Mobile money o2 digital futures by smart421 on 15-december-2011

© 2011 Smart421 LtdMobile Money

Mobile Money

Andrew Smale

15th December 2011


Contents

Channels, Services and Architectures

Ecosystem architectures

Emerging markets

What is mobile money?

Mobile Money

Developed economies

Where are we now?

Where are we going?

© 2011 Smart421 LtdMobile Money12 April 2023 3

What is Mobile Money? Introduction and Context


Hype or Here to stay?


Financial Services in a Mobile World


Quick App-Store Search


Free to download “Finance” Apps


What is Mobile Money?

Ignoring standalone “budget” / “expenses” type apps

Not just mobile banking... (balance, statement, transfer)or Mobile commerce (eBay, Paypal, Simply tap)

- Mobile ticketing

- Mobile coupons

- Mobile money transfer (person to person)

-Mobile microfinance

-Wealth management


Mobile Money on the hype cycle (Gartner July 2011)

Mobile Banking

Peak of inflated expectations

Trough of disillusionment

Plateaux of productivity

Slope of enlightenment

Mobile Money Transfer

Mobile Payments

NFC Payment

5-10 years 2-5 years Less than 2 years to mainstream adoption

MobileCoupons

MobileTicketing


Historical Context - Communications Banking

12 April 2023 10

3000-2000 BCDevelopment of Banking

Mesopotamia

~1800 BCFirst Banking Laws

Babylon

~1200 BCCowries as money

China

1000-500 BCMetal model currenciesChina, Lydia, Greece

~400 BCAthenian banker

Greece (10% rate)

300BC-500ADDeposit banksEgypt & Rome

~600ADSaxons producegold coins (GB)

1000-1300The CrusadesFunding/tax

~900ADPaper notes

In China

1566 ADRoyal ExchangeEnglish banking

1694 - 95Bank of EnglandBank of Scotland

~1700-dateModernbanking

3500-2900BCDevelopment ofFirst alphabet(Phoenicians)

1959Bank

networks

2000Online

banking

~1400 BCChinese

Writing onbone

3000-1800BCHieroglyphics

(Egypt)

~1270 BCEncyclopedia

(Syria)

~1775 BCGreek phonetic

alphabet

~900 BCFirst Postal

Service(China)

~775 BCPigeon post

(Athens)

~530 BCLibrary

(Greece)

500-100BCFirst portable

writing(Papyrus)

~100 ADPaper invented

(China)

1455Printing press(Gutenburg)

100 AD - 1200Books

produced

1200-1400Newspapers

Appear(Europe)

1700-1850Long distance

signalling(Morse)

1900Radio

(Marconi)

1950-dateComputersAnd phones

1990WWW

History of Communications

History of Money / Banking

(Source: Wikipedia and others)


Recent History – evolution of mobile payments

2009Mobile Money

transfer

1960sATM CoreNetwork

1999InternetBanking

2001MobileInternet

1990sGrowth of

MobileTelephony

2005Mobile

Banking

1980sWorld PaymentCard networks

1970sMobile

Networks

Banking with communications technologiesDevelopments since WWII

2012MobileWallets

1950sPlastic Cards

1940sWorld Telecoms Network (GSM)

Developed markets

Emerging markets


Mobile Banking Services, Channels and Architectures

© 2011 Smart421 LtdMobile Money 13

Mobile Money services

Developed, Western economies• Led (branded) by high street banks• Register for SMS Alerts, balance, etc• Secure Apps. Downloaded by device• Top-ups, transfers

Emerging markets (Africa, India)• Simple, functional, text-based service• All mobiles on GSM network• Cash In/Cash Out• Send money, top-up mobile• Small business loans/microfinance• Agent supported• Led by mobile operators

12 April 2023


Channels and Technologies

• SMS• USSD• SIM Toolkit

• WAP• Mobile Internet (browser)

• Java J2ME App• BlackBerry App• iPhone App• Android App• Windows 7 App

• BREW• Symbian

• Voice/IVR• Satellite phone!


Mobile Banking Architecture 1.0

• Banks saw text services as different to application services• Separate platforms, often managed independently with different registrations• Not joined up (can’t edit alert settings from within the App!) DUH!• Paranoid about security and not convinced with 3rd party partners• Mobile operators not seriously engaged or included, nor manufacturers

12 April 2023

Text Banking interface

Java Client BankingApp(s)

