Saturday, December 29, 2007
Anyhow, wishing all of you a prosperous 2008. It is (no doubt) going to be an amazing mobile banking year.
Tuesday, December 11, 2007
Saturday, December 08, 2007
1. Never write your passwords, PIN's or any security information down. Make sure that no-body can see this information or steal it in any way. When you feel that this information has been compromised, contact your bank or log on to the website or mobile phone and change the secret information to something else immediately.
2. Never communicate with your "bank" via a mechanism or channel that you are not fimiliar with. If your "bank" phone you or send you an e-mail or SMS requesting you to give security information, don't do it. Rather contact your bank via channels that you have used before (a known website, a known telephone-number or menu on your phone) to check this unsolicited request.
3. When your phone dies unexpectantly, phone your phone from another phone. If your number rings and it is not the phone in your hand that rings, chances are that your SIM has been swapped illegally. Phone your mobile Operator and report your phone as stolen so that they can switch it off immediately. Even if this does not stop a bank fraud, at least it will stop some-one calling on your account.
As with anything in life, safety is common-sense. People feel safe in their houses only because they know that they must lock-up at night. People feel safe in their cars, because they put on safety belts.... to feel safe in doing banking remotely, one must stick to a few simple rules.
I was phoned by one of South Africa's popular radio hosts (Bruce Whitfield) on 567 Cape Talk on Friday to ask my opinion on another recent fraud perpetrated by means of swapping the SIM of the target account holder (See story) (Transcript of the call). It is of concern that these incidents are creating the perception that mobile banking is not safe, as it does not have anything to do with mobile banking.
In order to explain this statement, I need to describe how South African banks have improved Internet Banking by utilising an additional channel to improve the security of sensitive transactions. Most South African banks enable customers to log into their Internet banking websites in the acceptable ways through entering Username/Account-number and a secret password. Some have even improved on this by utilising soft-keypads (to counter key-logging attacks) and partial passwords. Typically this would be viewed as "strong-enough" security in most places in the world.
However, most South African banks have improved on this security by also sending a one-time password to a client's mobile phone for sensitive transactions (e.g. registration of a new beneficiary). The client is then required to enter this one-time password into the Website. This is an ADDITIONAL security mechanism for Internet Banking.
If the passwords of a victim were compromised (either by means of phishing, resetting or physical stealing), a fraudster would have been able to commit a fraud in most other countries. However in South Africa, the fraudster is now also confronted with the need to have access to the one-time password that will be sent to the victim's mobile phone. It is in these instances that an illegal SIM swap is performed to get access to the one-time password.
This fraud is solely to perform an Internet Banking fraud and has very little to do with mobile banking. We at Fundamo have deployed more advanced functionality that would have countered even these types of frauds which I will not publish. What we have deployed for one of our clients is a feedback mechanism from the Mobile Operator that would render the sending of a one-time password temporary suspended in the case of a SIM swap. The customer is then required to confirm the SIM swap with the bank first (via other security mechanisms), before the transaction can be completed.
Thursday, November 29, 2007
According to a number of press releases today, Bank of America have reached 500 000 subscribers to mobile banking within five months. Amongst others, the story wqs picked up by CNN. I am of the opinion if this was the case with any other product launched by the bank, everybody would hail it as a big success. I looking at Bank of America's mobile banking offering, a number of things struck me:
- A link to mobile banking can be found on the Bank of America home page. This is an indication that they view mobile banking as mainstream.
- They have registered a .mobi domain-name (www.bofa.mobi). No sense in doing this, if you don't view it as important.
- They spend a lot of effort to demonstrate the solution, by making use of the media, special blog pages, videos etc. At least they understood that the public would only respond if told about things... and it seems as if they were right.
Tuesday, November 27, 2007
1. All messages are encrypted on the phone using the keys on the SIM with 3DES encryption algorithms. This is application-based encryption - not just carrier encryption.
2. All messages on GSM networks are compressed and then encrypted again using GSM protocols (every message is thus encrypted twice)
3. The PIN entry is accepted by a special program resident on the SIM card (impossible to replace with Trojan horses or Phishing attacks).
4. The PIN is never stored, it is encrypted on the SIM card according to Banking specifications. (As a matter of fact, Fundamo technology was the first to be certified by Mastercard according to PPED specifications for banking transactions)
5. Each payment message is MAC'ed with a special tamper-proof algorithm, that protects against Man-in-the-middle attacks and possible re-playing of messages.
