Internet and mobile as a revenue generator and as a low cost distribution channel
Design of value added content and functionality for strengthening relationships
Development of a flat / flexible structure with skill sets focused on innovation and delivery
Common look and feel across global markets
Experimentation with emerging technologies for continuous improvement
Development of world class customer service over all available channels
Collection and intelligent analyses of customer data for forecasting customer needs

Balance
Inquiries
Funds
Transfer
Bill
Pay
Stop
Payment
Commercial
Cash Mgmt.
Personal
Security
Actionable
Alerts
Check
Reorder
Account
Opening
Mobile POS
Payments
Location
Finder
M-Statements
2007 2008 2009 2010 2011 2012

• Security becomes more important as we move toward mobile payments and an ever increasing number of users
– Regulation
– Compliance
Tough Security
– Anti-money laundering
– Identity theft
– Access control vs
Customer Experience
• First line of defense is to educate the user. The greatest root cause of external breaches continues to be the human factor
• The desire for greater functionality must constantly be supplemented with stronger security measures to offset the risks of each new capability.
• These security measures must be highly nimble; they must be quickly deployed and evolve over time to anticipate and adapt to new threats and emerging risks, as well as satisfy a new generation of customers who want more-personal and customized experiences that match their lifestyles.
• A security strategy is essentially a road map for mitigating risks while complying with legal, statutory, contractual and internally developed requirements.
• Some of the basic components include defining control objectives, identifying and assessing approaches to meet those objectives, selecting controls, establishing metrics and benchmarks, testing and implementation, and performing ongoing maintenance.
• The ultimate goal is to increase customer confidence across online channels and reduce losses due to fraud and identity theft across the enterprise.

THE BUSINESS CASE IS CLEAR
• The second act of mobile banking shows longevity as consumer need, network maturity, device sophistication, and advanced technology enablers coalesce into a business case.
• Mobile banking is emerging as an indispensible business asset to retain customers and reach new segments
• The Key success driver will be the “Customer value proposition” whereas most of the current mpayment solutions are driven from “supply side”
• Waiting to act turns banks into prey for nontraditional players that pose a short-term threat of disintermediation, but in the long run the banks will thrive.
• Consumers will pay for the convenience and urgency factors of mobile financial services, and banks should be looking at opportunities to monetize premium services.
• The banks will become “Money managers” for customers as the distinction between Mobile as a
“distribution channel” vs. a” payment solution” will gradually disappear.
• Different “business models” will evolve based on different market needs and regulatory environment
• “Interoperability” will always remain the key for the phenomenon to gain wide and quick adaption