Mobile payment lessons to be learned from Casino's

Many of the more innovative mobile payment solutions that have been launched recently have much in common with Casino's. We have seen a plethora of new and exciting mobile payment solutions in South Africa during the past two months. (This does not make South Africa unique as people keep on innovating in this area). Two of the more recent products launched in South Africa are Mowaly (Read here) and Ammomobile (Read here). Both of these (as is the case with many similar solutions) acquire their own merchants. In other words, you can only pay with Mowaly or Ammo at outlets that have specifically been contracted. This is probably the biggest challenge to profitability of these type of deployments.

The characteristics that I find most interesting is that often these solutions turn into float-solutions. This means that if you have funded your wallet, you cannot cash the money back. You have to spend it (or pass it on to some-one else). Turning value into money have all kinds of ramifications and these solutions often limit the subscriber's ability to get the cash back for what has been deposited. This reminds me of Casino's where the ammunition is not cash, but chips. When entering a Casino, one would deposit cash in exchange for chips. This is very similar to the said mobile payment schemes. Only difference, with Casino's one can cash the chips in for cash.

Strikes may be a way to drive mobile banking take-up

Mobile banking take-up has been quite satisfactory in most instances that I have been involved. It seems as if consumers see the benefits of having access to their financial matters by means of a personal mobile device.

Yet, most banks and mobile banking operators are looking at ways to increase uptake and transaction volumes. This is often stimulated by means of special offerings, an increase in promotional activities and the provision of additional features.

Finextra recently reported on a planned strike of financial services staff in Finland (Read here). The report seems to indicate that Finnish banks expect a growth in the usage of online services during the strike. This is a very positive side-effect of a strike I think. By withdrawing expensive services (and not having them available for a period - as if the bank is coping with a strike), consumers are in essence forced to use (the more effective) electronic channels.

Strikes (or temporarily withdrawal) of services in branches may be the most effective way to stimulate the uptake of mobile banking.... Just a wild thought.

Will large banks license enterprise mobile banking solutions?

Citibank recently discontinue a pilot with a mobile banking vendor. The pilot was intended to show how the bank could utilise mobile banking platform as a service. Many offerings exist today (in most countries and on all continents) where banks can contract mobile banking as a service. This is attractive in many ways as it ensures that some-one else must focus on a the complexer operational issues. Also, this approach (while sharing downstream recurring revenue) requires less capital in the beginning.

Why would a bank then consider licensing their own enterprise solution? The reason for this is more control, more competitive advantage and more options. It is clear that the mobile channel (in most markets and for most sectors) will grow in importance. This will be the primary way that banks will interact with their customers. This will be their prime touchpoint, the way that their clients will experience the bank's brand. By embracing mobile banking, banks will be able to operate much closer to their clients.

It seems almost inconceivable that banks should outsource mobile banking.

Mobile Money in Europe set to take off

As is the case with most lasting changes, mobile money is not replacing cash in one fell swoop. While things do take time and it is often experienced as very slow, this change is only slow in terms of the perception. Replacing cash with electronic payment mechanisms (many of them based on the mobile phone) is an unstoppable force that will fundamentally change the way that we pay.

Once again, another proof-point can be found in a recent study conducted by Frost and Sullivan (Read here). According to this study the Western European mobile money market is set to take off and will be worth up to EUR5 billion by 2013. The report highlights the fact that it is both mobile operators and banks that are getting involved with mobile money and this time they are serious. They follow evolutionary strategies where consumers are given rudimentary services first - to get them comfortable with the concept. Over time, the services are getting more and more sophisticated and will gather more subscribers according to the research.

It seems as if mobile money is now turning into a run-away train: as it gains momentum it becomes virtually impossible to stop. I suppose the lesson here is that one should rather get on the train, while the speed is not too big. Comes a time when it will not be possible to get on.

Exponential growth in US mobile banking activities reported

I keep press releases that I find interesting to blog about in a special folder. Sometimes I don't get to them and then I have to throw them away because they expire. However, I looked at this press release by Mercator (dated July 2009) (read here), and I felt that the message is still fresh and relevant.

The report refers to the comparison between two consumer research assignments conducted in May 2008 and June 2009. With two report one year apart, it is possible to draw some conclusions on changes in behaviour. The report concludes (amongst others) "exponential growth seen among the younger generations" in using their mobile for banking and also payments. The big growth in numbers reporting that they now use their mobile to also pay and transfer money (I believe) is really significant. If the reported growth is to be projected to today, close to half of the US population in the age-group below twenty-five are using their mobiles for financial services.

