FSTC Mobile Technology Project

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The Financial Services Technology
Consortium Empowering the Industry Through
Innovative Ideas
FSTCs2008 Annual Conference On the Innovative
EdgeSuccessful Strategies for Financial Services
Industry Navigators
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FSTCs2008 Annual Conference On the Innovative
EdgeSuccessful Strategies for Financial Services
Mobility in Payments Getting to a Secure,
Resilient, and Customer Friendly Solution
Industry Navigators
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FSTC Mobile Technology Project

• Janey Place, CEO DigitalThinking
• June 18, 2008

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Mobile Financial Services Predictions

• Great Statistics
• Global subscribers ½ world population
• Mobile service revenue greater than fixed
  domestic and international line revenue
• Mobile commerce revenue soars predictions top
  50 billion
• Celent February 2006
• 2006 will be the year FIs and carriers work
  together to create a much larger market
  opportunity
• Mobile adoption
• Technology standards
• Industry dynamics
• Business interests
• What Happened? Or Didnt Happen?

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What Hasn't Happened

• Celent expected potential of vast opportunity a
  much bigger pie to drive stake holders to
  cooperate on a bank/carrier model for mobile
  payments
• But instead, mobile banking has dominated
  initial implementation.
• NFC is stalled why?
• Proximity Payments (POS) is where the money is
  will this model change or will the card model be
  grafted on to the mobile channel?

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The Problem

• Conflicting Expectations
• FIs want a mobile Internet dumb pipes
• Carriers want new revenue from content
• Both want control of their customers
• Many Global Models
• Carrier-led are most common Philippines, Kenya
• Hybrid carriers partner with FI - DoCoMo
• Bank-led is rare
• Cant We Just Get Along?

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Mobile Realities

• Wireless Carriers Own The Networks
• Not the Internet or old telephone network
• No regulatory presumption of universal access
  or public good
• Carriers huge investments make them determined
  not to be dumb pipes for content providers to
  earn revenues and customer loyalty
• Digital content purchases 25-50 revenue share
  to carrier
• Mobile applications can be carrier controlled
• Interoperability isnt a given among carriers
• Globally, Wireless Carriers are in Drivers Seat
  
• US Brand in the consumers hand is the carrier
  brand
• User choice is driven by carrier selection or
  handset
• Banks are frequently in the background in global
  payments

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More Mobile Realties

• US Carriers Subsidize Handsets/Control User
  Choice
• This may change or erode, but it is the situation
  today
• New spectrum some open requirements
• Verizon has announced it will be open what does
  that mean?
• Mobile Platform Contentions
• Who controls secure elements, user credentials?
• Most agree that FIs and other application
  providers will pay carriers rents to reside on
  mobile platform
• Mobile payments will not take off until a revenue
  sharing, rental and/or licensing business model
  is worked out
• Carriers are in Charge
• Payments are content to mobile carriers
• This is different from current models of
  accessing value, whether stored in DDA accounts
  or prepaid cards or in credit vehicles
• The differences are presenting FIs with
  challenges

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Lessons from the Past

• Remember the Internet
• Regulation helped bring order
• Walled Garden versus Open Access
• ISP owned customer for a while
• Technology a major driver to todays open
  Internet
• Browser is inherently open
• WWW is inherently open
• Look at the trouble closed countries have
  controlling access
• Land line evolution
• Technology innovation
• Regulation

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Mobile Models Celent Report 2006
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Technologys Role

• Technology is an enabler what will it enable?
• Open mobile web, bypassing carrier control?
• Great security and fraud prevention, requiring
  carrier involvement?
• Great User Interface, requiring carrier
  involvement?
• A clear description is needed
• To identify where value is
• To identify which entity can best provide each
  value
• To ensure rapid user adoption
• Can we have a Mobile Infrastructure that is
• Cost effective
• Capable of leveraging existing platforms
• Flexible enough to build compelling user-friendly
  applications
• Secure

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Project Goals Describe and Document

• The current US wireless networks transmission
  technologies and interoperability (or lack
  thereof)
• Handset capabilities in current and near-term
  future models
• Modes of accessing content using mobile phones
• Barriers to open access
• Methods through which to provide mobile content
• Open access standards and principles

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The Mobile Channel

• The mobile channel can be a powerful enabler of
  services to customers and driver of revenue if it
  is
• Very secure lets build this in up front this
  time, rather than dealing with deficiencies years
  later as were doing with the Internet.
  Consumers, businesses and application providers
  must trust this channel. This will require close
  collaboration among carriers, banks and handset
  manufacturers.
• User friendly and easy to use Nothing
  accelerates adoption like a great User Interface.
  This will also require close collaboration among
  the various players.
• Integrated with FI infrastructure Customers
  expect integration across channels robust
  security demands it.

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FSTCs2008 Annual Conference On the Innovative
EdgeSuccessful Strategies for Financial Services
Mobility in Payments Getting to a Secure,
Resilient, and Customer Friendly Solution
Industry Navigators
15
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