By the way, the biggest transaction value on our solution was a business to business payment of more than US$ 50 000. This will never be possible with SMS's in the clear.
Thursday, November 22, 2007
Recent research released in South Africa by World Wide Worx, have some very interesting findings about Mobile Banking in South Africa. The advantage of this research is that it has been conducted for the past three years. Clear trends can now be formed comparing the findings of 2005, 2006 and 2007. The results show an explosion in the usage by end-consumers of mobile banking. In this survey the number of respondents that have used mobile banking during 2007 have jumped to 17% (from 8%). In addition the research found that more than 50% of respondents plan to be using mobile banking by 2008.
However, the most interesting result of the research (which also tracks other services delivered via mobile phones) is that mobile banking is by far the mobile service used by older people. According to the research the likelihood of using cellphones for banking services increases with age, in contrast to the usage of other cellphone functions going down as users get older. For instance, urban cellphone users aged from 46 to 55 years are twice as likely to use cellphones for banking as those in the 19 to 24 age group.
I think some analysts might want to take notice of these findings.
Monday, November 19, 2007
1. On what basis did Qualcomm get to a valuation of $210 Million? Firethorn had very little revenue and to all accounts technology that have not yet been proven in robust business environments. The number of subscribers utilising Firethorn technology is so low that this could also not have been the basis of the valuation. Seeing that Qualcomm is a publicly traded company, one would expect some more info being made available rather than the sketchy press release provided last week.
2. How does the major partners of Firethorn feel about the acquisition, and have they been consulted? It is really interesting that Qualcomm (major CDMA and Brew supplier) should purchase a Java based company with some of the major GSM Operators as customers (Verizon and Cingular). Interestingly, neither Verizon nor Cingular are mentioned in the press release (only the banking partners).
3. Qualcomm is currently an investor in Obopay - a direct competitor to Firethorn in terms of their technology and business model. What does this acquisition say about the future of Obopay? Does this mean that Qualcomm has discarded Obopay? Are they thinking of merging the propositions... very difficult. I just have difficulties getting my mind around this.
4. Which investors will gain most from this transaction and how could they have influenced the transaction? Maybe this deal does not have anything to do with the fundamentals of the solution and how this will change the landscape of mobile banking, but rather about more complex economic principles that not all of us can understand.
If I were a Qualcomm shareholder, I would really have felt aggrieved about this transaction, but then, I am not and now I am just frowning...
Saturday, November 03, 2007
During the past five years many initiatives were announced and often launched in South Africa. Many large technology companies and smaller ones made announcements and then disappeared again. South African companies that offered mobile banking solutions include Prism, Namitech, Cointel and Paym8. The launch of Wizzit in conjunction with Bank of Athens was so spectacular that they featured on CNN, Financial Mail and many other publications. Citibank and Standard and Chartered played with ideas to use the mobile channel to enter the South African market with a different and exciting angle, but did not implement.
The launch of MTN Banking during 2005 can be considered as the ultimate mobile banking solution with many new angles and an exciting offering. Combining mobile concepts with banking a totally new banking experience was created. Some of the concepts like "a banking starter pack", "pay as you bank" etc. worked well to grow a subscriber base quickly into hundreds of thousands of subscribers.
With the exception of
Nigeria has turned into a hotbed of mobile payment innovation with one of the mobile operators Glo offering a product called Glomoney since launch. This solution provides mobile payment features on ATM cards from most banks. The solution is supported by one of the ATM switches called Interswitch who is now rolling this out to other banks and talking of providing it also via Celtel. (The solution initially available on special SIM cards, is now also available via a Java client to be downloaded on the phone). Other successful initiatives are from a company called eTranxact whom operates the solution themselves. The same technology is currently in production in
Another area in Africa with a number of initiatives under way or in production is
A North African example is the roll-out of a mobile payment solution in conjunction with VISA in
Another early starter and also identified as a leader in the field was a Spanish initiative (backed by BBVA and Telephonica), called Mobi Pago. The name was later changed to Mobi Pay and all banks and mobile operators in
Many other large players announced initiatives and ran pilots with big fanfare, but never showed traction and all initiatives were ultimately discontinued. Some of the early examples are the famous vending machines at the
Since 2004, mobile banking and payment industry has come of age. Successful deployments with positive business cases and big strategic impact have been seen recently.
Sunday, October 28, 2007
Take Y2K. Even weeks before 31 December, the world was only 63% ready. Yet nothing happened, except that the world spent billions to be "ready".
