citi mobile update march 2010
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CITI MOBILE UPDATE
MARCH 24, 2010
Dion F. LisleExecutive Vice President
Citi Growth Ventures
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Full Disclosure
I work in Citi Growth Ventures I am not a real banker I just work at a bank I worked for Obopay a mobile payments startup I belong to 12 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 (my iPad is already on order)
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Time Flies
I willGoogle
that
There isan appfor that
Elapsed Time = 1 Year
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Mobile Background
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Phone Interaction
SMS
160 Character limit
Not guaranteed delivery
SimpleNo download to phone
APPLICATION
Download to Phone
Requires Discoverability
High level of functionality
Brand able
App Stores changedeverythingWAP
Wireless Internet
Covers 60% of phones
Not easy to use
Doesnt require Phone
Carrier Cooperation
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6
Phone OS Wars
This is NOT the PC Wars
Eventually you will wish it was
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Smartphone Vendors
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Good Business for Apple
Apples iPhone is 6% of the marketbut 32% of profit
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Unabashed Commercial for theGreatest Mobile Device Ever
No I am not a Paid Spokesperson just a fan
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Thoughts Before Apple Launched the iPhone
Weve learned and struggled for a fewyears here figuring out how to make adecent phone. PC guys are not goingto just figure this out. Theyre not
going to just walk in.
$500? Fully subsidized,with a plan? It is the
most expensive phonein the world and it
doesnt appeal tobusiness customers
because it doesnt havea keyboard.So, Ikinda look at that and I
say, well, I like ourstrategy, I like it a lot.
Apple is slated to come out with a newphone.And it will largely fail.
The iPhone is nothing more than aluxury bauble that will appeal to a few
gadget freaks.
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12
1
Check email forUAL Alerts
2
Check Weatherfor NYC
3
Kill Time onFlight VideoGame andMusic
Check IntoHotel
Find Train fromJFK to Mid-Town
4
5
Look UpRestaurant onLocalEats
6
RechargeiPhone andListen to
Music
7Take Picturesand email to
Family
TextKidsand goto Bed
8
Fly to NYC
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iTunes as an App Delivery Mechanism
Total Active Apps (currently available for download): 159,611
Number of Active Publishers in the US App Store: 32,183
App Submissions
This Month (Games): 2,009 ( 84 / day )This Month (Non-Games): 14,387 ( 599 / day )This Month (Total): 16,396 ( 683 / day )
Current Average Overall Price: $2.85
Most Popular Categories1 - Books (28705 active)2 - Games (24551 active)3 - Entertainment (20656 active)4 - Education (11056 active)
5 - Utilities (9788 active)
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iPhone Drives Mobile Web Usage
Activity iPhone Smartphone Market
Any news or info via browser 84.8% 58.2% 13.1%
Accessed web search 58.6% 37.0% 6.1%
Watched mobile TV and/or video 30.9% 14.2% 4.6%
Watched on-demand video or TV programming 20.9% 7.0% 1.4%
Accessed Social Networking Site or Blog 49.7% 19.4% 4.2%
Listened to music on mobile phone 74.1% 27.9% 6.7%
Source: M:Metrics
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AT&T Investment Pays Off
30% of US consumers who purchased Apple iPhone 3G in the summerof 2008 switched from other mobile carriers to join AT&T,
47% switched from Verizon Wireless 24% switched from T-Mobile 19% switched from Sprint.
3G iPhone Impact on the SmartPhone Market Pre-3G iPhone Apples share was 11% Post-3G iPhone Apples share was 17%
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Not just in the USA
Japan has enjoyedthe most advancedmobile phones foryears with the
exception of Apple every phone in theirtop 10 list is made inJapan
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What Apple Taught Us
A Great UserExperience is Key
Build a CompleteEcosystem
Partner with theCarriers
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The Network
2G
2nd Generation
GSM or TDMA/CDMA
Digitally Encrypted
Digital NOT Analog
1G Signal could decay slowly
3G
3rd Generation
GSM / EDGE / UMTS andCDMA2000
Capable of Data andVoice Simultaneously
Being rolled out now
4G
100% IP Packet EnabledSmoother roaming andtransitions betweennetworks
Still mostly being
developed by standardsbodies
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The Downside to Success
AT&T has taken a great deal of grief for their network speed
Verizon took advantage of the opening with an ad that plays up theweakness of AT&T 3G
Note: The iPhone accounts for most of the traffic usage on AT&T
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Global SMS v 3G - Disparity
0
20
40
60
80
100
120
0% 5% 10% 15% 20% 25%
United States
Canada
Mexico
Brazil
U.K.
