Africa as a mobile banking benchmark

Africa probably boast the most advanced, oldest and most successful examples of mobile banking solutions on the planet today. It is not difficult to understand why, as this is also one of the fastest growing markets for mobile telephony in the world.

The Celpay deployment in Zambia was one of the first mobile payment solution deployed and is still operational today. This implementation currently manages about 2% of Zambia's GNP on mobile payments. I am not aware of any other mobile payment solution that can make the same claim. One of the other Celpay deployments (in the DRC - a country as large as most of Europe and with a population of more than 120 million people) runs roughly five million mobile payment transactions a month.

Other solutions (like the m-Pesa deployment) is often quoted by Vodafone as THE Vodafone mobile payment reference. This solution runs on the Vodafone network in Kenya (Safaricom) and boasts advanced cash management capabilities. Wizzit (an innovative mobile banking deployment for the under-banked) is often quoted as an example of empowerment of under-banked and the creation of jobs.

In a country like Nigeria (one of the most oil-rich countries in the world) one finds many advanced mobile banking and payment solutions - supported by advanced central bank regulations. Deployments like eTranzact, Flash-me-Cash and mobile banking provided by the central switch (Interswitch) must definitely be rated as some of the most advanced deployments in the world, with a large take-up and growing.

Every bank in South Africa have deployed advanced mobile banking and payment solutions. This market is currently growing at the rate of more than thirty-five thousand subscribers per month. The mobile banking market have grown to one million subscribers in just over two years. Few countries can claim this achievement. The MTN banking deployment in South Africa (an innovative product supported by MTN - the largest operator in Africa and Standard Bank - the largest bank in Africa) features advanced and unique characteristics (like a banking starter pack and "pay-as-you-go" banking to name a few).

It is no doubt that Africa is one of the leaders in mobile banking with advanced solutions and successful references.

Mobile payments to really take off

The Juniper research company predict a massive growth in mobile payment volumes. This prediction is based on the assumption that 204 million users will generate transactions worth approximately $22bn by 2011. The analyst firm predicts that the market will be driven by increased uptake of person-to-person fund transfers, along with the commercialisation of mobile payments using near field communications (NFC) technology. The prediction is based on the awareness in large industry players to start embracing mobile phones as transactional devices.

What does this mean?

It is now imperative for serious players in the transactional payment and banking arena to consider their position regarding mobile payments. These companies should develop positioning strategies and consider investment in early pilot projects and mainstream business initiatives. It is important to partner with leading suppliers with relevant track records, so as to minimise risks in this complex solution space. Fundamo is the leading supplier of mobile banking solutions and is the ideal partner for large banks and mobile operators considering the deployment of mobile payments.

New initiatives in Mobile Banking

New initiatives in mobile banking is now being announced all of the time. Just a sample of the announcements made during the past week is given below.

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.

Mobile Prepaid Cards

Prepaid cards are being utilised for many applications today. These range from giftcards to low cost banking applications. Applications for payrolls and cheap alternatives for cash distribution have been rolled out many times. All of these applications are based on plastic cards. The use of magnetic stripe solutions are by far more popular than any other solution.



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

Competition for Credit Card Companies

Some quotes off the Internet the past month:

"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)

and

"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.

Mobile banking is taking off this time

Since I was a small boy, Barclays bank epitomise banking. Other banks may try to do banking, but Barclays has always been the pinnacle of banking to me. When credit cards were launched, Barclays called their credit card a Barclaycard and this brand attached itself to credit cards. One could say that Barclays did to credit cards what Hoover did to vacuum cleaners.

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.

Cellphone remedy for Financial Fraud

This is a picture of an ATM with a card skimming device installed in front of the existing card slot. Very difficult to spot, not so? Recently, Westpac announced that they blocked 900 card accounts of cards that were used at a ATM in Melbourne that was tampered with and where the card information was skimmed. (Read article). All of the cards that could be effected were blocked, but fraudulent transactions were only conducted on 75 cards. The total amount of the fraud amounted to $ 100 000. Westpac also announced in the same press release that they are in the process of installing anti-skimming devices on their ATM's. It has been reported that these devices actually vibrate the card as it is being pushed into the slot, making it impossible to be read by a static device. Three things spring to mind when reading this story:

• 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).

Blogging busy

It is a sign of our times that we don't have time to do anything anymore. Looking back at the end of a week to take stock of what has been achieved, one often feel as if nothing has been achieved. At a previous job that I had at a big corporate, I asked a senior manager what his typical day looks like. The manager replied that he basically just goes to meetings every day. I then asked him why does he go to these meetings, what is the objective and what does he achieve by attending meetings. To this he replied, quite seriously: "I go to meetings to find out what is going on".