So why can't analysts get themselves to say that if banks don't deploy mobile banking they will be out of business in ten years.... like they did with Internet banking? Maybe it is because there is nothing sexy about stating the obvious. Lets just take one case study in South Africa. A bank called First National Bank (FNB), launched mobile banking in little more than two years ago. This is some of their results:
- Have more mobile banking customers than Internet banking customers within two years. It took them more than fifteen years to get to the same numbers with the Internet
- The monetary value running through their mobile banking deployment have risen to a point where it is conceivable to outstrip credit card purchase volumes in the next year.
- The service became profitable within eighteen months - now adding a sizable value to the bottom line.
Tuesday, October 16, 2007
In the other it was reported that criminals conducted fraudulent transactions on ABSA clients, by swapping client's SIM cards. Read more about it here. This was a much more elaborate sting and was based on a security measure implemented by ABSA where a one-time password is sent to a clients cellphone for entry into a website. By swapping SIM cards, criminals could intercept this critical and important password in order to complete the fraud.
Both of these fraudulent acts were possible because of a weak Dual Factor Authentication (DFA)implementation (or the lack thereof). Criminals were able to steal clients' identity, because this was solely based on one factor (the card, or the mobile phone). If one managed to intercept this device (only one factor), one would have access to the client's financial information and it is possible to commit a fraud.
An improved version of DFA would have prevented these frauds. For instance, even if the SIM have been swapped, the one-time password would only be visible after entry of a private key, or if the card have been skimmed, could only be used if a secret PIN entry is required before a payment can be completed. Both these designs are incorporated in Fundamo technology, which makes it the most secure mechanism to interact with your bank.
Sunday, October 14, 2007
Monday, October 01, 2007
Mobile Money is the brand that MTN banking also use in their deployments in South Africa and on their other networks in Africa. We are the primary technology partner for all of these deployments.
But then, "Mobile Money" is a very widely used brand name, as a simple Google search show. I know that everyone can do a Google search so at the risk of boring the reader I thought I would pick my fovorites:
1. Mobile money is the name of a lending company in the UK. I don't know why they call it MM - probably because the loans fly off the shelf.
2. In Malaysia Mobile Money is owned by entrepreneur Lee Eng Sia, who is also known for Cutie Compact toilet rolls which he pioneered and seems to be a well known brand in Malaysia. An yes, MM in Malaysia is the name of a mobile payment solution.
3. The mobile payment solution mPesa (currently being deployed in Kenya and supported by Safaricom/Vodafone) is supposedly Swahili for "mobile money".
4. Mobilemoney is the name of an application that can be loaded on the iPhone, Palm or Winodws CE devices with which you can manage your financial information.
So it is absolutely clear that Money is getting more and more mobile.
Sunday, September 30, 2007
I am often asked why a dedicated mobile banking installation is needed. Some of the companies that we deal with have already deployed excellent Internet banking services or run advanced ATM networks. They sometimes feel that they may as well make the same service available on the mobile.
Many reasons exist for deploying an additional layer between the core banking and the mobile network. The most important ones can be summarised under the following headings:
The Mobile banking layer have to be able to manage the "state" of the interaction of a mobile phone with a back office system that often has not been designed to work with a mobile front-end. In its most simple format, let us look at a balance inquiry. If the back office is busy and a balance is not returned in an acceptable timeframe, the mobile logic should return a message that says: "Service not available, please retry later". In more complex situations where balances are debited and credited across multiple systems with many possible points of failure, state management can be even more challenging, with capabilities to be able to manage (and resolve) transactions in a "pending" state essential.
Buffering of peak transactions
Banking systems are generally designed to deal with transaction peaks of not more than hundreds of transactions a second. In mobile telephony is is possible to be confronted with peaks of tens of thousands of transactions per second. It is good practice to "shield" banking core systems from these levels of transactions while still communicating with subscribers in a meaningful way. It is also important to "shut down" in a structured way when the system is flooded rather than crashing. The problem with most mobile payment/banking deployments is that they have never been exposed to these levels of transactions. Quite a few of Fundamo's deployments are managing transaction volumes that sometimes peak at around fifty transactions a second. I have learned from hard experience that the challenges in this regard are not trivial.
Mobile banking/payment solutions are often designed from the front to the inside. This means that the decision regarding the channel (SMS, USSD, Java or xHTML) is taken first and the rest of the system is then developed to support this channel only. These systems are quite simple, but also very inflexible. It is preferred to deploy "channel agnostic" solutions where many different front-end technologies can live together and can be utilised as required. This approach enable banks to offer more advanced solutions that can actually be used.