Browser Banking interface

SMS /USSDAggregatorApplication

“Core Banking” infrastructure

Java Server Banking

Application

Web Server Banking Application

Offline Balance Data

ATM Switch Shared i/f Online

Banking

iPhone Client

BankingApp

“iPhone” Server Bank Application

AndroidClient

BankingApp

POS/Card Terminals i/f

Bank accounts

Cardaccounts

BlackBerryClient

BankingApp

“Android” Server Bank Application

Sign-up and manage on

web






Java Server Banking

Application




Banking

iPhone Client

BankingApp

“Smartphone” Server Bank 1 Application

Android lient

BankingApp


Bank accounts

Cardaccounts

BlackBerryClient

BankingApp



webBANK NUMBER TWO






Java Server Banking

Application




Banking

iPhone Client

BankingApp


Android lient

BankingApp


Bank accounts

Cardaccounts

BlackBerryClient

BankingApp



webBANK NUMBER THREE






Java Server Banking

Application




Banking

iPhone Client

BankingApp


Android lient

BankingApp


Bank accounts

Cardaccounts

BlackBerryClient

BankingApp



webBANK NUMBER FOUR


Integration Challenges of mobile money

• Security• Reliability• Interoperability• Trust

OperatorsManufacturersApp StoresNetwork vendors

BanksCard schemesPayment networksATM networksMerchants

SoftwareApplicationsIntegrators


The Trust and Security issues


Mobile API Standards (Parlay-x)Mobile network

AggregatorInterface

Mobile Banking Architecture 2.0?

• Banks consolidate to core set of web services• Mobile operators open APIs for easier standard integration• Standard accepted security applied• Channel agnostic Identity and Access Management

12 April 2023

Core Phone Services



ATM Switch Shared i/f

iPhone App

Standards-based Banking Application interface (iFx)

Android App


Bank accounts

Cardaccounts

Integration and Business Process layer

?

HTML5 Browser


Mobile money in the emerging market economy


M-PESA take up in Kenya

http://www.mit.edu/~tavneet/M-PESA.pdf

X

http://www.mit.edu/~tavneet/M-PESA.pdf


The Agent ecosystem

MVAMobileVirtualAccount

Could be operator branded or third party.

Must be backed by a “Trust” account at a real, licenced bank.


Agent’s real bank

5a. Confirmation SMS

Issuer’s bank

Customer transfer

Agent Andybalance: £1000

Agent’s accountBalance: P900

1. Brenda sends P20 to Chris

2. debit P20 from B

Brenda’s accountBalance: P90

5b. Confirmation SMS

Fee accountBalance: P0

4. credit P18 to C

Chris’s accountBalance: P10

AuntieBrenda

NephewChris

3. 10% feededucted

Example transaction

Andy “buys into” MVA with £900

£ 100

P 2P 70 P 28


• Global signalling standard for all GSM phones• Does not use SMS or GPRS• “Free” even when roaming• Emerging markets used extensively

Unstructured Supplementary Services Data, e.g. *#06# +SENDRelies on core network integrationUSSD Gateway -> IP world/XML

USSD Network


Mobile Payment using Contactless Cards (NFC)


Is NFC Over-hyped?


Google Wallet


Logical interfaces on NFC-enabled phone

In principal, this need not be NFC butcould be camera takingpicture of QR code


EMV Working Group – Global Platform

The pace of delivery depends on • Speed of market development• Adoption of contactless mobile payment technology• Inter-industry cooperative models• Migration of provisioning systems to open standards• Multi-application, multi-user, multi-brand systems


Wallet Accounts

• Apply through the phone

• Standard secure mobile App

• High security (key exchanges)

• Communicates through Trusted Service Manager (TSM) Services

• Defined trust relationship with Secure Element on phone


Customer Use-case for Provisioning account

TSM Platform

FI “myBank”New Card Application

Core platform

Access Layer

Certificate Authority

Customer DB

Internet

Customer

MobileNetwork

Mobile Access Layer

Contactless Prepaid

Provision CardCheck ValuePreferencesView HistoryCheck BalanceDisable CardDelete CardReload Card

Secure element

The new virtual card package is downloaded to the mobile

and installed on to the secure element decrypting with the

exchanged keys

The new virtual card package is created,

encrypted and sent to the TSM to deliver to

customer securely

Card emulator securely provisioned


NFC Tag

UICC (Smart card in device)

Secure element

Carrier USIM

SIM App

SecuredUser Data

RFID in device

SecureApp

InstalledApp

Any NFC-capable Device

EmbeddedApplication

Proximity of NFC Tag triggers communication through RFID to an application on the device

that is registered to receive the message

MIDP App sends Funds-Transfer request to server to top up Prepaid Card balance

Insufficient balance on prepaid card. Could

generate “auto-top-up” request to provider

Customer Use-case for Card Payment


Mobile Wealth Management Services


Wealth management and technology

Source: Aite Group Survey of 201 financial advisers in July 2008


Mobile microfinance in emerging markets

Financial services to low-income individualsLittle access to traditional banking services.

Lifting out of poverty

Micro-investors have >95% recouped


Wealth management services

Market movements

Portfolio Analysis

Assets – net wealth

Performance vs Benchmark

Risk Analysis

Peer competition

Customer information


Mobile financial tips


Conclusions

Needs a lot of integration expertise

More regulation

Impact on network services

Developed economies

Notable progress – still a way to go

Wallets part of “core” mobile offering

Need interoperability

Emerging markets

Overcome security blockersCooperation and Trust


Strategy - Shield or Cloak?

• Why did the Starship Enterprise have a shielding device when the Klingon “Bird of Prey” had a cloaking device?


Questions?

Andrew Smale ([email protected]) @smaley

15th December 2011

mailto:[email protected]

Economy & Finance

Mobile money o2 digital futures by smart421 on 15-december-2011