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.

Mobey Forum

The Mobey Forum was founded in 2000 - almost at the same time that Fundamo was established. Many companies and industry organisations that was founded during those early times, disappeared. There something of a resilience that I sense in the survivors. Now that the industry is starting to take off and that more and more banks are starting to announce their interest in mobile banking it is important to take cognisance of organisations that have been around. Some of the lessons learned and the insights (like good wine) can only be gathered through time.

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.
  

JupiterResearch Mobile Banking Findings

JupiterResearch released a research report on the 6th April with interesting findings regarding Mobile Banking. This concept report (according to Jupiter website) is five pages long and can be purchased for $750 - that is $150 per page... not bad. I am not sure what have been written in the report and how the analysts that worked on the report came to the conclusion that they did get to, as I was not prepared to buy the report.

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.

Some of the activities in mobile payment

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:

January
2 - Online Resources announced the launch of its mobile banking and bill payment service
2 - US bank Wachovia is offering online banking customers a patent-pending mobile account information and intra-account funds transfer 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 U.S., today announced that it is entering the Indian market

February

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 Canada.
12 - Vodafone and Citigroup announce worldwide mobile financial remittance venture.
13 - Bank of America is to roll out a comprehensive mobile banking service to its 21 million online banking customers nationwide.
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.

March
9 - Marcus Theaters and Mobile Candy Dish today announced the pilot launch of a new service that allows consumers to use their mobile phones to buy movie tickets and more.
15 - US e-payments firm First Data is teaming with Germany's NCS to offer mobile payment processing services to its merchant and banking customers worldwide.
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.
23 - US mobile telco Cellular South is teaming with phone manufacturer Kyocera Wireless to launch a multi-city consumer trial of NFC-enabled wireless wallet technology.
27 – Monitise team up with American fintech vendor Metavante to launch and operate a wireless payments and banking network in the US.
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.

April
2 - Visa USA president and CEO John Coghlan called for closer collaboration between the payment card and mobile industries
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.

The SIM Summit

I attended the SIM Summit in Prague last week. It was quite interesting from a number of perspectives for me. I had the distinct feeling that some of the delegates were looking at finding a reason for having a SIM card in a phone. On the Wednesday-afternoon I presented a talk during the "mobile payment" portion of the conference. I shared the platform with some of the older companies in this space (paybox, SK telecom) and some of the newer ones (Monetise).

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.

Utilising Agents to distribute low cost Banking

One of the biggest challenges of bringing low cost banking to rural areas are the cost of distributing banking products. It takes a lot of time and effort to get someone to open a bank account - especially given the stringent regulatory requirements. I have seen some instances where banks have a requirement to have a photo-copy of this and that, as well as firm identification, in addition to a form that must be filled in and signed - quite a cumbersome and difficult process.

So some companies have started deploying a mechanism where agents are utilised to distribute these bank accounts. This means that some-one works on a commission basis to get people to open bank accounts. These agents do not earn a fixed salary, but rather get paid for each account that is opened by them. Great idea! Often this is also a mechanism to create work for people that do not have work. I have always been intrigued by this approach. I do subscribe to creating work and getting the community involved with banking themselves, but I am not sure if the economies work. How many accounts do an agent have to open to be able to earn a living wage? This is especially difficult if the commission must be earned on a low cost bank account. All of the sums that I do make this approach a marginal employment for the agents and I am not sure if it will work.

Low cost banks have two remedies:

a. Enable an agent to open bank accounts, but also sell more lucrative products (that have better margins) - preferably products that require a bank account (like insurance, loan products etc.). or

b. Enable customers to open a bank account themselves (even on their phone) with no assistance and no photo-copies. This is possible, and have been implemented by Fundamo.

Mastercard and the GSMA

MasterCard is planning to pilot international remittances with mobile network operators. Indications are that a few pilots will be set up and run with the intention to learn and to ultimately roll-out in a big scale to other operators. One of the pilots will initially pair India's largest mobile operator Bharti Airtel with the State Bank of India corresponding with a mobile operator and bank sponsor in another country. For the pilot programme, the recipients of funds will be notified of cash transfers via a text message sent over the mobile networks. They will be able to access those funds via debit and prepaid accounts issued by local banks.

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).

mobi VISA

I suppose Visa is as bank as one can get. Most banks are members of VISA - at least those banks that want to be taken seriously. VISA is the pioneer of payments in the world with new products and technology frequently being announced. dotMobi is an organisation that
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.