Spain
Hong Kong
Singapore
0
20
40
60
80
100
120
0% 5% 10% 15% 20% 25%
0
20
40
60
80
100
120
0% 5% 10% 15% 20% 25%
United States
Canada
Mexico
Brazil
U.K.
Spain
Hong Kong
Singapore
S
MSUsageSMSS
entper
S
ubscriberperMonth
3G Penetration As a % of All Subscribers
India
Czech
Philippines
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Sensitivities for Each Attribute Caching Concurrency System Throughput Thin Client: Avg,. Web
page size
Thick Client: Data refreshrate
PERFORMANCE SECURITY Encryption Intrusion Detection Code Security Role Based Security Authentication URL Spoofing Audit Trail
FUNCTIONALITY Business Rules Expectations User Experience
Product Scalability Hardware Scalability
VARIABILITY
3rd
Party Integration Change Configuration
MODIFIABILITY
Hardware Compatibility OS Compatibility Application Compatibility
PORTABILITY
Mobile Sensitivities
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Carriers Want
New Revenue Sources
Avoid being a big dumb pipe
Less churn more customer loyalty
Less Regulation
Reduction in CapEx big investment in networks
New customers often at the expense of current customers
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Mobile Money
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Mobile Money Taxonomy
Mobile Commerce Mobile Banking
M-Coupons MobilePayments
MobileAdvertising
Bank AccountServices
BillPay ByPhone
ProximityPayments
RemotePayments
P2MP2P
NFC orContactless
MoneyTransfers
P2MTransit
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A Three Level Basis to Offer Mobile Financial Services
III.
Advanced:location-based
services (LBS),contactless capability,full-featured browser,
mobile social networking
II.Progressive:
Peer-to-peer payments,
investments/trading, richerrewards management
I.Basic Consumer Mobile Financial Services:
Account balances, bill presentment/payment,marketing response, basic rewards
Service Progression
PlatformProgression
SMS
Thick/Thin
Handset
Modification
Technology Enablers
Network CapabilityHandset
Development
Most networks notyet enabled forAdvanced Services
5-10% of PhonesEquipped to handleAdvanced Services
50-60% coverageof wireless dataconnections
sufficient to supportProgressive
services
40-60% of Phonesalready equipped tohandle Progressive
Services
Most networkssupport BasicServices; SMS is astandard feature
~95% of PhonesEquipped to handleBasic Services
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Mobile today is a cluttered arena with multiple stakeholders
MobileEcosystem
Regulators TechnologyDriversFinance
Ecosystem
GTS Cards RetailPvt
Bank
Geographies
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Mobile Money Ecosystem
CardIssuer
HandsetMaker
MobileCarrier
SoftwareDeveloper
ChipsetMaker
PaymentNetworks
CardAcquirer
ProcessorCardAssociations
SIMCard
Consumer
Merchant
MobileApplications
POSVendor
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Around the World
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Across the Globe Mobile Financial Services are Growing
The number of consumers using Mobile Financial Services across the world is forecast togrow to nearly 1 Billion by 2014
15 MillionU.S. consumers use
mobile banking serviceseach month
3.5 MillionBank of America customers
are active users of BofAsmobile banking services
$61 MillionWas deposited by USAA Federal
Savings Bank customers via mobilecheck capture in only 6 weeks
$200 MillionHandled per month by GCash and Smart
Money in the Philippines by the end of 2008$140 MillionValue of transactions handledby M-Pesa in Q3 20083 Years
Before mobile banking ispredicted to surpass Internetbanking for Banco do Brasil
100% GrowthIn number of customers using mobile to
access Barclays banking services inthe U.K. in thefirst 6 months of 2009
35 MillionMobile handsets with Osaifu-Keitai
NFC payments and eWalletcapabilities in Japan
Market Leader
Market Leader
Market Leader
Market Leader
Market Leader
Market Leader
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Kenya
Kenya has a population of 40 million people
Kenya has 300,000 landlines Kenya has nearly 4 million internet subscribers Kenya has nearly 20 million mobile phone subscribers Kenya has a Per Capita income of $1,400 Kenya has nearly 9 million mobile money users
It is estimated that 40% of Kenyan Adults use the MPESAservice. MPESA has changed the financial lives of millions of Kenyans.