Unique mobile security elements
Effective, (but also usable) security can be deployed using mobile phones. Unfortunately this is often different than ATM's or the Internet. Characteristics like CLI, SIM certificates, phone and location based data are all available and should at least be catered for. A dedicated layer is the best way to harvest this.
The above factors are just some of the reasons why a separate mobile banking and payment channel is recommended in all serious installations.
Thursday, September 27, 2007
Wednesday, September 26, 2007
That is why I cringe when I hear banks talking of trying out mobile banking to see if it will work, or "the jury is still out if people will use mobile banking". If banks deploy mobile banking half-heartedly, it will fail. This is called self-fulfilling prophecies. What product ever in a consumer market space today work and receives massive take-up if not properly supported by co-ordinated marketing and sales efforts? One way to guarantee the failure of a mobile banking deployment is to go to the market tentatively.
We at Fundamo have helped our clients deploy many different mobile banking initiatives. Yes we have seen some fail and this have taught us valuable lessons. We have also seen some be successful in dramatic ways. The single most consistent factor in all the success stories have been commitment and determination to make it work. If you want to fly, run like hell...
So where are the fundamental cost of banking?
This would probably take a comprehensive study to understand and clarify, but if we look at well known facts applicable on any other industry that sell something on a recurring basis, it must be the cost of distribution and indirectly the effect of churning. In order to translate this into banking terms, this is the cost of opening a bank account and then get people to keep on using it. To keep the account on the books (even if it is been used heavily) does not take much cost nowadays. With the cost of equipment and systems as low as they are (compared to the past), it does not cost much to run a bank account. Costs associated with disputes and complaints (I think) will also add to the real expense.
So how to reduce the cost of banking? ... by reducing the cost of opening a bank account. We have demonstrated how to achieve this by enabling clients to open a fully functional (and legal) bank account on a mobile phone. This has been deployed successfully in South Africa and we can now show metrics that indicate savings of more than 95% on the cost of opening a bank account.
Saturday, September 15, 2007
Of course one have seen many initiatives to combat Internet shopping fraud. These solutions have ranged from very ambitious initiatives (like Verified by Visa or SET-remember SET?) to clever schemes that would probably win limited (if any) support. Many utilise alternative numbers or some provide a feedback loop (either through powerful fraud protection logic) and others still guarantee secure transmission of card information etc.
The most obvious way to protect consumers is to utilise their mobile phone to achieve peace of mind to the card holder. We (at Fundamo) have implemented successful solutions to our clients (in production running thousands of transactions) where we harness the characteristics of the mobile to protect the card holder. We have done it in a number of ways ranging from SMS alerts when the card has been used to the ability to block the card from the phone. We have also implemented mechanisms where the card is "unlocked" for MOTO (card not present) transactions and can only be used in such instances if it has been unlocked. In this way we have increased the security of using your card on the Internet without changing the card or the Internet.
Friday, September 14, 2007
Internet shopping is only unsafe in the sense that you do not necessarily know what you get when you buy. There is also a risks that you enable someone to steal your information or identity and then use this to de-fraud you.
If it possible to eliminate (or drastically reduce) these risks from Internet shopping by utilising the unique characteristics of mobile phones. Mobile phones provide an alternative channel (that is often very difficult to intercept - not like the Internet) that can be used for alternative security communication. In addition the phone is a very simple (yet extremely secure and easy to use) second factor for authentication. This provides for an easy implementation of dual factor authentication.
Wednesday, September 12, 2007
No don't get me wrong, I don't think that this is an amazing service provided by Lloyds... I am amazed that this is newsworthy to the point that one actually would want to announce it. This kind of service is so old and have been implemented by all South African banks that you would actually expect to get it. This is not something that you would draft a press release about. A South African bank would be so ashamed that they only now release such service that they would rather keep it quiet. In South Africa and in other developing countries, the mobile banking features that are generally available, seems to me, might not even be on the release plan of European banks.
This thought really made me think. Is mobile banking services so far behind in developed markets that their announcements make us in developing countries laugh? or don't I get it? I think that the answer is yes. Developing countries have deployed advanced mobile banking solutions and have perfected the offering because the need is much higher. Also, we were not confronted by constrained thinking about new standards (read SIMPAY) nor complex integration to legacy systems. We could merely get on with the job. The result is that mobile banking solutions from developing markets are far superior to those that are available in developed markets.