What is mobile about NFC?

NFC is an acronymn for "Near Field Communication". (See the NFC Forum). Many projects are currently being conducted to prove the viability of utilising phones with RFID chips in payment procedures. The intention is that one would be able to "swipe" your phone instead of "swiping" a credit or debit crd at a point of sale terminal. The picture on the right is an experimental deployment currently being conducted by Gemalto.

In order to minimise the impact of existing payment systems, all of the deployments are basically an extension of existing card based payment schemes. The phone swipe at a terminal initiate almost exactly the same transaction to the issueing bank as if a card have been swiped. The effect of this payment could also be achieved by imbedding the NFC chip in your sunglasses or for that matter in your credit card. The system does not recognise that the chip is actually in a phone, it just respond to the NFC chip. This is great technology for a number of reasons. The speed of concluding a transaction and the reliability of the infrastructure are big advantages over existing card based transactions. But why are NFC payments sometimes refered to as mobile payments? Nothing is mobile about it.

The terminals that read the NFC chip is static, the payment is routed in exactly the same way than any (or all) existing card transactions are. So is it because a NFC chip can be embedded in a phone that we call it mobile payments? That would mean that if an NFC chip was embedded in watch, we would call it Timeous payments? A reason could be that we can carry the payment instrument (the NFC chip) around. The payment instrument is therefor mobile going with us from one terminal to another.... just as we currently do with our credit cards. So that would mean that we have been using mobile payment instruments all the time (by carrying our credit cards from one terminal to another with us).

True mobile payment instruments should enable the payer to perform a payment at any place. (For instance the payer should be able to pay for parking without having to be close to his/her parked car). NFC payments today (and for as long as one can imagine) will only be happening at points where NFC enabled terminals are installed. This is definitely NOT mobile payments.

The economic benefits of mobile phones

In a recent report published by McKinsey's the value of mobile phones in developing markets is quantified. It is shown that the economic impact of mobile phones is significantly higher than the direct value to the mobile operators. This is because of a number of factors, but predominantly because of the productivity gains generated by users of mobile phones. The report then concludes that governments and regulatory bodies could amplify these gains by simplifying rules and deploying strategies to smooth the roll-out of mobile phones.

This report emphasise experiences that we have in developing economies where regulatory hurdles (and lack of capital) are the two most important factor that delay the roll-out of financial services on mobile phones in developing countries. Some of the regulatory questions that we often get confronted with are the following:

• How does financial products relate to Know Your Client requirements?
• Are special reporting and documentation required?
• What are the responsibilities of the Mobile Operator? and
• Can a Mobile Operator elect to block specific services on their (regulated) network?

Resolution of some of these questions have taken so long in the past that projects sometimes stop or turn into marginal projects. It is the interest of all (including governments) that regulatory dispensations are made lighter and the deployment of mobile based solutions are made easier.

In this regard the work that CGAP and the Worldbank is doing to make recommendations to streamline the regulatory dispensations should be commended. We at Fundamo are in full support of their efforts and contribute as best we can to help establish a facilitating environment for mobile banking and services.

Co-operation or Exclusivity

Two totally different initiatives in the US this quarter related to mobile banking is of special interest. Two companies have launched (or rather announced) two initiatives that is diametrically apposed in terms of the underlying strategy.

Firethorn announced an agreement with Cingular where the Firethorn Java application will ship with every Cingular mobile phone. Revenue generated via mobile banking and payment transactions will be shared with Cingular and in turn, Cingular will effectively block (or at least make it difficult) for other suppliers downloading their own proprietary Java applications onto Cingular handsets. Firethorn is confident that they will conclude similar agreements with other mobile operators soon. This is a totally closed and proprietary approach. Will it work?

Obopay is a service provided to any person with a mobile phone. A subscriber to Obopay is able to download a Java application to any mobile phone. This enables a subscriber to transfer money from any Obopay customer to another, do some rudimentary payment and enquiry services and withdraw cash or pay (using the obopay pre-paid (debit) card) at ATM's or POS's. The importance of this approach is that it is totally "open" in the sense that it is suppose to run on any mobile operator and work on any ATM. This is of course the most logical way given what happened in the past with the Internet economy... but is it the logical way in payments and banking?

It would be interesting to be able to roll forward in time to understand which of the two approaches win, as it will tell us a lot about the power balance in mobile banking. Consumers are of course very important. It is their decisions and preferences that have catapulted small companies into the limelight in the Internet economy. But, then, the Internet is much more open than is the case with mobile (at least at this stage). Mobile operators have much more control over what happens on their handsets and their network. As a matter of fact, Cingular have indicated that they do not see their network as an "open network".