Anybody in banking not taking this seriously should be fired.

Mobile payments square up with iPhone applications

This is one of these sexy announcements that everybody picked-up on. I had to swim through an avalanche of alerts, e-mails and tweets to be told: "Twitter founder's new venture is shaping up" (Read here). And then one is told how this new invention (called Square) will revolutionise payments forever. You cannot be serious!

See, what Square will do, it will turn your card info (also the track 2 data, that is not visible on the card) into a sound. The Square device is plugged into the ear-phone socket on an iPhone. The invisible information on your card is now audible!

I can just imaging a number of applications that will be so much easier to write, like fraudulent capture of card information at restaurants, or the storage of card information to be re-played later (after a valid transaction had happened.) I am sure that one can think of more applications where the Square could be used to steal money.

A better name for the Square could have been Hole, as it creates a massive hole in the well-defined security dispensation for magnetic stripe cards.

Mobile banking receives criticism too

Twitter is such a good tool to be connected to what is happening in the real world. What is great about it, is that one can read the messages of people that you do not even follow. I recently saw the following two tweets (from people I do not know at all):

"Chase Mobile Banking Alerts are always late. I get deposit alerts two-three days after they go in. Might as well send me an alert via mail."
"Seriously, Bank of America, why do you have a mobile banking app if it's not going to reflect the correct information?"

and I am sure that there are many others. I find criticising tweets of mobile banking very interesting. Not only does it show that people are starting to use the service, but that they are also developing levels of expectation of what the service should include.

Card Association certification of mobile payment schemes

Using mobile phones to secure card-not-present transactions have been announced frequently. This is probably one of the areas in payment where innovation is rife. Anyone that have experienced the inconvenience of a stolen card and this card then being used for fraudulent transactions on the Internet will appreciate the advantage of using mobile phones in this way.

This blog is not about the many attempts to secure card payments in a proprietary way - and many examples exist - but about the fact that the card associations now seem to be certifying some of these solutions. I think that this is a major step forward with significant implications. The fact that unique payment solutions (some of these being very different to what we generally would have done) now get Credit Card Association endorsement or even licensing is indeed very interesting.

While quite a few of these examples can be found (one that we at Fundamo are intimately involved with), I would like to just quote two:

• Mastercard recently announced their Chip Authentication Program (CAP) which allows for a One Time Password (OTP) to be generated by a phone (Read here). This means that someone can use a card on the Internet with a OTP that has been generated by their mobile. This is quite interesting as merchants can validate the OTP for a specific transaction. Security is much higher and the computing power of the phone is utilised well.
  
• The mCheck solution deployed on Airtel in India is also an interesting case study.(Read here). While I do not know the detailed architecture of the solution, it is my understanding that the encryption capabilities of the SIM card is used to good effect to secure an ordinary Credit Card transaction. This is solution is endorsed by VISA, even though it is very specific to mCheck.

This approach, while commendable, may lead to a situation where so many acceptable schemes are available that it becomes extremely difficult to keep track of legal mechanisms. The allocation of liabilities may also not always be clear to the uninformed. The proliferation of different Credit Card Schemas could lead to some problems.

The technical requirements for interconnected mobile banking

This posting is an attempt at listing the key technical requirements that must be present in order for two mobile banking systems to be able to inter-connect. This means the ability of a subscriber in one system to be able to send money (preferably in real-time) to another subscriber on the other system.

Both systems must be able to do the following:

• Adhere to the same message routing strategies. It is essential that the payment instruction issued on the one system should travel to the correct destination system and then that the actual target account be identified. This is not a simple problem as the routing should cater for multiple accounts associated with the same telephone number. Banking systems use the concept of a BIN to route payment systems, Telco systems use international dialing codes and operator codes (or look-up tables if number portability has been implemented). Which one of the two should banking systems use?
• A mechanism to clear the transaction and ultimately settle the transfers must be implemented in the same way by both systems. This is not a trivial issue as clearing and settlement creates all kinds of liabilities that must be analysed properly and catered for in the selected system. Reconciliation and detection (and correction) of discrepancies are also important.
• One of the most difficult interconnect problems is the schema for the management of uncompleted transactions. This type of situation would occur when the originating system did not get a confirmation nor a decline message from the destination system. The resolution of such conflicts are extremely complex. The design of roll-backs, pending transactions etc. is not trivial.
• Reporting systems must be agreed on.
• Technical handshakes, unavailability of one of the systems and consideration like load management (because of the potential huge volumes) must be well defined in order for the solution to work.