Maybe Lloyds should work on opening branches on Saturdays first. Now that would be something to do a press release on.
Sunday, September 09, 2007
By far the majority of these new connections are happening in developing economies: India, China, Indonesia and large parts of South America and Africa. This is great, because more and more people will get connected and will have all the benefits associated with the free market and being able to participate in economic transactions. This is the vision that every-one gets excited about and a lot of effort is being invested to make this a reality.
The irony for me is that most of the solutions that is being presented is based on the assumption that transactions will flow from the cellphone holders credit card. And if this person do not have a credit card, then maybe their debit card (if we can figure out how to accept a PIN on the phone securely). This is where I loose the argument...
Where will we get all the credit cards from (three and a half billion to be precise)?
It is obvious that one should be looking for another solution that is much easier to execute on, is legal and conform to banking rules and regulations, yet can be executed with much less effort and overhead. In order to provide these masses with a transacting account, one will have to think different and develop new solutions that will enable transacting capabilities to grow at the same rate as mobile phones do.
My take on this is that we will see the development of a new kind of mobile wallet associated with a mobile phone (preferably identified by the mobile number), but low cost to open and to operate. This wallet will have to be able to initiate and terminate payment transactions in a secure, easy way, that is both intuitive and rigorous. Payment transactions should be possible across networks and must also cater for multi-currency transactions (like making local and international calls). Furthermore, the only way that this will be possible, would be if Mobile Operators and Banks start to collaborate (rather than fighting each other).
If this starts happening, we will truely make this world a better place.
Saturday, July 28, 2007
Tuesday, July 24, 2007
Citibank launches mobile bill payment service in Malaysia - Citibank launched a new service in Malaysia that will enable its customers to pay bills using their mobile handsets. The SMS-based service enables customers to use their credit cards to pay bills. Customers can also receive reminders when bills need paying and personalise their payments by assigning key words or texts.
Masabi signs YourRail to mobile ticketing technology. YourRail has contracted London-based Masabi to build a mobile application which enabled train tickets to be securely bought and displayed on mobile phones.
Vodafone offers direct access to bank accounts via MoniLink. The service allows customers of MoniLink banks to check their balance, request a mini-statement and top-up their or their friends'/family's 'pay as you talk' mobile phones. The Monilink system has been set up by Monitise and VocaLink and has so far signed up HSBC, first direct, Alliance & Leicester, Royal Bank of Scotland, NatWest and Ulster Bank in Northern Ireland.
Wells Fargo and Visa to conduct public mobile payments trial. Wells Fargo and Visa are to undertake a public trial of mobile payments technology with up to 500 customers in the fourth quarter of the year. The move to a public pilot follows positive feedback from an internal laboratory trial conducted by the bank in April.
Alliance & Leicester is to pay younger customers £10 for signing up to its mobile banking services. A&L is introducing the offer to customers who have signed up to its Premier 21 current account. But the bank says only the first 20,000 customers who register for the m-banking service and use it before the end of June will receive the £10.
Telsecure launches securePay m-payments system in UK. UK mobile payments start-up Telsecure is launching its securePay front-end payments system that is designed to protect customers from card-not-present (CNP) fraud. Telsecure said in 2003 that it was teaming with business and technology consultancy Generics Group to develop the mobile authentication system, which uses a cardholder's mobile hand set to verify and authenticate transactions made via the Internet, mail and telephone.
What is interesting about most of these announcements is that they almost all are from UK banks and mobile operators. Does this mean that the UK has now become the hot-bed for mobile banking/payments. Or is this only because the British like to talk about what they do more?
It would be interesting to know how many initiatives are being launched that is not announced. We at Fundamo, have deployed a number of mobile banking initiatives for clients that has not been announced. So this may point to much more activity in this space that is just not visible to all. I think it is safe to say that mobile banking is taking off.