So what will happen? I believe that the role of banks, their ability to take their own decisions and stay in touch with their own clients will play a mega-role in which model wins. Not only banks per se, but also other organisations and bodies in the banking domain. It would be interesting to track what VISA, Mastercard and clearing switches (like Swift) do, as these organisations will ultimately influence who will win.

Content and Mobile Payments

Today content on mobile (ringtones, pictures, etc) are mostly paid for by utilising the billing systems of the mobile operators. This approach is probably the only mechanism that allows content providers and mobile operators to effectively collect the millions that is spent on this industry every month. Unfortunately, utilising the billing system to collect for non-telecommunications (and especially ad hoc) services leads to many problems:

• The billing systems are not effective mechanisms to collect payments. In other words it costs a lot of money to collect what is often small amounts. This is because of many factors, but primarily because of built-in distribution costs in the collection of the value in the mobile phone accounts (independant if it is pre- or pos-paid). It is expensive to collect the money in these accounts because of the established commission structures.
• Billing systems are not geared to cater for effective management of disputes. This also means that it is expensive to deal with complaints for content services that consumers lodge.
• Payment activation by the consumer is also often cumbersome and often different from one service to another. (For instance, send the following code via SMS to the following number, or enter the code that we sent you via SMS on a WAP session or the Internet, etc etc.)

This situation will get more complex and problematic in future as more sophisticated content services are being invented and delivered to subscribers. Mobile TV and other services based on broadband is a case in point.

Mobile payment schema's offer elegant solutions to solve the problems listed above. This is because it is possible to provide much more cost-effective payment solutions as well as proven rigid and intuitive support for disputes and complaints. The ability to give immediate feedback on payment activity also adds to cost-reduction and customer satisfaction.

GCash in other Markets?

I have absolute respect for the results that have been achieved by dedicated people in the Philippines to deploy excellent solutions. In many ways the solutions deployed by Smart Communications (Smartmoney) and Globe (GCash) have set benchmarks for other organisations to follow. Recently, GCash started a concerted drive to bring GCash in the same or similar format to other markets. I believe that the implications and challenges associated with this should be highlighted.

GCash is a Structured SMS, predominantly closed payment solution, focused on a large under, or un-banked population in the Philipines. It provides for the creation of an electronic wallet that some-one can access with their cellphone by sending "code-words" in open SMS commands. The solutions security is based on a "M-PIN" (that is often stored on the cellphone in the open), limits in terms of transactions and the local Philippine Identity document. The operation in the Philippines is connected via participating banks in many other countries. These banks provide a mechanism for people in these countries to send money to electronic wallets in the Philippines. It must be noted that these banks do not operate e-wallets, nor are the G-cash functionality available in these countries.

The problem with proposals to deploy GCash in other countries (as it was done in the Philippines) are the following, and prospective clients/partners, should consider these carefully prior to engaging with Globe:

Regulatory complexities
The GCash deployment as is currently deployed operates under a special Central Bank dispensation (resolution 116 of 2005). Although the Central Bank of the Philippines should be applauded in giving the regulatory backing for a very good solution, this is not a given in other countries. As a matter of fact, it is most likely that this dispensation would not be given in many countries as the situation is totally different from one country to another. In regulating banking type solutions, a Central Bank should consider specific market realities, the potential risk, impact on other players etc. To assume that, because the Central Bank of the Philippines have allowed a GCash solution, other Central Banks would do the same, is a big folly. One should also take cognisance of the role, strength and maturity of banks in other markets and their right to objecting in other markets.

The role of banks (and Credit Card Associations)
The relative strengths and ability to innovate of banks in relation to mobile operators differ significantly from one country to another. The Philippine market with two very strong and innovative mobile operators is not a blueprint for every market. As a matter of fact, this is probably quite unique. It is our experience that one should consider a total eco-system of payments when deploying mobile banking. Banks in general will not allow a Mobile Operator to deploy a GCash type solution without a strong (and often effective) reaction. Participation by banks to send money to GCash in the Philippines should however be supported and banks should consider participating and assisting GCash in this way. (This should not be confused with deploying a GCash type solution in country)

Support considerations

It has been shown over and over again that remote support of technology solutions is something totally different to operating a solution in country. The fact that GCash is being operated successfully in the Philippines does not mean that it can be replicated into another country. As a matter of fact this is highly unlikely. The skills required to support and maintain multiple different technology solutions, in different time-zones with different languages, require a totally different organisation, set-up, managed and organised in a totally different way. We at Fundamo for instance, have well defined support roles, service levels measurements and escalation mechanisms in place. The version management of our software is carefully documented and controlled so as to ensure that we know exactly which version of which module is in production with which client. Evaluating operational excellence does not say anything about ability to provide technical support.