In my interaction with industry specialists and technical suppliers, it is my perception that this problem is not understood well at all. Very few companies have the experience and expertise to design and build such systems.

The popularity of Mobile Banking Worms

I found Twitter to be one of the best sources of information. I am constantly logged into the service (either by means of my PC or iPhone). One of the streams that I track is a search on the keyword "mobile banking".

On the 24th of November the Twitter search stream filled up with the following news item: "New Worm Attacks iPhones, Targets Mobile Banking ". I think that this Tweet was re-tweeted probably hundred times. In reading the associated press (here), it is clear that this is probably a no-event. The attack focused on clients of ING in the Netherlands and only if the subscriber's iPhone has been jailbroken. The target community for this attack is probably less than ten phones.

So why is it that people find this article so interesting. I believe it is because of the following reasons:

• Anything related to an iPhone is news
• The potential risk associated with remote banking is always interesting. It seems that security and how it can be penetrated is always newsworthy.
• And then, could it be that mobile banking is also of sufficient interest that people want to hear about it.
  

What is it: Interoperable or interconnected mobile payments?

One of the biggest benefits that I have because of the wide readership that I have, is the interaction that I have from valued readers of the blog. The comments that I receive are so valuable and I would like to thank everyone that respond to my attempts at publishing something worthwhile. I received an e-mail from a good friend on my latest entry. I will quote a short paragraph:

"...there is a difference between interoperability (...to connect components that interoperate) and interconnectedness (where systems are interconnected and are able to communicate between each other)". As is the case with all things, using the wrong terminology will confuse everyone. We must be succinct and accurate with what we say to ensure accurate understanding. (sometimes difficult for me considering that English is a second language). So should it be interoperate or interconnect. In order to answer the question, lets evaluate what I think we were talking about.

The term should describe the situation where one mobile banking subscriber on (lets say) system one can send or receive a payment from another subscriber on system two. These two systems (system one and system two), must be able to communicate/interact in such a way that payments can be cleared between the two subscribers. We would like to achieve this in such a way that system one and system two should not necessarily be connected, but that a transaction path must (at a minimum) exist between the two systems.

While I see that interoperate is not correct, I am not sure that interconnect describe this also. Maybe we need another term? Any suggestions?

How do you regulate to ensure interoperable mobile payments?

I was recently asked: "What needs to take place, both from a technical and regulatory perspective, for mobile banking to be fully interoperable...". This is such a good question as it verbalise a growing need (specifically from subscribers) to have this functionality available, as well as highlighting the two factors that must be addressed in order to solve this complex problem: technical and regulatory.

Before talking about the technical and regulatory requirements, just some general observations that will illustrate the extremely complex nature of mobile banking interoperability:

• Mobile banking payments are of a totally different nature than any other type of payment, because of the following two characteristics, in combination: The payment is initiated by the payer (not the payee as is the case with most electronic payments). This simple fact have major ramifications in as far as clearing, disputes, roll-backs etc. is concerned. The complexity is aggravated because mobile banking (by nature) should be real-time.
• Current game plans in big eco-systems are to build a competitive advantage over other competitors through mobile banking. The mobile banking supplier with the biggest market share (and thus having the best chance of ensuring interoperability) usually do not want this to happen as it would dilute their competitive advantage.
• While it is possible to route a telephone call to a unique telephone number, this is not as easy with a payment. Some factors that could complicate this are more than one bank account associated with one telephone number, implications of wrong numbers and other incidents where reversals may be required.

I will describe some of the technical requirements of interoperable payments in the next post.

What drives dedicated mobile banking professionals?

Contrary to what many people may think, the deployment and support of mobile banking systems is extremely hard work. The complexity and the tolerance levels of these systems are on par with the most complicated systems that can be deployed. Furthermore, these projects are often under difficult timeframes.

Mobile banking professionals are always under pressure, often out on a edge (because new frontiers are being crossed) and with limited support. Price pressures on many of these projects also mean that monetary benefits cannot be their main motivator.

Yet these special people almost always are full of energy and passion. They produce miracles and serve as inspiration to others. Why is this the case?

