The future of mobile banking Ludwig Schulze Business Development Corporate Development Office 1 2008 Nokia
Amazing growth of mobility Global subscriber s (million) 4 500 4 000 3 500 4 billion in 2009 3 billion in 2007 3 000 2 500 2 billion in 2005 2 000 1 500 1 billion in 2002 1 000 500 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008e 2009e Source: Nokia estimate, March 2008 2 2008 Nokia
Penetration and growth Latin American sample 160% 140% 120% Penetration Growth 2005-2007 100% 80% 60% 40% 20% 0% Argentina Brazil Chile Colombia Mexico Peru Source: Nokia, December 2007 Page 3 2008 Nokia
Socio-economic benefits of mobility In a typical developing country, an increase of ten mobile phones per 100 people boosts GDP growth by 0.6 percentage points. Source: Vodafone policy paper: The Impact of Telecoms on Economic Growth in Developing Countries, Waverman, Meschi & Fuss Shared access to mobile phones bringing mobility to millions Microfinance & mobile entrepreneurs creating new business opportunities Instant SMS alerts directing users to best market prices Page 4 2008 Nokia
Nokia in developing markets 5 2008 Nokia
Entry products innovation First camera phone Nokia 1100 FM flashlight Integrated radio under 100 6 2008 Nokia
The possibilities when everyone has a phone Being connected & monitored HealthCare/Wellness Distribution of pensions in India E-Government Distance learning, internet research Education Page 7 2008 Nokia
Mobility will also change banking & payments Account Management Consumer uses mobile to review transactions on bank account and credit card Person to Person Payment Person to Physical Merchant Payment Person to Online Merchant Payment Merchant to Person Payment Give $5 to my daughter. Send relative in US $100 from Peru Consumer uses mobile to purchase groceries Consumer uses mobile to purchase a song from Nokia Merchant uses mobile to offer coupons and targeted ads User estimate global 2012 440M 330M 50M 150M N/A Source: Juniper Research, Feb 2008 Page 8 2008 Nokia
With significant impacts Increase people s control of their money Increase traceability in the economy Increase formal merchants when every phone is a point-of-sale Decrease use of cash Decrease the cost to serve the under-banked Page 9 2008 Nokia
Opportunity to serve under-banked Mobile phones provide new banking channel Lower cost-to-serve than retail branches, ATMS Expand reach of financial services offering Improve information flow between bank and clients Capture an entirely new market segment! Bank Branches, ATMs Per 100,000 People; Mobile Subscriptions Per 100 People. World Bank Page 10 2008 Nokia
New offerings possible Gain greater share of $300B international remittances Replace informal transfers with faster, easier, lower fee mobile-based option Replace cash with real-time person-to-person transfers Finance millions of microentrepreneurs with microloans Financial Flows to Developing Countries 1990-2006, $000. World Bank / IMF Page 11 2008 Nokia
Benefits to the under-banked Saving instead of filling the mattress Security from cash theft Lower-cost loans Rapid person-to-person payment over distances Easily accessible from mobile phone at low / no additional cost Interest Rates on Loans, Selected Developing Countries %, World Bank Page 12 2008 Nokia
Barriers to deployment Security and trust Ease of use Relevance Page 13 2008 Nokia
Secure & trusted Accessible from every phone Secure, multi-level authentication & encryption Open-standard platform & protocols Access to existing financial institutions and new service platforms $ Page 14 2008 Nokia
Intuitive & relevant Intuitive, human technologies Access to a wide range of services & application Integrated to messaging, entertainment services, web-browsing, etc. Mobile location (GPS) & context (night, in-meeting) aware Seamless transaction validation Page 15 2008 Nokia
Cooperation is needed What can the private sector do? Embrace new, low-cost banking models Affordable and innovative devices and services What can governments and regulators do? Deliver a regulatory framework that facilitates low-cost banking models, like stored-value accounts Support experimentation and commercial innovation Lower taxes and duties on mobile devices and network infrastructure and services to speed adoption Page 16 2008 Nokia
Thank you Ludwig.Schulze@Nokia.com Page 17 2008 Nokia
Summary Lack of access to banking services is currently forcing people to rely on a cash-based economy with little security, a more casual informal labour market and a lower tax base for governments. Over the last two years, pilot programmes in Africa and Asia have highlighted the potential for mobile phones to deliver basic financial services in developing countries. The development of m-transactions is also expected to introduce significant improvements in financial services, such as easier and cheaper international payments especially for remittances home, or reduced risk in domestic payments by near real-time transfers. A new regulatory framework is needed to encourage financial transactions by mobile phones and transform access to financial services in developing countries. Financial services are critical for economic development and inclusive financial services for the unbanked are essential for poverty reduction. Page 18 2008 Nokia