Security dispensations
It is unlikely that the security dispensation deployed at GCash will be acceptable to other markets (and specifically to mature banks). The fact that the M-PIN remains resident on the phone after the SMS has been sent, that the M-PIN is often in the clear will not be acceptable to many banks. Security management that is heavily dependant on the availability of a general Identity Document can also not be deployed in many countries where this is not the case.

Consumer behaviour
Philipino’s are famous for their SMS ability. Manila is often referred to as the SMS-capital of the world. The willingness and ease with which Philipino’s adopted a keyword paradigm based on open SMS’s for mobile payments will not necessarily be replicated in other markets. It is our experience that (especially when payments and money are involved) that consumers requires usability one level up from SMS’s. Prompt’s like “Are you sure”, more intuitive inputs and online support (like “invalid account number”) are critical to ensure adequate adoption. Porting a solution that works in the Philippines “as-is” without due consideration of consumer behaviour cannot be recommended.

Even if a client is interested in deploying a GCash like solution (e-Wallet, with an exemption from the Central Bank), a solution provider should be used with a track record in deploying solutions in different countries and time-zones. We at Fundamo have relevant expertise, an understanding of different behaviour in many countries and the ability to deploy legal solutions given different central bank dispensations. It is important to deploy mobile banking solutions with a proper understanding of local realities as well as what is possible with technology.

The Economics of Mobile Banking

The truth of the matter is that mobile banking can only be successful if it makes business sense in the long run, and that means business sense for most (or all) stakeholders. Obviously this is only going to be possible if mobile banking can lead to more efficiencies that can be translated into direct benefits. Fortunately (for people like me working on mobile banking solutions) improvements in efficiencies are easy to demonstrate: replacement of expensive cash systems, improvements in back office processes, removal of the constraints of time and place (meaning people don't have to travel and stand in queues) etc. All of these things lead to direct benefits to participants in the mobile banking eco-system.

The challenge is is two-fold: To demonstrate this to potential investors in mobile banking solutions and to ensure that the ultimate solution does not have an economic barrier to one of the stakeholders:

Demonstrate the benefits
It is important to be able to build suitable business models to demonstrate that a positive business case exists. We at Fundamo have refined our approach to this having worked in many markets and different realities. We have build powerful business modeling tools and have learned that models should take cognisance of the different realities from one country to another. They key is to start with the different sources of revenue to prospective investors. These are typically the following: subscription, transaction fees, treasury benefits, interchange fees, commissions and cost savings. The contribution of each differs significantly from one scenario to another.

Ensure all participants benefit
I have seen other solution providers in this industry making fatal mistakes by deploying solutions with impossible cost barriers. These barriers implies that it is impossible for one of the participants (say for instance the mobile operator) to support the initiative in the long run. In some instances it is assumed that the subscriber would be prepared to pay more for almost the same service. It is therefor important to evaluate the proposed mobile banking solution from the perspective of all participants in the solutions eco-system. Every-one should get a slice of the revenue or benefits, enough so as to entice them to make behaviour changes.

Regulatory considerations

Let us agree that, even though some of the functions are very similar to other types of banking, mobile banking is different. For a start this is the only type of banking where you can enter your own PIN on your own secure device. It is the only type of banking where you can be informed of banking transactions and be asked to confirm actions at any time or place in the world, providing you have cellphone reception.


The question frequently asked is what is the regulatory implications of all of this? or.. does it impact regulatory considerations at all? These are very important questions and should be properly resolved prior to deploying any solution. It is far better to ensure Central Bank approval prior to launch than having to suspend a product launched in haste in order to get the regulatory dispensation in place. This is especially embarrassing when the product is particularly successful.


In considering regulatory issues four areas are important:

Deposit taking

The basis of banking anywhere in the world is the management of systemic risk. Central banks are primarily concerned of situations where an institution holds money on behalf of some-one else and then is not capable of repayment if required. Organisations that take deposits from consumers and hold it on their behalf forms the basis of banking and is carefully controlled. These organisations are usually called banks and must conform to Central bank's regulations (like strict reporting and capital adequacy considerations). When deploying mobile banking solutions the regulator must be consulted especially in instances where a wallet, or pseudo bank account is created or even in instances where clearing is a delayed process.