I know this is because most are working in this industry because they are driven by a bigger purpose: to help people that are less fortunate than them. Or to quote from the movie The Soloist: "The dignity of being loyal to something you believe in. "

Posted from my iPhone

Some thoughts on the hierarchy of agents

Mobile Operators utilise agent hierarchies for the distribution of pre-paid airtime. By implementing a multi-layer of agents Operators can reach a much bigger market. For instance with just ten super-agents an
Operator can have thousands of agents in the field.

This approach does have one major drawback: in order to
make deep hierarchies work the Operator must sacrifice big margins. This means that this approach is an expensive distribution mechanism.

It seems that it is obvious that Operators should utilise the same approach when implementing mobile money systems. However there are three reasons why this should be re-evaluated:

• The available margin in mobile money systems are significantly smaller than airtime. It is usually not possible to offer the same level of margins to support multi-layers of agents.

• Indications are that Mobile Operators should be more involved with support, training and controls for mobile money agents. Deep hierarchies implies that the Operator does not have the same access to the agents that they would need to support these agents effectively.
• Good mobile money systems are based on sophisticated banking systems (as apposed to over-extending airtime systems). This means that commissions can now be controlled in much more focused ways.

It does seem that mobile money system should have flatter hierarchies. In the long run this may even lead to an approach where airtime can be distributed cheaper.

Posted from my iPhone

A fresh new VISA

For those of us that have been working in the payment industry for some time, VISA was always seen as the protector of the status quo. Even new initiatives that were sometimes brought to market took a long time to deploy or were not applicable. (Remember SET?). VISA was an extension of the institutionalise banks, and (the perception were), that banks used the card associations to protect their interests, rather than help their customers. The fact that both Mastercard and VISA were controlled by the same banks meant that competition did not always pan out the way that one would have liked it to be.

This is why it is so good to see a new VISA that emerged after the listing. The approach is now much more open and driven by an honest effort to find solutions that customers would want. Nowhere is this more clear than in the mobile payment industry. The people and decisions that we are experiencing as an industry shows a new style of collaboration and openness to new ideas. A search of the news channels will show many initiatives that supports this view (Read here, here and here). One of the exciting initiatives is the mDirect initiative recently launched by Mobile Money in South Africa. In this instance the go to market strategy was based on joint branding between MTN (a mobile operator) and VISA. This would have been unheard of ten years ago.

Could it be that a change in ownership and governance structures can have such a dramatic change in behaviour? It does seem to be the case.

Balance of competitive forces is a prime consideration for mobile banking regulation

The complexity of providing regulatory frameworks for transformational banking is well known. While regulators are keen to create mechanisms to ensure access to banking services also for the poor, they have to the risks in changing existing regulations. I have written about these risks. (Read here). To recap, the following are the typical risks that one should be thinking of:

• Utilising the system for criminal activities (money laundering, funding terrorism etc.)
• Protecting the customer so that deposits are safe and also information protection
• The creation of money

Lately, in discussions with regulators and what I have seen in the market, it seems that regulators are also apprehensive about an competitive imbalances that may be created by allowing transformational banking. My first reaction was that this is not the mandate of regulators, but thinking about it, this makes a lot of sense. The natural forces in a free market system ensure behaviour that will not harm the customer, keep costs in check and contain criminal actions. If these forces are lost because of a dominant player all of these benefits will not materialise. Regulators concerned about the balance of competitive forces may just be getting it right.

A view on the trigger behaviour for mobile payments

It is my believe that many experts just re-package what they heard other people say. The saying: "Originality is the art of concealing your source", is true for most people. However, some individuals do exist that are capable of new, original thought. It is these people that build new offerings and ultimately change the world. I am privileged to know quite a few such people. One of them is my good friend Dave Parratt.

We have shared thoughts on this industry through many hours of discussion and always found his thoughts interesting and stimulating. Unfortunately I cannot share all of them because they were shared in confidentiality. However, he recently spoke about one such theory in a podcast published on the web (Read here). I suppose this means that it is now general knowledge and I can also publish it.

Dave postulate that widespread adoption of payment systems are triggered by change in behaviour of the population. He says (for instance) that the big move to card-based payments from check-payments was triggered by people that started travelling more frequently. Check-payments from foreigners were frowned on, but quickly got replaced by a plastic card.

