ISSUE - JULY 2009 l VOL : 17

PayMate to provide Mobile Banking Solutions to major Indian Banks

PayMate, Indias leading mobile commerce company, has partnered with Syndicate Bank, one of Indias leading nationalized banks, to provide mobile banking solutions to their customers across over 2000 branches. This is PayMates first foray into the lucrative Mobile Banking solution space. While PayMate has till date tied up with 22 leading banks and provided them with its mobile payment services & applications, PayMate will now also be offering holistic mobile banking applications which will include non-financial transactions as well. Syndicate Bank customers will be able to download a mobile banking application on their GPRS enabled cell phones and this application will allow them to carry out their daily banking functions like funds transfer, stop-cheque, balance enquiry, cheque book request etc. Additionally, they will also be able to use their mobile to
...contd. on back page Mobile Banking makes things easier

Lakshmi Vilas Bank inks partnership with PayMate for Mobile payment solution
Lakshmi Vilas Bank, one of South Indias premiere private banks, has tied up with PayMate, Indias leading mobile commerce company, to provide mobile payment solutions to its customers across over 200 branches. With this partnership LVB will be joining a select group of large public sector as well as private & MNC banks that have embraced the potential of mobile banking and payments. Speaking on the association Mr. B.M.Nair, CTO, Lakshmi Vilas Bank said As a heritage bank with a rich history, what differentiates us from others is our relationship with our customers and the value
...contd. on back page

The 4 Csof Mobile Banking

Where are we in Mobile Payments? The RBI Mobile Banking Guidelines was out last year (October 2008). More than 19 banks have received approval to launch some kind of Mobile Banking service for their customer base. PayMate itself is live with eight deployments in India (SBI, IDBI Bank, Corporation Bank, Stanchart, ABN-Amro, Lakshmi Vilas Bank, South Indian Bank, Union Bank), and two overseas banks (RBB Nepal & Bank of Ceylon) and has a dozen plus in various stages of implementation within the Indian-Subcontinent, West Africa and Middle East. Clearly the core value proposition of Mobile Payments is Convenience or taking away the pain from day to day financial (and non financial) transactions viz bills from various utility services or shopping & ticketing or money transfer, gifting and alerts, etc. The convenience factor tips the balance for adoption, when security of doing the transaction is adequate - and benefit is seen as greater than perceived risk. Its essence is what lends itself to ease of use, anytime anywhere nature and speed of transaction.
...contd. on back page

MTN launches Mobile Money offering in Ghana

African operator MTN Ghana has launched its Mobile Money service in Ghana. The service allows mobile owners to store and transfer money, and pay for goods, without needing a bank account. The group has also launched the service to subscribers in Uganda and its West and Central Africa (WECA) operations including Cote dIvoire and Nigeria following successful pilots in 2008. MTN Ghana launched Mobile Money ahead of its competitors in partnership with nine banks including CAL Bank, Ecobank, Fidelity Bank, GTBank, Intercontinental Bank, Merchant Bank, UBA, Stanbic and Zenith Bank. The service would enable Ghanaians to perform a range of basic financial transactions using their handsets without the need of a bank account, and provide access to money beyond banking hours. Mr. Brett Goschen, MTN Ghana CEO, said: The introduction of MTN Mobile Money which is convenient, accessible, safe and easy demonstrates the companys commitment to bring world class mobile services to subscribers in all parts of the country. The secured system and processes conforms to best practices in the industry and highly regulated by relevant authorities.

