Financial Institutions & MVNOs

Analysis Document
May you require further info, please contact: Pedro Ruiz-Blanco(+34629369404,pedro.blanco@nereoconsulting.com)

Sao Paulo, November , 2010

This document has been created for the exclusive use of our clients. It is not complete unless supported by the underlying detailed analyses and oral presentation. It must not be passed on to third parties except with the explicit prior consent of NEREO BUSINESS CONSULTANTS.

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INTRODUCTION
This document highlights the underlying advantages of financial institutions using mobile services to expand their penetration and reach
NEREO has extensive experience in assisting clients realize their MVNO objectives. Based on this experience, we have studied the manner in which financial institutions can differentiate themselves through MVNOs Brazil, being a rapidly maturing telecom market, presents an exciting opportunity for setting up MVNOs Financial institutions are one of the key players that can create substantial value by exploiting synergies between their existing products and mobile services By launching a MVNO, a Financial institution can exponentially increase its reach in the target market Finally, this document is intended to provide a high-level understanding and demonstrate the attractiveness of the MVNO proposition

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MVNOs & FINANCIAL INSTITUTIONS The multi-channel bank

The banking and the mobile world intersect each other in mobile banking, which is the last building block for developing the multi-channel bank The multi-channel bank
The mobile terminal is configured as a personal finance management tool for the end user: Guaranteeing access to the banking services with no time or location constraints allowing the customer needs to be satisfied at very competitive rates

Brokerage

Mobile banking Online Branch

No time constraints. .. ... Nor place offering greater added value

Insurance
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Payment

Banking

MOBILE FINANCIAL SERVICES Where is the business?

In contrast to other mobile banking offerings, the Company would have direct control over its mobile offering by becoming an MVNO
Bank offering MFS without MVNO
Indirect Relationship

Bank with MVNO offering MFS

Direct Relationship

BANK Mobile Financial Services (MFS) Mobile Services Billing / Customer Care
MNO

BANK Mobile Financial Services (MFS) Billing / Customer Care

BANK MVNO

Mobile Services

Bank cannot promote uptake of MFS actively as it has no control over pricing The Bank does not benefit & is not able to leverage on the MFS offering due to the indirect relationship

MNO

MVNE

USER

Bank can promote uptake of MFS actively as it has complete control over pricing

USER

With a MVNO, the Bank can create a tailored offer based on bundles of voice, SMS, data transmision, & MFS, taking advantage of cross subsidies between them
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WHY CREATE MVNOs Benefits for Financial Institutions

A MVNO allows a financial instution to increase touchpoints with its existing customer base while also increasing the number of clients itself
Benefits
DESCRIPTION KEY ELEMENTS

Profits

Increase in customer wallet share (financial services + telecom services) Optimisation of channels of communication & management Increase in brand perception and brand mindshare Increased barriers of exit Using mobile services as a hook to capture new clients for financial services Increasing touchpoints with the existing clientele

Seamless Integration of financial and telecom services ARPU lelves Penetration of mobile services with the client base Take Up rate of mobile banking services Segmented channels of distribution Minimisation of SAC (control of the value chain and own channels ofdistribution)

Customer Loyalty

Clients

Mobile banking allows the development of new channels for interaction with clients and customer management
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MVNOs FOCUSSED ON MFS Postemobile

Posteitaliane, the Italian postal service, launched the Poste mobile service in Nov 2007 on the Vodafone and has grown into the biggest MVNO in Italy with over 50% of the MVNO market share
Project Highlights
State postal service with a network of over 14,000 post offices and 38,000 POS across Italy. Bancoposta, its Financial services division has over 5.5 million accounts.

Extensive client base

Objectives of the agreement

Providing mobile telecom services to Postemobile telecom services. Increase access and use of Financial services provided with the help of Mobile Financial Services.

Positioning

Simplicity: Flat-rate plans with optional add-ons. Innovative: A wide range of Mobile Financial Services provided alongwith the mobile service.

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MVNOs FOCUSSED ON MFS Postemobile Value Proposition

Postemobile has successfully integrated its mobile services with its other offerings, namely banking and postal services

Mobile .... Recharge

Banking Operations

Partnerships

Other Services

Associates
Recharge own prepaid account using an associated Bancoposta account Recharge another Postemobile phone using an associated Bancoposta account Recharge Postepay, a prepaid credit card, associated to own Postemobile. Recharge unassociated Postepay cards. Check balance and movements of associated bank accounts & Postepay cards. Transfer money to accounts in Bancoposta & other banks. International money transfer in partnership with MoneyGram. Pay using postemobile for products bought in Hoepli and Monclick. Buy public transport (ATAC) tickets in Rome using Postemobile to pay. Postemobile users to buy and recharge parking card (Telepark) using their Postemobile. Pay taxes and other charges to local authorities using Postemobile as the method for payment. Send telegrams directly using Postemobile.

Operations

Postemobile charges users transaction fees on the MFS operations thereby increasing its customer wallet-share
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MVNOs IN THE BANKING SECTOR Spain Bankinter

Bankinter launched its own MVNO with the aim to enhance customer loyalty and reinforce the brand image among the existing clientele
Project Highlights

Extensive client base

Bankinter has more than 750,000 clients using online banking.

MVNO Objectives

Offer clients the opportunity to use mobile banking at any time of the day at no extra cost

Positioning

Simplicity: Simple Tariffs for clients with low consumption and rate plans for clients with high consumption. Mobility. Anytime, Anywhere access to banking services through a mobile terminal

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MVNOs IN THE BANKING SECTOR Germany Sparkasse

The confederation of saving banks in Germany (Sparkasse) has signed a MVNO agreement with Vodafone AG which allows its associates to offer mobile telecom services
Project Highlights
Germany has more than 500 savings banks. The confederation of savings banks (Sparkasse) has more than 450 associate banks with a commercial network of more than 16,000 offices.

Extensive client base

Objectives of the agreement

Extension of the agreeement inorder to enable associate banks to offer MVNO services. Development of mobile banking services.

Positioning

Simplicity: Flat-rate plans for a closed group of users (families, companies). Increasing the use of mobile banking services through the introfuction of flaterate plans.

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MVNOs IN THE BANKING SECTOR Others

Financial entitities in other European countries have commercially launched MVNOs utilising the key assets of brand and distribution
Experience of banks who have launched MVNOs in other countries in Europe

Rabobank launched the first banking MVNO in Europe in Dec 2006 with a positioning of convergence in mobile and banking services. Hosted on the Orange mobile network. Rabobanks offer is further complemented by access to news and entertainment services.

BRE Bank launched its MVNO offering in Poland in 2006 with a strategy based in the cross-selling of mobile and finacial services. Hosted on the Polkomtel mobile network.

The stated objectives of banks entering the MVNO world has been to increase customer loyalty and profitability of each
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