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The Secret to MPESAs success in Kenya
Nearly 14,000 Agents By the time you read this it has probably grown by 5%
A Human ATM Network across Kenya Rural and Urban
Reality Mom goesto an agent to pick up
the Money
Brochure Send MomMoney Anywhere
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Be an MPESA Agent
Research by: Mark Pickens, Sarah Rotman,Ignacio Mas, Olga Morawczynski
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Mobile Payments in ME and Africa to Rise to $5 + Billion in2013
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The Philippines
The Philippines has 2 successful mobile money systems Gcash offered by Globe Communications Smart Money offered by SMART Communications
Like MPESA in Kenya the Philippines relies on a network of incentedand trained agents
Unlike Kenya the central bank was very involved in the design androllout of Mobile Payments in the Philippines.
In accordance with BSP Circular 471, which was issued in January 2005,non-bank agents must first attain a Remittance Agent license to performcash in/out.
The Philippines has been a Texting country since the advent of theirmobile phones this Texting literacy made the transition much easier.
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India The RBI Weighs In
Mobile Payment in India - Operative Guidelines for Banks 2.1 Only such banks which are licensed and supervised in India and
have a physical presence in India will be permitted to offer mobilepayment services to residents of India.
2.2 The services should be restricted to only to bank accounts/ creditcard accounts in India which are KYC/AML compliant.
2.3 Only Indian Rupee based services should be provided.The RBI only took 12 pages to outline what can and cant be done withmobile payments in India.
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Osaifu-Keitai (Mobile Wallet)
Japan is the most advanced Mobile Money Market in the World !
NTT DoCoMo drove the entire ecosystem to deliver a complete MobileWallet
Get on a train, buy a soda, pay at a store It is the unique dynamics of the Japanese Market that allowed such a
complete solution to be delivered
Even with NTT driving it took 10 years 30 million users out of a subscriber base of 60 million Osaifu Keitai is accepted at 700,000 retail locations
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22%
17%
7%
27%
22%
9%
0%
5%
10%
15%
20%
25%
30%
eMoney Holder IC card Mobile
2007
2008
Prepaid and eMoneyusage (to total
population)!
21 2225
3033
38
4
4
12 12
12
12
13
14
32
21
3436
39
45
50
56
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010
Suica, Pasmo Edy Others Total
B USD
Felica Market Size
both Prepaid(plastic) andeMoney (mobile)!
Ministry of InternalAffaires, 2009
C Media, 2006
Prepaid(plastic)
eMoney(mobile)
eMoney (mobile)Prepaid(plastic)
Yano Institute, 2008
Felica Market in Japan
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Service type Vendor Issued
(MM)
(in mobile,
MM)#shop (M)
Monthly
transaction(MM)
Charging touch point (pre-
paid) Negative points note
Edy Pre-paid
Bitwallet
(Rakuten
Group)
48.4 8.0 132.0 22.5
Credit card, Bank, POS, Charger,
Point exchange
5000 websites accept Edy for
payment. Rakuten obtained over
50% of Bitwallet shares in Nov.
2009.
Suica Pre-paid JREast 27.5 1.5 63.2
42.9
Creditcard, Bank, POS, Ticket
vending machine, Point exchange,
USB Reader/Writer with JRE credit
card, Auto top up with JRE credit
Mobile Suica requires 10USD for
annual service fee.