The $5bn MMT opportunity

The World Bank quantifies the current remittances market at $318bn, with informal transactions taking the total to close to $600bn. Domestic money transfers are typically 10 times as frequent. Revenues derived from domestic and international MMT services will exceed $5bn globally by 2013. The same analyst, from Juniper Research, also found that 70% of mobile payment initiatives announced in the last 6 months have been in MMT. Mobile money is a competitive necessity for MNOs, particularly in emerging markets. For example, Safaricoms M-PESA has secured 5 million loyal customers in under 2 years, and has recently broken even. Mobile money offers the chance to extend financial services to the unbanked it costs around $400 to equip a mobile money agent. It costs around $250,000 to set up a branch, $10,000 to set up an ATM - mobile money will be the key to bringing financial services to rural areas. However, many mobile money initiatives fail. You need to engage with a diverse and complex ecosystem of partners and competitors. The MMT project management roadmap requires tackling many obstacles, from defining a business model that satisfies multiple regulators (who may not have defined their regulations yet!) to selecting technology partners, developing an agent network, setting your fees and commissions, piloting and launching the service. The worlds population will look back in ten years time and acknowledge that mobile money transfer was the product of the decade Michael Joseph, CEO, Safaricom.

Security main concern for US Customers

A survey by KPMG has revealed that most people in the US are uncomfortable with mobile banking, mostly citing concerns about security as a main reason. Most US respondents (91 percent) said they had never tried banking through a mobile device, and similar levels were reported for mobile payments: 95 percent of U.S. respondents said they never made a purchase from a vending machine using their mobile device and 95 percent said they never made a purchase using a mobile device through a retailers mobile website. Two thirds of respondents said they werent comfortable using their mobile device for financial transactions, and of those respondents who had not done any mobile banking 48 percent cited security and privacy as the primary reason. Theres not much flip side only 19 percent of respondents said they are at least somewhat likely to use their mobile device for online banking in the next 12 months, with 7 percent saying they were willing to pay a nominal fee to do so. More people may be interested if they can be convinced that mobile banking is secure, and if they become aware of the services that are offered. About 68 percent of respondents said that their current bank does not offer mobile banking. The fact that the majority of U.S. consumers are not aware that their current banks offer mobile banking is clearly more perception than reality, said Carl Carande, a principal in KPMG LLPs Advisory and Banking and Finance practices, adding that banks would have to work on increasing awareness of the service.

Mobile banking uptake rises

Growing desire among consumers to keep closer tabs on finances is driving the trend, says research. The uptake of mobile banking services is increasing as consumers seek to better monitor their finances, according to research. More than half (52 per cent) of 1,000 UK consumers polled by Monilink and The Future Foundation are checking their bank balances via their mobile phone more often a usage increase of 10 per cent since October 2008. But mobile banking is still only used by five per cent of UK bank customers, says the study, which represents growth of 25 per cent over the same period. As the recession continues we are seeing consumers adapting their behavior to help them get better control of their money, with people checking balances more often, said Barry Clark, research director at the Future Foundation. Furthermore, having tracked behavior over the past six months we can see how money awareness has become increasingly ingrained into consumers minds, said Clark. The rise in consumer use of mobile banking services indicates technology is part of the solution in times of financial instability, said Monilinks managing director, John Milliken. However, we see this flight to technology as a long-term trend as people increasingly choose fast, convenient and secure ways to manage their financial affairs, he said.

Mobile Banking and Payments:

Prospects of customer acquisition increases dramatically

The edit team spoke to Mr. B. Murali Nair, Chief Technology Officer, Lakshmi Vilas Bank, and Mr. DK Kundu, AGM, Information Technology, Syndicate Bank for their views.

