mobile banking and innovative payments - technologies, trends, strategies

20
Mobile banking & innovative payments technologies, trends and strategies Special for Axiom Groupe - 4 th Innovative Mobile Payments, Security & Cards conference, Brussels Alexey Kazakov Head of Electronic banking, OTP bank, Russia March, 2014

Upload: -

Post on 17-Aug-2014

429 views

Category:

Economy & Finance


2 download

DESCRIPTION

Presented on Axiom Groupe conference "Innovative payments, Security and Cards 2014" in Brussels, march 2014

TRANSCRIPT

Page 1: Mobile banking and innovative payments - technologies, trends, strategies

Mobile banking & innovative payments –

technologies, trends and strategies

Special for Axiom Groupe

- 4th Innovative Mobile Payments, Security & Cards conference, Brussels

Alexey Kazakov

Head of Electronic banking, OTP bank, Russia

March, 2014

Page 2: Mobile banking and innovative payments - technologies, trends, strategies

Is a Mobile bank is ONE MORE "window" to client's account?

NO! - Mobile world - Mobile apps - M-wallets - M-payments - M-commerce

Page 3: Mobile banking and innovative payments - technologies, trends, strategies

Mobility landscape in Russia

3

184% - Mobile penetration in Russia

36% - Mobile internet penetration (0.6-1% monthly growth)

6,6 mln Russians pay from mobile at month

LiveInternet, May 2013

Markswebb Rank and Report e-finance User index 2014

37% - Smartphone penetration in Russia 18,5 mln. devices were sold in 2013 (51% yearly growth)

Wearesocial.sg, 2014

“Svyaznoy” research, 2014

Sources: - Nielsen report - Mobile consumer, Global snapshot, Feb 2013

Page 4: Mobile banking and innovative payments - technologies, trends, strategies

Mobile - Incredible opportunity for banking

4

Smartphone is always with a

client

Mobile internet connection, and

SIM access

Hard/Software interfaces (BT,

NFC, QR)

Geo-positioning and geo-location

data (GPS)

Social media (SM) and text-

messaging APPs

Unique user experience across Apps

IN OPPOSITE TO WEB-BANKING Mobile banking have advantages, based on unique combination of hardware technologies, are native for Smartphone and universality of Mobile Apps

Page 5: Mobile banking and innovative payments - technologies, trends, strategies

• P2P and P2B transactions in a chat/messaging fashion

• Bill payments from service providers

• Scheduled transactions in one-click-action

• Physical goods purchasing on QR-codes/NFC or other technologies

• Special offers and discounts with a usage of geo-location data

• E-invoicing - bank fills up a payment bill with received requisites, and client just may to accept or decline it in one click

5

Mobile Apps - “born to do sales”

Instant P2P transfers on QR, BUMP, or Card-2-Card

Discounts and special offers in physical shops nearby

Extra quick payments on templates WITHOUT authentication

EXAMPLES:

SHARED PRACTICES in sales:

Page 6: Mobile banking and innovative payments - technologies, trends, strategies

Mobile wallet – client acquisition channel

Electronic wallets (EW) become finally legal in 2011, and in 2013: • 16 mln. Russians use EW for everyday purposes (56% of internet

audience) • 7 mln. - do regular online transactions/payments using EW • $4500 mln. – total yearly turnover on EW (72% - growth)

6

ELECTRONIC WALLETS – technical “account” in IT systems, with prepaid “balance”, which might be opened, credited and debited without KYC.

• There is a huge own self-serviced network (kiosks, etc.) being utilized (e.g. “Russian Standard Bank”, QIWI)

• Permanent focus to e-commerce development is present

• Payments business is developed enough to become attractive for non-clients

• There are partners with significant P2P traffic for cash (e.g. money transfer services like Western Union, etc.)