He then describe (in much more detail than is possible on this blog), how the need for "card-not-present" transactions will drive the adoption of mobile payments. He does not believe that mobile payments (ala NFC) will replace card payments in retail environments, but will definitely become the preferred mechanism to pay in situations where cards cannot be used. (On the web, call centers, and of course on your phone). Transactions where you wanted to use your card, but cannot because you could not swipe the plastic, it is those type of transactions that are the low hanging fruit for mobile payments.

Some books that one should read in order to appreciate mobile banking

Peter, one of our senior solution consultants sent me the following quote:

"Overcoming poverty is not a task of charity, it is an act of justice. Like Slavery and Apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings. Sometimes it falls on a generation to be great. YOU can be that great generation. Let your greatness blossom."

— Nelson Mandela

This really resonate with me. This is what I would want to work on and what I believe mobile banking can change. I found two books worthwhile reading with similar messages:

• "Portfolios of the Poor" is a great book describing the complexities of managing money if you are poor. The book looks at the many different instruments that poor people use to manage their financial world. (Read here)
  
• In "You can hear me now", Nick Sullivan talks about his experiences in poor countries and also the effect of cellphones on the wealth of people (Read here)

I am looking forward to hearing about other books that is a must read for us that are passionate about using mobile phones to better the lifes of billions.

Visiting our new offices

My apologies - this blogpost was mistakenly published to the wrong blog. It was meant for my private blog.

Is the US really the biggest market for Mobile Banking

Navi Radjou published an interview with Carol Realini recently (read here). In this article Carol made a number of statements that I think one should analyse a bit further:

• That the US is the next big market for banking the under-banked. She base this statement on a statistic that 106 million citizens in the US are underbanked. Considering that these people are spread over many states (all with different banking legislation) it would be difficult to offer a service to all of them. If one then compares the realities and size of this market with countries like Nigeria, Pakistan, Indonesia, Brazil or Mexico (to name just a few), this statement smacks of ignorance.
• The article reference the recent Economist publication (Read here) as if this is Obopay technology. Careful reading will show that MTN Banking and MPESA are referenced only and very different technology suppliers have made this possible. These are true African success stories made possible by the real pioneers of the industry.
  
• She makes the statement that mobile banking has not been able to scale because Operators have worked with closed networks and that the answer is open standards. Well, the reality is different. Massive penetration have been achieved by closed systems: Smart Money, GCash, mPay (in Thailand), mPesa etc. This statement is just not accurate.
  

Africa was the inspiration for Carol's company when she visited the continent in 2002, as she indicate in these interviews. I do hope that the fact that Kinshasa is the capital of Kenya as is implied in another Realini interview (Read here), is a mistake by the publishers. Knowing how big the African continent is, how big the need is and the progress that is being made by Africans for Africans, the statement that the US is the next big market is a bit ironic.

Marketing is essential to grow Mobile Banking

"Consumer Adoption of Mobile-Banking is Lagging Primarily Due To Ineffective Marketing By Many Financial Institutions" is the heading of an article reporting on a recent research report produced by Javelin Strategy and Research (Read here). "Wow!", I thought, this is insightful: it is true that consumers will not use things that they are not told about. This is marketing 101 and is true for every consumer product. Could it be that mobile banking is not reaching its full potential because it is not sold properly? So I decided to read on.

It turns out that the report provides many other interesting observations and is based on the assessment of 26 criteria for a collection of US banks. It seems an accurate observation that banks do not support mobile banking with adequate marketing when a number of banks do not describe the security of their offerings in marketing material. This is important as it is known that security is one of the key inhibitors for consumers to use mobile banking. If banks do not actively address these concerns how could they expect their subscribers to use the service?

While this is a report focused on the US market, it is my experience that this lack of marketing support is more widely spread. Mobile banking seems to be the only consumer product that companies expect to take off without telling their customers about it. This is one of those things that I have difficulty in understanding.

The "Spin" and "Hot air" of mobile banking

I have been told that flying a hot-air balloon can be quite scary. Many things can go wrong and one has to be extremely careful in understanding the weather patterns prior to a cruise. Best advise for some-one considering a trip in a hot-air balloon is to choose your partner carefully. It is important to only get into a basket with some-one that knows what they do and have a lot of experience.

The same with mobile banking. The pilot that you select for your deployments should be selected carefully. Some-one recently told me that the mobile banking industry is full of "Spin" and "Hot-air", and I thought that this is a good description of "mobile banking experts" that have not done many (if any) flights and are looking for customers to join them in their basket. The real experts actually talk little and are generally quite non-descriptive. It is my view that they are quite busy and their reputation usually does the talking rather than wild claims and too much confidence.