Mr. B. Murali Nair, Chief Technology Officer, Lakshmi Vilas Bank 1. What are your plans for Mobile Banking and Mobile Payments? Lakshmi Vilas Bank has an aggressive plan for rolling out Banking and Payment services through mobile. We will be rolling out the services in the coming days. Our objective is to move our customers to this platform and reduce transaction costs. 2. Which technology is planned or in place by you for financial and non-financial mobile banking transactions? Technically most of these services can be deployed using more than one channel. We shall be using the IVR, SMS and WAP technology to deliver the mobile services. Stand alone Mobile applications like J2ME applications are also being evaluated. 3. What synergy do you see between Mobile Banking and Phone Banking? Frankly I do not see any synergy. Phone Banking has been in use for quite some time and has not become popular. I am afraid it will die a natural death. On the other hand mobile based banking has been a huge success in countries like South Korea where it has been able to even drive the sales of mobile phones. It has the same potential as what e mail did to internet. It can have a tremendous impact on the m-commerce space also. 4. What challenges do you expect to face as you bring mobile banking to your customers? For one thing, it will not be able to support the entire gamut of banking services. The compatibility of the mobile operator with the handset, there being plenty of models and makes in the market may also be an issue. Security also still remains a concern and service providers are yet to give comfort on this front. 5. How will you encourage your customer segments to utilize mobile banking/ payment services? We will try a combination of methods consisting of incentivizing, awareness drive and the awareness about the ease of usage besides the normal marketing techniques like publicity campaigns, press advertisements etc. 6. What trends do you foresee in the Mobile Commerce space? If the trends in other Asian countries are any indication, I feel that mobile commerce holds great potential. With more maturing of technology, banks will try to reach out to more number of customers. Banks see the advantage of reducing the cost of transaction while being able to cross sell and up sell their products though this medium. With the growth of mobile population increasing at a very fast pace, the prospects of customer acquisition also increases dramatically.

Mr. DK Kundu, AGM,Information Technology, Syndicate Bank 1. What are your plans for Mobile Banking and Mobile Payments? Syndicate Bank is already in the process of implementing the Mobile Payment and m-Commerce solution. Funds transfer will be thus on the finger tips of the customer. It will facilitate availability of funds to dear ones. Sending gifts on various occasions will be easier now. To take it further, we may think of the Mobile as a part of Cash Payment System through ATM or POS machines, thus facilitating the customers to get payments anytime and anywhere instantly. 2. Which technology is planned or in place by you for financial and non-financial mobile banking transactions? Syndicate Bank has chosen the ASP model of providing Mobile Payments and m-Commerce solution. Paymate India has been chosen as a partner to this project. 3. What synergy do you see between Mobile Banking and Phone Banking? In addition to payments, mobile Banking is used for sending information to the customers such as alerts, warnings of any unwanted transaction taking place etc thus in effect acting as a tool of authentication. Traditional Phone Banking did not have any such facility. 4. What challenges do you expect to face as you bring mobile banking to your customers? Security is a challenge. However the same can be mitigated by preemptive response to the issues. Syndicate Bank has robust Security processes in place. 5. How will you encourage your customer segments to utilize mobile banking/payment services? A mobile phone is already in the hands of most of our customers. The only effort that it requires for popularizing the service is to provide them the information about the utility and the ease of the service. 6. What trends do you foresee in the Mobile Commerce space? This is going to be the most favored mode of funds transfer and commercial transaction. The usage will be across the country. Mobility has already penetrated into the rural areas of India and because of this reach we anticipate that the usage of mobile for payment will be crossing all limits in near future.

PayMate to provide Mobile Banking... contd. from front page pay for mobile recharge, utility bills, movie & flight tickets and other online & retail purchases at over 15,000 PayMate registered merchants across India. Speaking on the association Ajay Adiseshann, MD and Founder, PayMate says, The high penetration of mobile phones is the definitive indication of the growth potential of m-commerce in India. With this technology we plan to offer Syndicate Bank customers an all new banking experience whereby they Lakshmi Vilas Bank inks... contd. from front page we offer them. We always strive to bring the best of banking convenience to our customers whether it is through improved services over the years or through technologies that enable them to do more. Our partnership with PayMate will enable us to do both with an exciting mobile payment solution for our customers. Ajay Adiseshann, MD and Founder, PayMate says, Our alliance with Lakshmi Vilas Bank will further bolster our payments ecosystem. Further, we are excited to bring mobile payments to LVBs customers and are confident that the sheer convenience of using their phones to make payments will drive the uptake and enhance customer satisfaction, loyalty and stickiness With PayMate, Lakshmi Vilas Bank customers will be able to use their mobile to pay for mobile recharge, utility bills, movie & flight tickets, online purchase, retail shopping and so much more at over 15,000 merchants in India registered with PayMate. How PayMate works: Once the customer chooses to pay via PayMate at the merchant, he / she shares the registered mobile number and the merchant triggers an IVR call to the customers mobile. The customer punches in his 4 digit mPIN to authorise the payment. A confirmation of the transaction status is sent to both the customer (via SMS) and the merchant (through the PayMate interface) within a few seconds. can conduct their banking and non-banking transactions through their mobile phones anytime anywhere. PayMates selection as the developer for Syndicate Banks mobile banking initiative has come after a tough selection process where-in a total of 9 companies including Obopay, FSS, Unicell & NGPay participated in the bidding process.