• OR if there is a brilliant marketing idea

Sources: - Markswebb Rank & Report, e-finance User index 2014 - ARG Обзор рынка электронных платежных систем. Март 2013 - Price free agency 2013 / www.futurebanking.ru

ELECTRONIC or MOBILE WALLETS to be launched if:

Providing “absolutely free” payment tool for non-identified users of Tinkoff Mobile Wallet, TCS bank attract new clients for Credit and Debit Cards, are

delivered by couriers directly to a client

BEST CASE – Tinkoff credit systems

Page 7: Mobile banking and innovative payments - technologies, trends, strategies

Mobile operators – “out of the game”

7

M-PAYMENTS without MNO – is a today’s reality: Host Card Emulation

• No SIM or particular device dependency (only OS is matter)

• No Mobile network operator dominating

• Any Interface: NFC or QR … • Any Applications; Finance transactions,

Loyalty programs, Couponing … -

“First bird”: PRIVATBANK (UA) had presented own HSE wallets on FinNext – 2014 in February

Bank’s cloud”

BEST CASE – Privatbank (UA)

Page 8: Mobile banking and innovative payments - technologies, trends, strategies

Mobile NFC - “dead on arrival”

PAYPAL have announced its technology in Q4’13: • No additional equipment - "beacon" is connected to

USB (and Bluetooth exists in each Smartphone); • Hands-free payments – it is enough verbally confirm

a payment from PayPal account • Individual offers and discounts – right at a time

when they may excite the customer (based on inside-building geo-positioning)

• Safe (it's PayPal!)

APPLE had featured IOS 7.0 with BLE support, shell we expect mobile payments system from TOP1 player on technologies market?

8

M-PAYMENT APP with a BLE (Bluetooth low energy) technology support – is a revolutionary solution of “lack of infrastructure” issue in contactless

Page 9: Mobile banking and innovative payments - technologies, trends, strategies

Is your Bank ready for NEW challenges in online business?

NEW … - clients - financial behavior - lifestyle - process innovations - user experience - business models - market players

Page 10: Mobile banking and innovative payments - technologies, trends, strategies

New clients & new ideas

10

• Like to do payments on regular basis • Have a lot of needs in banking products during life

(card -> cash / auto loan -> mortgage -> PFM …) • Will become an “affluent” in close future • Might be “on-boarded” easily regarding

innovative technologies or products • Spread out new banking experience on others

(friends, parents) and influence them

A lot of Banks worldwide focused on getting new, young, active client segments, because they:

BANK should earn Y-GEN respect on a new ideas, but not on adaptation of old ones

NEW CLIENTS have no loyalty and trust to old (“granny”) brands

Page 11: Mobile banking and innovative payments - technologies, trends, strategies

New financial behavior

11

NEW CLIENTS do not ever think (or have no time) about financial planning. They are thinking about financials, but … backward

BANKs don’t even try to give them “living advice”, just provide a honest support and fancy solution:

BEST CASE - Westpac bank (NZL)

How to sell term deposits widely - make a “virus” App

1. Download the application to your Smartphone

2. Open deposit account remotely 3. …. 4. Press the RED button, and top up you

deposit on $5 instead of "impulse buying“ during shopping

5. Share your success with friends thru Social media

Page 12: Mobile banking and innovative payments - technologies, trends, strategies

New lifestyle

12

BANK should provide them familiar workflow: funds transfers – as a text messaging, balance check – as social media follow

NEW CLIENTS bring first “online experience” out of finance area

That is why Facebook acquires WhatsApp!

Page 13: Mobile banking and innovative payments - technologies, trends, strategies

Innovations pipeline

13

BANKs should follow up simplicity, and proper market positioning of online tools – proposing “APPs supermarkets”:

NEW CLIENTS are looking for “killing feature” but not universality of financial tool

Alfa bank propose different online tools and Apps under separate trademarks for different audience, but all solutions

based on general technologies, invented in Alfa Innovation LAB

BEST CASE – Alfabank NEW CLIENTS change their minds rapidly, always request for an new innovations

BANK should be ready to accomplish “cool-not-cool” rhythm and follow up trends.

Page 14: Mobile banking and innovative payments - technologies, trends, strategies

Loyalty rocks!