Saturday, June 09, 2007
However the technology is available today to deploy prepaid card products by making use of mobile phones. This means that no plastic is produced and any communication, redemption and payment is dealt with by mobile phones. The use of mobile phones as the means to "virtual" prepaid cards can lead to a lot of benefits:
- Prepaid cards can be distributed much more easily and cost effectively (e.g. by making use of SMS's)
- Prepaid cards can be distributed and activated with much mre security features
- Additional payment functionality can be made available that was never possible before, and
- Information related to the use of pre-paid cards can now be gathered more easily and acted on
Retailers should consider the use of mobile pre-paid cards in future
Friday, June 08, 2007
"A group of Europe's largest banks are holding secret discussions to establish a pan-European debit card scheme that would challenge those operated by MasterCard and Visa" (Read the article on the 11th May 2007)
"India's banks are considering setting up a domestic card payment settlement system to rival the networks operated by Visa and MasterCard" (article)
Why would banks want to do this? Surely, as the only shareholders in MasterCard and Visa they benefit primarily because one standard exists and that allows them to transact with each other in many different countries and with as many currencies - totally seamlessly. Just doesn't make sense. I can think of only two reasons why this should even be considered:
The first is the cost associated with a transaction as it is passed through the Credit Card settlement network. This is a function of the number of parties that must benefit from the transaction as well as some of the complexities regarding dispute resolution and fraud management. However, I am sure that if the different parties put their mind to it and make some compromises this should never be a problem.
The other reason can be because the organisations behind credit card transactions have started to morph into companies that are starting to compete with the banks. They may even be perceived as potential competitors and threats. In the Lafferty article the following words are being used: "....they do not have to rely upon foreign states or organisations for the provision of critical infrastructure services, including payments." (foreign organisations?)
It is a fact that credit card organisations do not play a neutral role in facilitating mobile payments. (One more than the other). These organisations are often prescriptive on designs and architecture and sometimes even develop competing product to what banks should be doing. It could be worthwhile to define the ideal role of credit card organisations in the world of mobile payments.
Saturday, June 02, 2007
So when Barclays announced the availability of their mobile banking solution in the United Kingdom last month, everyone should take notice. Barclays would not launch a product and attach the word "banking" to it, if this is just another fad. I think we can now safely say that mobile banking has moved from the maverick fringe to an enterprise necessity.
Suppliers of mobile banking solutions should also take note of this. The time for experimental pilots is gone. The need for mature, proven products that can be guaranteed by the supplier has now arrived. Only suppliers that are able to provide acceptable levels of support conforming to agreed service levels will be able to compete in this market going forward.
- Westpac must be congratulated that they actually tell this story. I often hear banks saying that it would break confidence in the banking industry if cases of fraud were to be reported. I believe that this attitude aggravates the problem. By telling people what can possibly happen, they can be more prepared to fight the fraud and report any suspicious things.
- Second thing, it does spring to mind that Westpac may be publishing the story to highlight the fact that they might be the only bank in Australia that is installing the vibrating card trick. I was wondering what the cost of this change to all the ATM's is and if this is an indication of the size of skimming fraud in Australia. If this project is being executed with a positive business case, many other skimming incidents must have occurred to make it worth the cost and effort.
- So is this vibrating card reader the only anti-skimming and anti-fraud mechanism that can be deployed for card fraud, and a related question: Why talk about this on a mobile banking blog?
Fundamo successfully deployed a number of very powerful anti-fraud mechanisms for card systems by making use of the unique characteristics of mobile phones. Solutions provided by Fundamo to combat card-related fraud include transaction alert services delivered to the card-holder's phone, ability to change a card PIN on a phone, or even block the card and mechanisms where the mobile phone is utilised as "something you have" in two factor authentication for transactions performed on the Internet... In addition, most phones can vibrate too (for free).
Friday, June 01, 2007
At least we now have blogs that we can read "to find out what is going on."
I notice that I have not posted anything since 22 May. The reason for this is that we concluded some very interesting agreement at Fundamo during the past two weeks and I was quite busy with the activities related to these agreements. We will be making a media release on some of these deals next week, so I don't want to use my blog to "jump the gun". I intend to start posting in earnest many thoughts that I would like to share and get comments on. Some of the topics that I would like to discuss in the next few days are:
- New types of fraud in banking now, and how we can use mobile banking help to fight these.
- Some advances in mobile banking in specific markets (e.g. the UK and the US)
- Some ideas on applying mobile banking in money transfer
- Thoughts on least cost routing of payment clearing
- The pre-paid card market and opportunities in this market
- And some of the interesting "competition" that are emerging for Mastercard and Visa and the chances of them succeeding
See I am already tired just thinking of what I would like to post, but at least I have committed myself now.
Tuesday, May 22, 2007
What is refreshing about the Mobey Forum is the changes that have been made in the past few months. I believe this is a direct result of good leadership and expect the Forum to play an important role to make mobile banking mainstream banking business as it should be. Some of the important advances at Mobey Forum are the following:
- Invitation to other players in the ecosystem to join the Forum. Up to recently the Forum was definitely bank-centric, but some of the leading mobile operators as well as solution providers have now also joined.
