CITI NFC UPDATE 2009

2

Full Disclosure

• I work in Citi Growth Ventures

– Not an Operating Group

– I am NOT a real banker

• I worked for Obopay – a mobile payments startup

• I belong to 10 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

Agenda (s)

• Your Agenda

– Find out the results of Citi’s highly publicized Bangalore NFC pilot

– Find out how hard it was to launch

– Find out what is next for NFC at Citi

• My Agenda

– Get to my favorite European City

– Energize other zealots around NFC

– Engage ecosystem partners on real next steps to deliver NFC in my lifetime

4

1. Citi intends to be a worldwide leader in mobile financial services (MFS)

2. Citi is customer-centric in our philosophy and all of our innovation, ventures and investments in mobile financial services will be designed to provide outstanding customer experiences.

3. We seek and welcome partnerships and collaboration that delivers a new customer-centric mobile financial services ecosystem.

4. We will continue to leverage and strengthen existing capabilities and develop new capabilities to deliver our mobile strategy.

To deliver the most mobile bank in the world to Citi customers

Citi’s Mobile Aspirations

5

3.

5. Citi should lead or become a major participant in at least one NFC xxxx in each of xxxx xxxxxxx

and xxxxxxxx xxxxxx to xxxxxxxxxx experience with consumer use of the service most likely to

lead the path into Advanced mobile financial services.

4.

6.

Citi’s Mobile Strategy Recommendations

• Citi believes in Mobile and has key strategic initiatives in many areas including NFC.

6

Mobile Money Taxonomy

Mobile Commerce Mobile Banking

M-CouponsMobile

Payments

Mobile

Advertising

Bank Account

Services

BillPay By

Phone

Proximity

PaymentsRemote

Payments

P2MP2P

NFC or

Contactless

Money

Transfers

P2MTransit

7

NFC is not a Payment Method

• There are enough payment methods

• NFC is the ideal access to the payment methods that already exist

• There are no technical issues – just connections to be made

ACHGoogle

Checkout

Phone

Top Up

P2P

Remittance

Stored Value

Account

Credit

Cards

Debit

Cards

P2P

Domestic

PayPal

Coupons

Offers

NFC

8

NFC Brand Confusion

Match the NFC Programs to their Owners

9

NFC Brand Confusion

Match the NFC Programs to their Owners

10

Bluetooth

• Compare NFC brand confusion to the clear Bluetooth message

Marketing Mix – Reveal and Educate

• Direct Mail / Online micro-site

• Nokia in-store presence

• TV Coverage – Panel Discussion, Product reviews on gadget shows

• Corporate campus kiosks – Road shows

• Outdoor Advertising (prominent locations in the city)

• Airport presence / Cinema Multiplex screening

• Weekend Mall based fun events

• Print advertorials / Mobile and PC Magazine product reviews

• Merchant signage / Customer hand-outs and much, much more….

Marketing Mix – Teaser Posters (week leading to Launch day)

Marketing mix – Educate (Mall based fun events)

Launch Day - Snapshots

The first Citi Tap and Pay purchase

Press Conference

Merchant and Client dinner

Press Coverage – Visibility across all leading national newspapers

Results Speak Volumes

• How Many Phones 3,000

• How Many Purchases 33,000

• Value of Purchases $500K – USD

• Average Value of Purchases $14.50 – USD

• How Many Merchants 205 and growing

Satisfaction Scorecard

Communication of Tap and Pay

Customer Sign Up Process

Tap and Pay Brand Image

Phone Selection

Experience at Merchant - Checkout

Results based on a highly rated marketing agencies’ systematic feedback

review with actual Tap and Pay users – n=200

OVERALL RATING

Partner Participation - Nokia

• Leveraging Nokia’s Sales & Distribution strength

• 8 flagship Nokia stores are retailing the 6212 NFC phones

• 2 Nokia Care centers to service any customer complaints

• Considerable in-store Marketing presence for Citi Tap and Pay at the participating Nokia outlets

• Tap and Pay kiosk to be set up at the Nokia Corporate campus for employee sourcing

Partner Participation - Vodafone

• An integral part of the solution architecture – hosts the Control and Coupon servers

• Provides OTA (Over The Air) GPRS network required for card & coupon download

• Actively promoting Citi Tap and Pay in the top 10 Vodafone Stores in Bangalore

• Tap and Pay kiosk set up at Vodafone campus for employee sourcing

Laying the Tracks for Acceptance

• Built an acceptance network across top merchant locations

• Exclusive offers across the ‘best-in-category’ retail locations in Bangalore

• Build consistent and repeat customer usage over next 6 months

• Track Customer acceptance, Customer satisfaction and feedback, Business metrics (card usage, card spend volumes) and showcase as a global case study for Citi and the entire NFC eco-system

Hurdles Overcome……barely

• Getting all the partners on the same page

• Branding for Tap and Pay

• Regulatory issues

– The RBI (Reserve Bank of India) is very conservative

Game Changer

• Most popular phones in 2006

– Cingular Wireless RAZR by Motorola (in various colors)

– T-Mobile RAZR (in various colors)

– Verizon Wireless RAZR (in various colors)

• Best update to phones

– New Colors

• Downloads

– Ring tones

• Apple’s Mobile Phone Marketshare

– 0.00%

MOBILE - B.A. * MOBILE - A.A. *

• Most popular phones in 2009

– Blackberry Curve

– Apple iPhone 3G

– Apple iPhone 3GS

• Best update to phones

– Download applications

• Downloads

– Applications of all kinds

– Apple’s Mobile Phone Marketshare

– Close to 10%

* Before Apple and After Apple

Apple Joins the Fray (I hope)

A patent application for a 'Touch

Screen RFID Tag Reader', filed

by Apple in December 2007, has

been published on the US Patent

& Trademark Office website.

• Differentiator

• Easier for Apple than Nokia – Apple doesn’t need to decide which phone to NFC-enable

• iTunes is a big payment platform – Apple gets payments better than the other phone manufacturers.

Why Would Apple Add NFC ?

Ecosystem Improvements

• Enough tests – just launch as big as your budget allows you to

• Break the tyranny of the spreadsheet – the ROI is hard to calculate, you need to invest for the future

• More phones please – yes, it costs money, but that cost will come down

– Apple’s building in NFC to the iPhone in 2010 – what will you do ?

• Think about more than payments – coupons, social networking, information updates – NFC delivers a lot more than payments

• Don’t wait for a TSM – there are a lot of trusted parties around

– Not the least of which are banks and carriers

Citi’s Next Steps

• Expanding the pilot in Bangalore

– Need better/more phone selection – this has been sited as the #1 issue to solve

• Build it, they will buy

• Repeating the success of this pilot in other markets

– We are evaluating data on other cities in India versus other geographies

– We have gained great knowledge and experience and are anxious to apply it across the globe

• Investing in NFC “bridge” technologies

– You know which ones – I just can’t say yet

– Watch this space in 2010

Dion F. Lisle

Executive Vice President

Citi Growth Ventures

Dion.lisle@citi.com

650-814-8081

Further Questions