ICOCA Pre-paid JRWest 4.7 unavailable 49.2 0.9Charger, Ticket vending machine
PASMO Pre-paid Pasmo 13.5 unavailable 50.0Charger, Auto top up with credit card No mobile service is provided so far. Convertible with Suica.
nanaco Pre-paid Seven I 7.9 0.9 23.5 26.0POS, Seven BK ATM, Charger, IY
Card (credit card)
Charging/accept point is limited in Seven
group shops and cards.
Transaction number is the largest
among eMoney.
WAON Pre-paid Aeon 10.0 n.a. 29.0 25.3Aeon BK ATM, POS, Charger, Auto
top up from Aeon bank account
Available at McDonald's
iD CreditDocomo,
SMVC..10.0 6.4 390* n.a.
- Currently other carriers don't implementiD in their handsets. One handset can
have 2 card numbers of iD.
*Shows # of available terminalinstead of # of shop.
PiTaPa CreditRailway companies in
Western Japan1.1 unavailable 18.0 0.9
- No mobile service is provided so far.
QUICPay Credit JCB, Toyota 4.6 n.a. n.a. n.a.- AU pre-loads this into some handsets.
One handset can have only 1 card
VISATOUCH
/SmartPlusCredit MUFJ Nicos 0.8 n.a. 12.8 n.a.
- One handset can have 5 card numbers.
Total 128.5 16.8 377.7 118.5
Suica (Kanto area), Icoca (Kansai area),
and other e-money issued by train
companies are becoming interoperable
interoperatable.
eMoney Usage in Japan
Successful YesComplex - Definitely
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Other Merchants
Transportation companies
Pre-paid(cost reduction)
-Edy (SONY, Rakuten). Transaction fee atpayment. Not profitable. Rakuten got 50% ofBitwallet (Edy issuer) shares in Nov. 2009.Rakuten also bought eBank in Feb. 2009.
-Suica (JR East), PASMO and ICOCA (Bus,Subway).Reduce maintenance cost of autoticket gate and ticket itself. Now JRE isleveraging it to payments (plastic & mobile).
-Nanako and Waon (merchants). Fast cashingand reward points to loyal customers
Post-paid(not widely accepted)
NTT Docomo launched iD on Docomohandsets. Fee at transaction. They became anissuer of credit card and network provider forother credit card companies.
JCB provides its electronic credit, called QuickPay. Available on all 3 carriers.
VISA and MUFJ also provide its scheme calledSmart Plus and its convertible with VISA Touch.
JR group JR compatible
Pitapa is Post-paid
Pre-paid
Post-Paid
Pay pass is still trial in Japan
Felica Types in Japan
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Overseas Lessons So Far
Carriers offer successful services so far no banks have beensuccessful
Regulators have been both active (Philippines) and nearly invisible(Kenya)
Texting based services rule the day..so far This is self-selecting as Smartphones have not yet proliferated in
underbanked countries.
Except Japan Low ATM penetration combined with high mobile penetration
Except Japan Domestic remittances is the best use case so far.