- Discussion and communication with the GSM Association is also a step in the right direction.
- The development of specific models, but with sufficient emphasis on bank-robust security requirements is also good. In the end mobile banking and payments is about dealing with client's money and the same levels of security available in other channels should also be made available on mobile phones.
Thursday, May 03, 2007
What I did read, was the media release made by Jupiter (probably to get people to buy the report). This release was featured on many online newspapers (Newsweek, Finextra, Slashphone, to name a few), and highlighted the fact that only 8% of people with cellphones and regular online customers of existing banks would like to get their balance from their cellphones.
It also seems that the analysts came to the groundbreaking conclusion that " banks should not offer mobile services that aim to mirror or duplicate the online experience" and also "Mobile banking can add an anywhere element, but banks should identify where such ubiquity is crucial." In addition, another amazing insight was that younger and 'under-banked' consumers were identified as consumers who might want to use this service.
The conclusion reached by Jupiter: "that consumers have limited interest in mobile banking" seems to me then only holds true for a percentage of customers that already log on to their Internet banking regularly. It seems to me that this conclusion would not be applicable to banks that would want to sell to younger customers or those customers that are 'under-banked'. This conclusion is also not applicable to banks with a need to augment existing services and provide "an anywhere element" to their services.
To summarise, executives in banks without the need to grow their subscriber base or launch new innovative products, without the need to augment existing functionality and provide functionality to younger customers, should rush out and pay $750 for this five page report.
Tuesday, May 01, 2007
Just to show the activity in this space, I thought I would just list announcements and newsfeeds on Finextra since January in mobile payment and banking:
2 - Online Resources announced the launch of its mobile banking and bill payment service
8 - Visa has formally launched its mobile payments platform
10 - Hybyte has launched AirPayment,) billing solution that supports PayForIt
23 - Norway-based LUUP has signed National Bank of Abu Dhabi (NBAD) to its mobile payments system
24 - Obopay, the first comprehensive mobile payment service in the
8 - MasterCard has partnered with Taipei Fubon Bank and Taiwan Mobile to launch an NFC mobile phone payment pilot programme across the island.
8 - Royal Bank of Scotland to offer mobile banking via MoniLink.
12 - MasterCard is to work with GSM wireless network operators to pilot an international remittance system using mobile payments technology.
12 - An agreement with Telus will bring ClairMail's mobile banking systems to a large customer base in
12 - Vodafone and Citigroup announce worldwide mobile financial remittance venture.
13 - Bank of
13 - China Unicom and SmartPay launch 'mobile wallet' in Guangdong.
15 - Morgan Stanley credit card unit Discover Network is working with Motorola to trial a combined mobile account management and payment service
20 - Cyphermint announced that it has released the PayCash Mobile Wallet.
27 - Japanese telco NTT DoCoMo iteam with McDonald's to enable payment for purchases via customer mobile phones.
28 - Citibank and Obopay launch a pilot person-to-person mobile payment service for its credit and debit card customers.
16 - Masabi, the secure mobile applications company, today revealed a working prototype of a graphically rich, secure mobile banking application.
16 - Vodafone is teaming with German rail operator Deutsche Bahn to develop and implement a mobile phone-based electronic ticketing and payment service called Touch&Travel.
20 - Belgian payments network Banksys and network operators Base, Mobistar and Proximus launched a system for consumers to pay for high street purchases via mobile phone.
27 – Monitise team up with American fintech vendor Metavante to launch and operate a wireless payments and banking network in the
28 – Obopay announced the introduction of Obopay Checkout.
29 - Firethorn Holdings, LLC, confirmed today that Verizon Wireless is working with Firethorn to introduce its mobile banking and payments solution.