The 4 Csof Mobile Banking... contd. from front page It must also cater to three distinct consumer needs (a) address pain point for todays harried time pressed customers in their daily rush to manage their lives and work. Paying bills, premiums, installments, fees etc. (b) serve as an aspirational need, one - of making a lifestyle statement of being able to buy tickets, gifts, holidays, hotels, cars, restaurant etc while on the move and (c) being in command, without complex intermediaries or processes, having the world literally at your fingertips. Communication towards creation of awareness (need) of the concept and benefits as outlined above are key. Stoking interest and desire would be first steps, leading to action and usage. In this all stakeholders have to play a role. If Banks are the front facing entity providing this service under their overall brand, then the onus is primarily on them to drive this. In the recent past several Banks have made announcements with ads in the top business newspapers, TV ads and various Out of Home media (ATL). Others have embarked upon below the line (BTL) activity by way of SMS, e flyers, online ads, messages on statements & ATM screen & slips, signage, etc. Both methods are needed. One to create awareness and desire, the other to induce and action. Perhaps in the ratio of 20:80. The third C is Customer Adoption. How fast or which customer segment is the low hanging fruit and how to board them into the service? The challenge is to get this TG to sample and experiment with the service, and then make them regular users. This could be a 3 stage cycle, firstly board the i-banking & e-commerce customers (the immediately relevant TG) these are the early adopters and electronically savvy base. They tend to be the evangelists and form the core of potential word of mouth. Second, some banks have embarked upon incentivizing registration and subsequent usage by running special promotional offers. A program which has been very successful is movie ticket offers, with one ticket free or 25/50 % off. And third, every new customer is given the option of becoming a mobile payment user at the time of opening of an account. The end game is to focus on converting at least 10 percent of the i-banking & e-commerce base into a regular mobile payment transacting user base within 12 months! No doubt this is the slowest part of the journey, but something which has to be done by the service provider. The last C is Concern on security, speed, privacy and risk. This is a genuine issue, albeit a perception issue. Every consumer electronic payments channels has had to perforce run the gauntlet of misuse or safety perceptions- whether that is credit card, ATM, debit card, online banking or telephone banking. So neither will the mobile payments channel be exempt from this. It will have to jump through the same consumer education hoops. This again will need to be primarily addressed by good (focused) marketing communication, viral and a minimal critical mass of good user experience.
Probir Roy, Co-founder and Director, PayMate

Contact us Copyright PayMate Disclaimer

: PayMate India Pvt Ltd. 111, A Wing, Sundervilla, S.V. Road, Santacruz (West), Mumbai - 400054 Tel: 022-26616170 Email: mpower@paymate.co.in : All rights reserved. All names and logos are copyright of the reprective owners. : All names and logos are copyright of the respective owners. 1. Mpower is an Industry Newsletter for private circulation to opinion leaders within the consumer payment systems industry only. 2. We do not accept any responsibility or liability for the accuracy or contents of the newsletter. These are reports based on public information. For subscription contact : sunita@paymate.co.in