Know your customer (KYC)

One of the most difficult problems to solve in the provision of entry-level banking to low income people is the disproportional high cost of opening a bank account. Some of the regulatory prescriptions regarding KYC, if implemented according to the letter of the law, often kills the business case. It is important to consider the characteristics of the phone, the objective of the service and special dispensations often available in banking law to solve this problem in a legal way. The registration process and take-up procedure in many mobile banking solutions often contravene regulatory prescriptions. In many cases the solutions had to be suspended in others the Central bank accommodated solution providers by making small modifications to the rules. We at Fundamo are of the opinion that this work should be done prior to product launch.

Dispute management

One of the strengths of the existing banking world is the clear definition of liability. If you accepted a card payment without checking the signature, then you may be liable to refund the whole amount. Payment systems have been clearly defined to cater for situations like when your PIN has been compromised, when a card payment is accepted while the card is not present at the merchant, what happens if the terminal is not certified etc. etc. In many instances the rules usually applicable in the classic world can not be applied as is for mobile initiated transactions. Liability and dispute mechanisms must be re-developed, tested and then applied. These rules should conform to laws and existing relationships between banks and clients. It is not trivial to adjust these rules for mobile payments/banking, but critical to ensure that disputes can be managed accurately.

Clearing and settlement

Many countries have promulgated advanced electronic payment laws. These laws prescribe regulations regarding the clearing and settlement of transactions between banks. When implementing mobile banking solutions, it is critical to consider these rules carefully. Considerations should be given to the legal implications of aggregated settlement and/or nett settlement designs. The need to be a member of or even the establishment of ACH's must be considered carefully.


Regulatory considerations is not trivial and differs from one country to another. It is best to contract experts in this space when deploying mobile banking solutions. The small additional cost is not even closely comparable with the potential risk and loss of income that may accrue to a customer if regulatory mistakes are made.

Back Office

Much thought is being given on how an end-user will interact with a mobile banking system. Many a debate hinges on the channel required, how the system will be distributed and how the functionality would work. What is sadly lacking though, is a quality debate on what happens in the back. This is often the most important element in insuring a workable (and legal) deployment - one that can be backed-up by reputable companies and that can deliver sustainable solutions to customers.

In evaluating back office functionality, a number of factors should be considered without which a solution would not be viable. We at Fundamo and our partners pride ourselves in our experience in many of these aspects. It is critical to work with experienced professionals to ensure that a sound, auditable and legal service is delivered to end customers. Operators should select solution providers with suitable experience and systems that are able to provide solutions that can be deployed in commercially viable instances:

Integration considerations
Unfortunately no solution is an island, and neither can mobile banking be deployed without due consideration of many different integrations that can be required. Some of the key integrations that are often required are: integration to existing bank accounts or credit cards, integration to clearing streams or switches, integration into infrastructure (like ATM's or POS's), integration into mobile infrastructure and integration into third party service providers (like bill providers or ticket vendors). Each of these integrations are often complex on their own, but to ensure a consistent integration architecture can be quite challenging. Fundamo technology ships with many pre-packaged integration tools.

Regulatory
Banking laws are different from one country to another and are often strictly enforced. A keen understanding of the implications and the options possible to cater for deposit taking, KYC and conformance to clearing and settlement regulations are important. Some of the deployments that we have been involved with can be quite challenging as one will have to consider novel schema's like push clearing and aggregated settlement. In instances where deployments span more than one regulatory domains (like in the case of money transfers), regulatory conformance is even more difficult.

Scalability and Recovery after disruptions
The banking world and telecommunications are very different in many ways. The typical transaction volumes experienced in the telecommunication industry is of an order of magnitude bigger than what is typically expected in banking. This in itself is a major challenge. It is just not possible to plug a phone into a banking system. This is almost like connecting a fire hydrant to a hosepipe. Something is going to break somewhere. The design required to ensure that transaction peaks can be managed should be built into the system from the start, but more important, functionality and capability to deal with disruptions and to be able to recover from disruptions where tens of thousands of pending mobile payment transactions must be resolved should be available.

Support for administrative staff
Back office business processes must be supplied with a working system to ensure an effective deployment. Administrative staff must have the ability to authenticate a customer (in a call center environment) and must have the ability to serve his/her requests. Financial staff must be able to evaluate performance, profitability and be able to post journals or raise interest or subscription fees (if applicable). All of this must be done in such a way that fraud is limited by means of role management and security mechanisms like dual authorisation etc. Systems without support for functionality like this is just not good enough. Systems should also generate suitable audit trails.