Who would want a bank in their pocket?

I have a lot of respect for what Charles and Brian achieved with Wizzit. The vibey brand and the distribution model should be embraced by other transformational banking ventures. They use the by-line "...you have your bank in your pocket" to describe their mobile banking offer.

Some-one recently said to me: "Who would want a bank in their pocket?" and the more I thought about it, the more I realised that a lot of truth is locked up in this question. Many professionals in this space are grappling with the challenges to ensure take-up and growth of wallets. One of the reasons that transformational banking initiatives work is if it offers a real value proposition.

What we should not be selling is a new kind of bank or banking in a different format. This is not what subscribers really want. As a matter of fact, these customers do not want to get close to a bank if they can help it, but they have very real problems to solve. The brand message should rather be "Now you can send money to some-one else easily" or "It is so easy to pay a bill, or your rent or buy stuff" or "Your money is safe". Thinking about the value proposition, I believe, will help to deploy solutions that people really want.

New predictions on Contactless deployments

With the recent launch of the Nokia 6216 Handset, I thought that it would be interesting to look at the prediction of NFC again. According to all accounts it seems as if this is a cool handset that comes with all the features that one would want in a phone. Also (most importantly) the phone implemented the (possibly industry standard) single wire protocol (SWP) entrenching the SIM card as the source of identity.

So now that the phones are available, we should start seeing more deployments, and less trails and pilots, or will we?

I thought I should look at some of the predictions that experts and specialists are making of NFC. What follows is a random selection of predictions (With the date when the prediction was made):

• Aug 2006 Technology Review published by MIT predicts that 50% of new phones shipped in 2011 will be NFC enabled
• Sept 2006 ABI research predicts that 450 million new phones in 2011 will be NFC enabled. This represents about 30% of the phones to be shipped in that year.
  
• Nov 2008 The GSMA predicts first commercial deployments during latter part of 2009
  
• Feb 2009 Informa's prediction is that 10% of phones will by NFC enabled by 2013
• Sept 2009 Junper predict that the NFC market will be $30 billion by 2012 (In the same report the prediction for MMMT is $200 billion)
• Oct 2009 Venyon CEO predicts the first mainstream production deployments in 2010

I wonder if there is a trend here somewhere?

Financial services for mobile devices: new trends from the Philippines

Trust the clever people in the Philippines to lead the way with Mobile Financial services. Any person studying the industry would know that it was the people from Smart Communications that deployed the first commercially successful mobile-based person to person payment system. Mobile banking the way that the rest of the world deploy them has been available in Manila for ten years and they invented mobile remittances. It therefore does make sense to look at what they are working on now.

I picked up on a number of interesting articles published during the past few weeks that all seem to point in the direction of a new generation of mobile financial services. "We are looking at it..." says Napoleon Nazareno, president of Smart about Micro Finance in one article (Read here). In another article (quoted from the Philippine Star) John Owens says: “It has to do with smart money and mobile phone technology,” (Read here). John heads up and organisation called the Micro-enterprise Access to Banking Services (MABS) program in the Philippines. In this article mention is made of ".. several mobile banking products already being pilot tested with several rural banks."

Could it be that we are seeing the emergence of a new generation of banking products based on the proven mobile payment capability in the Philippines? How would this be translated into other markets? I think it is worthwhile to keep tabs on these activities.

The SIM-based authentication mechanism in Turkey

Turkcell provides advanced crypto authentication on every SIM card that they ship (Read here). The level of technical security provided in this way can not easily be duplicated in any way as the SIM provides a cost-effective way of distributing crypto keys.

As far as my information goes, at least twelve of the largest banks in Turkey makes use of this solution for secure login in order to gain access to Online banking. Amongst others, the solution is also used in e-Government. (For instance to access and lodge Patents, to get access to government information, during the Customs process and various declarations.) The wide roll-out of this solution places Turkey at the forefront of digital signatures.

The solution has been designed in such a way that it is available on any type of handset (expensive or entry-level, old or new), the interface is simple to understand and use, yet powerful in application. The fact that the same security paradigm is used for many different applications ensure better support and a high level of confidence with the subscriber base.

