DISRUPTION BY MOBILE PREPAID SHOULD BANKS EMBRACE PREPAID? Wednesday, 8 October 2014 Mobey Day, Barcelona

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1 DISRUPTION BY MOBILE PREPAID SHOULD BANKS EMBRACE PREPAID? Wednesday, 8 October 2014 Mobey Day, Barcelona

2 Barca, banks and emotions

3 but prepaid is not FIFA

4 it s street football!

5 Key takeaways of this presentation One conclusion: Prepaid is a major driving force in the near future of mobile wallets Two lines of attack of mobile prepaid players on banks Three levels of development of mobile prepaid Four options for banks to deal with mobile prepaid

6 Mobile Wallets 1.0: Digitising Leather Wallet Different stakeholders - each of them holding a piece of the puzzle (control points) Each of them is vying to establish a commercially influential position in the value chain Deadlock and market fragmentation Reduced integrative potential and market adoption

7 Mobile Prepaid: A Future Full of Opportunities Enhancing existing physical products via mobile channel Mobile reload / top up Additional channel to improve customer value Interactive channel to get in touch with the users

8 Mobile Prepaid: A Future Full of Opportunities Enhancing existing physical products via mobile channel Mobile reload / top up Additional channel to improve customer value Interactive channel to get in touch with the users Digitisation of existing physical prepaid solutions Replacement or endorsement of the existing solution Host card emulation (HCE)

9 MNO Bank Payment Scheme Merchant has a Winning Combo: HCE + Closed Loop Prepaid

10 Mobile Prepaid: A Future Full of Opportunities Enhancement of existing physical products via mobile channel Mobile reload / top up Additional channel to improve customer value Interactive channel to get in touch with the users Digitisation of existing physical prepaid solutions Replacement or endorsement of the existing solution HCE? Development of new mobile-based prepaid solutions Launching a new mobile-based prepaid solution No need to produce physical cards anymore - is there?

11 Mobile Wallets 2.0: Reinventing Commerce Strengthening the brand loyalties of customers Uniquely pleasurable shopping experience Minimising the inconvenience of payment Prepaid: a way to minimise payment disruption Focus on unique advantages to conventional commerce

12 Examples: Reinventing Commerce Starbucks (US, Canada, UK) Digitization of existing prepaid card Combination with its new loyalty program Over 10 million customers More than $1 bn in sales (2013) / 14% of purchases in U.S. It s about customer loyalty and behaviour (not payment)

13 Examples: Reinventing Commerce Apple / itunes (Worldwide) Global powerhouse in mobile commerce Small steps (itunes store, App Store, Passbook, digitized itunes card, TouchID, Apple Pay) Mobile prepaid an instrument to reach non Apple customers and those who don t have payment cards

14 Mobile Wallets 2.0: Reinventing Banking Prepaid instead of current account Challenging the banks at their own game Integrated cashback, reward and loyalty schemes of high street and online retailers Prepaid as a model for personal mobile banking Progressive banking customers and NOT underbanked

15 Examples: Reinventing Banking Google Wallet Open loop product & closed loop product in one wallet Interest in transactional data Google Wallet Card, a prepaid plastic card additional functionalities like P2P money transfers and cash withdrawals at ATMs

16 Examples: Reinventing Banking Amex Bluebird Partnership with Walmart Digital first (online & mobile) Positioned as an alternative to a bank account Doesn t support Apple Pay

17 Prepaid Options for Banks Option 1: Deploy an invisible prepaid infrastructure in support of a new service Option 2: Establish a prepaid agent network and resell the products of high profile merchants Option 3: Use prepaid openly and actively Option 4: Play a supporting back-end role to new players in prepaid

18 Examples: Options for Banks Option 1: Danske Bank Option 2: PostFinance Option 3: Use prepaid actively & openly Option 4: CBW Bank

19 Looking to the Future What a Bank Should Consider Mobey Forum predicts: Prepaid a major driving force in the near future of mobile wallets New forms of engagement with the merchant sector (compare to PayPal) Start paying attention to possible disruption of current account and customer relationship Question your own role in the ecosystem Obstacles such as with regulation, operating procedures and legacy systems integration are no good excuse for missing the momentum

20 Special Thanks to the Core Team! Anne K. Shreiner Hans S. Ildstad Thor Ragnar Klevstuen Sarah Kocianski Ville Sointu Kasper Sylvest Olsen Kristian Thure Sørensen André Zölch American Express EVRY EVRY Monitise Ericsson Danske Bank Nets PostFinance

21 Thank you!