Commercial support
The importance of billing engines for mobile banking is often ignored. I have seen production deployments that do not have the ability to charge the customer (or merchant) for transactions that is being performed on the system. Capability like fee management, risk management and least cost management are critical to ensure a successful commercial deployment of a mobile banking system

The Mobile Banking Concept

The lifespan of all good ideas can be broken into five phases: concept, prototype, pilot, pre-production, commercial deployment. Few ideas ever reach the stage of commercial deployment, because they are just not viable, or have been ill conceived or badly deployed. For some or other reason, mobile banking has been over-saturated with concepts and to some degree with prototypes. The idea of utilising the phone for financial transactions are so obvious that every man and his dog have developed a new concept or have submitted a patent somewhere. Everyone of them believing that they have stumbled on the ultimate approach.

The reality is that very few of these ever progress past the rudimentary prototype stage. And it is actually quite easy to demonstrate simple mobile banking functionality in a prototype environment. Some of the challenges that often have not even been identified and hence solved are issues related to integration, regulatory/legal and usability. These are sometimes addressed in the few prototypes that migrate to pilot.

A pilot usually consists of a few hundred, maybe thousands of subscribers performing transactions in a controlled environment with limited functionality. Even if pilots work, they often don't address important aspects like scalability and system responses to unpredicted actions or break-downs. What happens in the case of transactions that have been lost and how does the system respond to situations where a component is not available. Important legal aspects are also often not addressed yet at this stage. Pilots seldom uncovers the real system challenges and at best highlights key elements regarding user experience.

During the pre-production stage business processes and system reliability and robustness should be attended to. Many different business processes are required if a system is to be deployed in a production environment. This should include registration, dispute resolutions, service activation to name only a few. In examples that we have seen in the market some deployments have neglected key processes leading to very difficult deployments and disillusioned clients. What looked easy during pilot now turns out to be a nightmare of realities.

It is only when a solution is deployed commercially that they most important element of any idea is tested: Can it make money? Mobile banking solutions that are not profitable will fail ultimately. An this is where we at Fundamo can really contribute to making a difference in deploying successful mobile payment/banking solutions. We have seen what works and what does not. We have built powerful business modeling tools and have helped many customers to culminate with commercially successful deployments of novel ideas. We have seen many competing products fail because they were not commercially viable.

Why SIM based solutions are best for Mobile Banking

The matter of empowering the Bottom of the Pyramid is a challenge that many have attempted. We at Fundamo have been working on this challenge for the best part of ten years and you would agree with me, that nobody is a better teacher than experience. We deployed the first mobile payment solution on a SIM card during 1999 and have since helped many mobile operators and banks to enter the exciting world of mobile payments. Our technology has been deployed on most major networks in Africa and further afield.

Our technology and experience spans many different channels (ranging from simple SMS and USSD, to advanced deployments utilising Java and Internet Chat protocols), but by far our most popular solutions run on SIM cards. It is no doubt the best way to deploy financial services on mobile. We have a close working relationship with Gemalto in this regard, but our technology have been deployed on almost all serious SIM card manufacturers.

So why is SIM cards so important for mobile banking:

Ease of Use

The problem with our modern life is that we have to remember such a lot of things. Even if information is stored on a phone, one still needs to remember the name that it was stored under. One thing that I do remember is the PIN that I unlock my life with. If you cannot remember a PIN you are quite dead in the modern world, but you don’t have to remember much more.

Yet, many mobile payment solutions are based on remembering numbers to call or send Text’s to. One has to remember special acronyms and error codes, or then you could do with a quick-reference guide that you have to remember where you left it. Mobile payment solutions based on for instance USSD suffer other usability problems. For instance, the application cannot set an input field for numeric input only, or awkward key-strokes, like hit “YES” first before you enter info and then “SEND”. Java is pretty user-friendly, too.

SIM based solutions are by far the most user-friendly deployments. Our customers that ship mobile payment solutions on SIM cards report that between 80 and 100% of subscribers try the service, without any training or quick reference guides. It is intuitive, conforms to the phone paradigm that consumers are used to and pre-empt the consumer’s behaviors. I would say quite safely that SIM card based solutions score better than any other channel on the usability stakes.

Cost
I am thinking about this problem from a GSM operator perspective. What is the total cost of ownership for running a mobile payment solution for a mobile operator? Of course, a mobile operator could charge it at what-ever price they want – could even give it away for free for that matter, but it is important to look at the intrinsic cost to understand the profitability and business case.