It would be interesting if some-one could provide us with more information on commercials, the take-up and usage and any technical challenges that Turkcell experienced in deploying this solution. Purely from a technical perspective, every mobile operator should consider deploying similar infrastructure at a marginal increase in cost, but offering significant benefits to all of their subscribers.

Turkcell Mobile Signature is Turkey's first and only ISO/ IEC 27001 Information Security certified GSM service. The service infrastructure and processes are audited by globally accredited audit companies and by Turkish Telecommunications Authority.

New types of mobile based payments by mainstream banks

We have seen it in the past: a mainstream bank attempting to launch a mobile payment or an innovative payment solution. These attempts usually ended in the "did not work" folder and life carried on. This is why mainstream banks wait for standards to evolve. By launching a product conforming to an industry standard, the bank can be assured of interoperability, conformance to regulations and a clear definition of liability(and how to manage risk).

However, it seems as if this may be something of the past, with a number of proprietary mobile payments and wallets being launched by mainstream banks with very little consideration for standards. It is almost as if the banks are saying: "We have waited long enough for these standards to emerge..." and now we are going to do what is needed. And I am impressed with what they produce.

I was exposed to the mobile wallet solution being offered by Rabobank in the Netherlands last week and was really impressed with the way that the team have worked on integrating different aspects of remote payments, SMS order entry and proximity payments. The solution is called MiniTix and may indicate a way forward for mainstream banks (Read here).

Of course one can reference many other initiatives. For instance the Mowaly wallet from Standard Bank recently launched in South Africa (Read here), the tie-up between Deutche Bank and Luup and many initiatives that one can refer to in the US. (for instance Boku (Read here) and the Starbucks wallet (Many references, but read here). Maybe it is time for mainstream banks to stop waiting for standards and start delivering solutions in this space.

Nacha requests mobile payment ACH comments

Nacha (the US electronic payment clearing organisation) published a request for comment document with major implications for mobile payments. (Read here). This action in my view could be one of the biggest catalysts for proper mobile payments in the United States.

If the door being openened by Nacha is embraced by a critical mass of financial insitutions, the US is poised to launch the first cost-effective interoperable mobile payment solution in the world. Nacha provides the rules and the infrastructure to enable electronic funds transfer from one bank account to another in a secure way. This, coupled with a very low cost structure and enough participation can trigger true mobile payment products, that are both open and flexible.

The RFC issued by Nacha recognise that payment transactions triggered from mobile devices should be identified as such and that different rules can be applied to these transactions. The question now is, if financial institutions see this will they embrace it?

The Telenor EasyPaisa mobile banking launch

The launch of Telenor Pakistan EasyPaisa was arguebly the biggest launch of branchless banking in the world this year. With a brilliant marketing campaign consisting of social-media teasers, billboards, double-full page advertisements and a glamourous event, the service was announced last week Wednesday. I think everyone seeing the television advertisements would agree that the campaign was as good as it can be. (See here and here).

However, what makes this launch significant, is the fact that Telenor Pakistan subscriber base is close to thirty million in a country of 180 million people. The product was launched with 2 000 agents activated and supported. The service deployed is unique to the culture and needs of this vast country. During the launch the State Bank of Pakistan governor, Syed Salim Raza, publicly gave his support for the service and highlighted the big need for more affordable financial services, where only 12% of the population is served with formal financial services. Read more press here, here and here.

Congratulations to M-Com with their regional Gartner leadership

The first mobile banking magic quadrant produced by Gartner was recently released in the North American mobile banking report. It is understandable that Gartner produced this report first, as the majority of their clients are based in the North Americas, but this is not the full global picture of mobile banking yet.

One should congratulate M-Com on being judged as the regional leader (though with small margins). This is well-deserved given the product innovation and insight from this New Zealand based company. However, I do think that the heading of their press release produced immediately after the event is a bit miss-leading: "M-Com Positioned As A Leader In Magic Quadrant For Mobile Banking" (Read article here.)

The heading creates the impression that M-Com is a global leader in mobile banking. It is many experts impression that the North American market is definitely not at the leading edge of mobile banking globally. The products and services are not as innovative, nor visionary as many other products deployed in Africa and Asia. It is therefor a bit mischievous to create an impression of global leadership on the basis of a regional win.

Funding mobile wallets through grants and pensions

I recently saw a very informative presentation from CGAP highlighting a obvious, but very important angle on how to bank the underbanked by means of government grants and pensions. It is well known that getting cash into wallets is one of the biggest challenges of effectively deploying mobile wallet solutions for the underbanked (MMU). This is usually achieved by an extensive agent network with the ability to receive cash and credit the wallets of the subscribers.