2 - Visa
2 - SmartPay and China Unicom team for mobile payments in Shandong
3 - Citibank launched a mobile banking application, called Citi Mobile, that customers can download to their hand sets
16 - The Mobey Forum has signed up Dutch banks ING and Rabobank and mobile operators Telenor, TeliaSonera and SK Telecom as new members
17 - MonVia, a specialty firm that helps accelerate the growth of early stage start-ups, today announced the launch of MobiBucks, a mobile payment solution
18 - Gresham Computing, the real-time financial solutions specialist, today announced the enhancement of its Clareti Connect product suite to include mobile banking
20 - Fidelity Express is teaming with e-payments outfit Cyphermint to launch a service that will enable its customers to pay bills using their mobile handsets
24 - Morse is to spin off its mobile banking arm Monitise and list the business on the AIM
24 - Altair Financial Services International has launched a totally revolutionary addition to Altair’s Prepaid Card services that makes use of SMS on mobile phones
27 - MFoundry announced a formal agreement with wireless leader Sprint that will bring mobile banking to subscribers
30 – Analyst report : Opportunities and challenges for m-banking and m-payments by Katy Jacob and Caroline Boyd of the Centre for Financial Services Innovation
30 - Japanese telco KDDI and Mitsubishi-Tokyo-UFJ Bank have joined forces to launch a mobile Internet banking business later this year
I know that we at Fundamo are busy with a number of accounts that we don’t even talk about. If this is the number of announcements then I don’t even want to know how many things are being worked on that people are not talking about at this stage. I think this is an absolute indication that the tipping point has been reached.
Sunday, April 29, 2007
The usual questions on why it is taking so long and why we have not seen the "google" of mobile payments yet where asked. I almost had the feeling that critics were saying that one should stop working on this type of solutions since it does not seem to deliver any benefits. In the meantime, the discussions on the "ecosystem" of NFC payments almost reached fever pitch at some stages. Every-one was talking about their pilot projects and what they have found. Yet it was clear that almost no phones would be available for this kind of thing (estimates were that not even 20% of phones will be NFC enabled by 2012), that nobody really knows where and what the business model for mobile NFC will be.
For me, though, mobile payments and banking is succeeding dramatically. From where I am sitting and what I am seeing a massive revolution is happening and growth in mobile payments is at a rate that have never before been seen in financial services before. If we compare any other change in financial services with mobile payments, none is happening at the rate of mobile payments. Look at how long it took credit cards to become mainstream, or ATM's or Internet banking (and how much has been invested before it was successful). In countries like South Africa, DRC and Nigeria (where we have deployed solutions) and others like Austria, Slovenia, South-Korea and (of course) the Philippines, it is clear that mobile payments are delivering good solutions to subscribers, stakeholders and banks.
Failures like Simpay and others should not be taken as the template for this industry.
Wednesday, April 11, 2007
Thursday, April 05, 2007
In another initiative a Vodafone subsidiary (the Kenyan mobile operator Safaricom) and Citigroup is planning to test a similar system under which Kenyan workers in the UK will be able to text payments instructions for money transfers to dependants back home. The recipient will receive a text containing a PIN which is then used to collect the cash at a choice of outlets.
What is the relevance of these initiatives? Should it be taken seriously and what should banks and mobile operators do in the light of these pilots?
I think that these initiatives (and others that are likely to evolve) will definitely succeed - as a matter of fact it has the potential to succeed spectacularly. Parties involved with this will benefit significantly because of the additional revenue that will flow out of business that they were not involved with traditionally. But the most interesting by-product of this will be the number of people that potentially could be drawn into the banking space. Consider how many people will now received money from abroad on a bank account (which they now need if they want to benefit from this system). I believe that the real advantage of this initiative is the market for ancilliary product that banks will now be able to sell to these consumers (ranging from saving to lending products, including risk product - like insurance).
Any bank that operates in developing economies (or have clients with interests in developing economies - like migrant workers and expats), should evaluate these initiatives carefully and develop strategies to get benefits from what is about to happen. It is advisable to contract and work with companies with experience in this space (like Fundamo - my company).
Monday, April 02, 2007
specialises in the development and promotion of applications and websites for the mobile
device. It would be hard to find something more, well, eh,
mobile. So when VISA decided to invest in dotMobi, anybody interested in mobile banking should sit up and take notice.
VISA did buy a stake in dotMobi recently. Neither party were prepared to disclose more detail, but VISA subsequently registered a few domains - visa.mobi, electron.mobi, plus.mobi, etc. and a few more, but don't try and surf them, because VISA has not yet posted any content to the sites. In the meantime they have the domains.
What is the relevance of this move? Clearly some executives in VISA is of the opinion that the mobile space is important. Important enough to buy a stake in a company like dotMobi. What is unclear though is what the rationale is for VISA to invest in this company. Surely, dotMobi will allow Mastercard to also register mastercard.mobi and maestro.mobi. Also, even if VISA makes a nice return on their investment, should they not have applied their capital in a different way (like giving it back to shareholders, or even better cardholders)?
I have difficulty seeing any strategic reason for VISA to take up this equity. But then it is a definite sign that banks are starting to get more of an interest in the mobile space. Maybe this purchase may trigger a renewed interest in mobile banking.