14

BANKs should do a business on loyalty and brand recognition, but not on direct fees …

NEW CLIENTS pick up “awesome” things, which are not highly priced at all

BEST CASE - Starbucks

1. $1,4 bln. – cumulative turnover on STARBUCKS cards in Q4’2013 2. 10 mln. ppl uses IOS and Android STARBUCKS Apps worldwide 3. 5 mln. transactions goes thru Apps in a week only in Northern

America 4. $146 mln. were embezzled by STARBUCKS in last 3 years

(unclaimed balances) 5. STARBUCKS and SQUARE - joined opportunity for mobile

payments in 7000 locations in U.S.

IF STARBUCKs being a BANK, it would be listed in first 170 retail banks in USA

Page 15: Mobile banking and innovative payments - technologies, trends, strategies

Social media – new look

Social media are not for DIRECT SALES, because there are no BUYERS in SM …

HELP, CARE, ENTERTAIN – use different social medias for appropriate tasks: • for being transparent and getting more respect • for teasing and getting customers to be

involved • for education and advertising

KNOW YOUR CLIENTS, be aware where they are staying online and be a friend to them, especially, when advice is needed.

GAMIFICATION – it is not a “GAME”, is a power tool to explain complex things (or products!) on a most simple language for widest audience

15

Page 16: Mobile banking and innovative payments - technologies, trends, strategies

E-commerce – new era

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Cash

Card (AN+secure code)

Mobile\mPOS

Card, linked to e-wallet

Internet bank (e-invoicing)

Card, linked to account

41%

34%

Innovative e-commerce

“Classic”

e-com

Sources: - e-commerce User index 2014, Markswebb Rank and Report

• Online experience: do the deal like on Apple or Google (i.e. built-in purchase)

• Convenience: no need to remember a lot of digits & letters

• Secure (mentally): no need to fill up card details • Secure (visually): 3DS + additional personal controls

In ONLINE SHOPPING world card branding is disappearing

16

Client chooses better:

Page 17: Mobile banking and innovative payments - technologies, trends, strategies

New merchants

MERCHANT is a major “customer” for payment innovations

• Merchant resists to payment innovations in acceptance, if there isn't long-term and transparent value (lower MDR, loyalty features)

• Any acceptance equipment brings freedom restriction for a Merchants and exchange it to a dependency on external factors (internet connection, physical damages, etc.)

Customers Merchants

Banks Banks

Devices

(HW)

Devices (HW)

Issues Acquirers

Apps (SW) Apps (SW)

Card systems

Banks

MS, Chip, NFC

Alternative PS

17

U.S. and Canada based payment acceptance network, with extra low fees (FREE for <$10, $0,25 FIX for else) and convenient

Web, Tablet and Mobile Apps

Cards acceptance enough expensive for a Merchant

BEST CASE - Dwolla

Page 18: Mobile banking and innovative payments - technologies, trends, strategies

New competitors

Finance aggregators: • IT start-ups, but not finance organizations • … able to modify online products very fast , according new

trends and technologies • … may choose Partners (banks, micro-lending orgs, payment

providers) and create value proposition combining different finance products

• … keep marketing and advertising efforts on desired client segment

• ... have no bureaucracy • ... have less operational expenses • ... have no social obligations or "historical products" which

need to be supported

In PAYMENTS WORLD banks are competing with new players – finance aggregators

BANKs should resist these expansion, by using their TOP-3 STRENGTHs:

• Physical presence – as a visible symbol of stability and reliability in customers eyes • Accumulated customer data and behavior information - banks can successfully handle these

data forming successful product offerings, using industrial CRM • The opportunity to buy complete solutions, technologies and even teams - banks can, though

not as quickly form a scalable and efficient IT landscape.

Page 19: Mobile banking and innovative payments - technologies, trends, strategies

Future of payments - to be invisible

IDEAL PURCHASE:

Come in – Choose – Take away …

… Some settlement stuff (which nobody really doesn't want even to think about)

19

Page 20: Mobile banking and innovative payments - technologies, trends, strategies

О группе ОТП

Дирекция розничных бизнес - технологий, ОАО

«ОТП Банк»

Thanks for your attention!

Alexey Kazakov, [email protected]