In the CGAP presentation the point is made that more than 155 million people receive regular payments from their governments and that less than 20% of these actually get paid directly into a bank account. The rest are distributed by means of very inefficient cash mechanisms. The following quote from the presentation: "A growing body of evidence shows that access to financial services enables the poor to better withstand shocks, build assets, and link into the wider economy as fuller economic citizens.". It seems as if it should be the duty of governments to implement aggressive plans to pay grants and pensions into low cost wallets.

Currently, mobile banking is used to distribute grants effectively. For instance the payment of ex-soldiers in the DRC in conjunction with Celpay and Concern in Kenya (to quote only two). The tremendous benefits of this approach can be seen in the following youtube video, that for me, is one of the most inspirational stories of what we are trying to achieve with MMU.

The importance of implementation consultants for mobile payment projects

The advantage of having executed on multiple MMT projects is that it provides for perspective. I have now seen our organisation successfully deploy the technology in many different environments (clients and countries). We now have enough confidence to be sure that the technology infrastructure will be implemented and will be ready for production. Yet, this is not all that is needed for a commercial successful venture.

While many other reasons are put forward for what have enabled one deployment to be more successful than another, statistics seem to indicate that good, experience implementation consultants almost always ensure success. This is the one ingredient that if it is omitted almost always lead to delays, tentative deployments and missed commercial targets.

Many of these independent consultants can be found and I would be happy to recommend these to interested parties. It is impossible to single out any specific consultant, but as an example one could reference Mark Guthrie (partner in consulting company Oscillyte ). He was quite instrumental in the very successful deployment of MTN Mobile Money in Uganda and have subsequently advised similar projects in other countries.

I think that these experienced program managers with an ability to grasp the uniqueness of MMT projects are often overlooked in planning projects. Results seem to indicate that this is the biggest mistake than can be made.

When mobile banking becomes an essential element of retail banking.

My bank (who will remain nameless) used to have a free loyalty program. Recently, they made the loyalty program optional and I have to pay if I want to join it. It is obvious that I will now be less loyal.

A lot has been written about what will make mobile banking succeed. What is the elusive killer application that will make people sign up in their thousands. I have heard many experts say that it is the distribution strategies. If one can figure out how to place the mobile money application in the hands of subscribers, then it will truly become mainstream. "It is a trust issue" others say. "If people know their money is safe, they will put more money into their mobile wallets"... and so on and so on. All of the above are of course on the right track. The recipe for a successful mobile banking offering is a concoction of many different things and it is important to get all of this right.

But as is the case with loyalty programs, mobile banking will only become mainstream if it is an essential part of the service that banks offer. I cannot see how a retail bank can function effectively without a working loyalty program in today's competitive marketplace. Only when mobile banking becomes an essential component of delivering retail banking, will it get the management attention it needs to grow. In some markets this threshold has been crossed and it has surpassed Internet banking in usage. In others it is just a question of time.

The flat normal distribution of mobile banking deployments.

Having seen many mobile banking and payment deployments during my ten years in this industry, I know that many deployments fail. Unfortunately, not many individuals like to talk about failures and important lessons than can be learned are swept under the carpet. In stead of talking about specific failures, I though I will write a blog about failures and successes in general.

It is common knowledge that most naturally occurrences if sampled sufficiently, will display a Gaussian curve. This is supposedly also true for mobile banking deployment successes. (or is it?). All of us have heard of the small number of successful deployments of mobile banking and payment solutions. They do exist and is growing slowly. Because the industry is still young, the numbers are still low, but all indications are that this will grow. At the same time we also see failures - this is instances where the technology was deployed successfully, but then gets discontinued after some time. It is my estimate that the percentage of deployments that fail after five years may be as high as 25%. (I would be happy to argue this in person). This means that mobile banking successes do not show a normal distribution, but rather quite a flat graph skewed to the failure side. This is the picture of an immature industry without a good understanding of what is required to be successful.

As the industry matures, the graph should start getting steeper and the percentage of failures should reduce. Only by talking about the failures, will we be able to figure out what is being done incorrectly, so that we have a better change of not doing this in subsequent deployments.

Unfortunately, this is not the style of the industry. Nobody wants to acknowledge failure nor want to talk about it. This does not spell well for our industry.