Except Japan
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At Citi
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ATM
Primary Bank Relationship
Primary Bank Relationship
DebitCard
Money
Transfer
B
illPay
Reg
ularSavings
Aut
odepositPayroll
Mobile
Internet
ATM, Mobile and Internet channels allow Citibank to maintainstickiness with customers through their primary bank relationship
The fivepillars of
Retail
Payments andDeposits aresupported by
the 3 key
technologychannels
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First major U.S. bank to offer adownloadable banking app
For Cards-only customers,Cards opened access Oct 2008
through Firethorn app
Bank and Cards apps availableto AT&T and Sprint customersas well as to Verizon, T-Mobile
and Alltel BlackBerry users
View account info, maketransfers, pay bills, find branch/
ATM, connect to CustomerService
DownloadableCiti Mobile (Original)
(aka Thick Client)Bank launched April 2007
DownloadableCiti Mobile iPhone app
Bank launched February 2009;Cards-only access coming 4Q09
Mobile Browser(aka Thin Client or
Citi Mobile for smart phones)Bank launched June 2009;
Cards-only access coming 4Q09,behind joint front door with Bank
Text Banking(aka SMS for Short-Message Service, or
MyCiti On Demand)Cards launched March, 2009;Bank support coming 1H10
Adapted the original Citi Mobilefor use as a native app on iPhone;
support for Cards-only users isbeing added 4Q09 behind a joint
front door with Bank
Available on iTunes and on theApp Store
View bank/cards account info,make transfers, pay bills, find
branch/ATM automatically, one-touch to reach Customer Service
Built on Citibank Online and AOtechnology, but optimized for mobile
browsers
No downloads, installation, updatesor enrollmentsign on with CBOL or
AO User ID and Password
View more account info (bank /cards / brokerage), transfer funds,add payees, pay bills, self-service
options, find branch/ATM andconnect to Customer Service
Cards customers can requestbalances, recent activity, locations
Bank accounts coming 1H10, on sameshort code of MYCITI (692484)
Phase 2 (2H10):Actionable Alerts (e.g.. Minimum
payment of $10.00 is due 2/7/09 on loan574. Reply PAY to make payment.)
Building on our 2007 head start, this year is seeing an unprecedented push forward
43Citibank Online Business: Citi Mobile Citi Internal Copyright 2009Citi rou Inc.
Citi Mobile Current Banking Suite
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SMS versus Application
Be Honest which do you prefer ?
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Citi Mobile Whats Next
Location Based Services (LBS) Near-Field Communication (NFC) Peer to Peer Payments (P2P)
3 Strategic Initiatives:1 2 3
Obopay: A Silicon Valley P2P service that
allows clients and customers to send and
receive money using their mobile phones. Citi
made a strategic equity investment in thecompany in 2007 (3.1% equity stake) and
partnered with Obopay to bring Citi-Obopay
ventures to market in the US.
Tap &Pay : Worlds largest NFC trail inBangalore, India. Goal is to validate customer
acceptance of technology, pioneer definition of
and business model for contactless payment
ecosystems, and capitalize on resulting brand-
shift
Citi wants to be a leader in being Ubiquitousfor our customers and clients financial needs
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Tradeoffs
Customers require Easy toUse Services Customers demand
convenience from their banks
The average bank customer isNOT an 18 year old heavymobile user, but a 38 year oldlight mobile user
Money transfer products areunder attack from externalfraudsters
Mobile is an unknowndimension to a banks security
teams
Banks can not afford negativeheadlines in regards to mobilepayments.
Easy & Secure
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Mobile Risk Management
New Risk most banks dont have true mobile expertise, but it isgrowing
Old rules dont always work Citibank required a 6 digit alphanumeric PIN as compared to
Obopays 4 digit PIN.
Go Ahead Try Alphanumeric on your non-QWERTY phoneInfoSec View Business View
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Weekly project call had over 50 participants from INSIDE of Citibank To ensure compliance, the team included
ARR Audit Risk Review Compliance
Two groups legal and internal policy Information Security
Two groups Business and IT Financial Accounting Legal 2-3 lawyers every week Financial Risk Operations Marketing of many kindsAnd more
Weekly Mobile Money Project Meetings
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LBS Fraud Prevention
Imagine that you have a payment service, such as a benefit card thatcan only operate when you are near it.
500 FeetRadius
2 MilesAway
LBS BasedFraud Prevention
Rules
The systemsees aTransactionout of your
GeographicRange
You get a Text
requestingAuthorization
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Amazing.but True
A carrier in Mozambique issued tokens for airtime that becameaccepted as Currency because their national currency was devaluing soquickly.
There are other examples of airtime as currency
Nokia says Nokia should get a percentage of every transaction carriedon one of its devices.
The MPESA service failed in Afghanistan due to illiteracy No one could read the text messages
A mobile payment service in Latin America claimed 1 million users 1 million registrations led to less than 30,000 users