• How easy is it to deploy the solution and what is the cost associated with this. Well, it is pretty expensive for any of the deployments, considering infrastructure that must be deployed. Java requires a lot of development to make it accessible on all phones on the network and USSD and SIM require back-office infrastructure, so pretty much similar I would say. I assume that the operator will be distributing SIM cards anyway, so I am not counting the cost of SIM cards. But if you do, this would increase the cost of a SIM based solution.
• Once again, I would say that Java and SIM are similar in the cost to transact. Java would probably run on GPRS connections and this is very low cost to the operator. SIM applications typically run SMS classII, but can also utilise GPRS and the cost is therefor similar. USSD on the other hand, hoard a voice channel for the duration of the transaction time (from base station to IN platform), and this is expensive, because one less voice call can be made.
• The maintenance of Java is extremely expensive. To ensure that the Java applet is compatible with all (and all new) handsets, can be quite expensive. USSD’s advantage is one just need to make changes on the back-office, whereas SIM based solutions will require OTA functionality if changes are to be deployed.
• The most expensive element is the cost of scaling. The problem with USSD (because it is a session based solution), is that it is expensive to scale. At a critical stage of increased usage USSD will fail unpredictably, because it is not possible to implement any queuing capability.

Security
Some people have told me that one does not need that high level of security and that good-enough security is, well.. “good enough”. I think the question is then, what is good enough? I thought a good indication of what is deemed to be good enough is a statement by the Federal Financial Institutions Examinations Council of the United States. All banks in the US must conform to two-factor authentication by December 2006 for electronic financial transactions.

Most banking solutions utilise at least two factors to ensure adequate levels of security. One of the best examples is the EMV standard, currently being rolled out globally by the large credit card associations. This is based on a smartcard (something you have”) and a PIN (“something you know”). It stands to reason that one should expect the same level of security to be deployed in mobile payments. Anything just based on a UserID and Password is just not acceptable. For a start, SIM-based solutions (if implemented correctly) is one of the best examples of dual-factor authentication. It utilises cryptographic keys in the same way that EMV does. Definitely score highest.

USSD transactions can (at best look like dual authentication) and suffers many security short-comings. It is literally a single-factor deployment with big holes for “man-in-the-middle” attacks. Java applications can digitally be signed and could mimic dual factor solution, but is an ideal candidate for “Trojan horse” attacks.

Ubiquity
This is probably the most contentious topic. It is correct to understand that USSD is available on more phones. Although one should recognise that not all networks support USSD Type II (which is often required for mobile banking application support).

Java phones are not yet that widely distributed (especially in developing markets) and a Java application, running on one phone is often not portable to another. That brings us to SIM-applications. SIM solutions require a SIM card capacity of at least 32k, with appropriate keys loaded. The penetration of suitable SIM cards is higher in some markets than in others, but surprisingly high in many markets. In markets that we have worked in (Nigeria, South Africa and Middle East), the penetration of suitable SIM cards is closing in on 100%. Consider the massive churning in most markets and the rate at which SIM’s are replaced (especially in pre-paid markets). Within a few months of a firm decision to distribute suitable SIM cards, operators will have a sizable market of SIM cards.

Strategy
It is difficult to understand specifically what is going to happen in the future, but one thing we know about GSM: we are going to have SIM cards. SIM cards will be different with more capacity and higher transport protocols, but they will still bear the identification of mobile telephony. It would be easier to store information on High Capacity (HC) SIM cards, more complex routines would be able to run on the platform and communication to the SIM card from the network would be easier. As a matter of fact, the Java functionality and SIM capabilities will merge with deployment of the JSR188 specifications. Deployments utilising NFC technology will require the flexibility that SIM card-based systems require. As a matter of fact, when Visa piloted their NFC solution with Maxis in Malaysia, a critical component of the solution was a SIM-based application on the phone.

New SIM cards will enable more secure solutions with high likelihood of deploying PKI and Sandbox concepts as a given. This will enable much, much more advanced solutions than is currently possible or that can even be envisaged. Mobile Operators with the vision to embrace SIM technology, will be so much better positioned to experience the benefits.

USSD technology, though important will probably not develop further. The management of dynamic menus and handsets that operate more effectively with USSD commands will be developed, but it is unlikely that any strategic advances will benefit USSD-based transactional solutions. As far as strategy is concerned USSD is a cul de sac.

The question to ask (I believe) is: In a world of interoperability where one operator will allow another to send money to them (and vise versa), what should the minimum requirement be? Would you be happy to accept the risk of a lower security deployment at another mobile operator? Or should the industry decide on what is acceptable risks?

The important elements of Mbanking

What is important about mobile banking? What makes it successful? How do you judge failures? These are all critical questions in approaching mobile banking projects and deployments. To answer any of the above questions, first answer the following question: "Is the service being used?" If people are using the system (preferably voluntarily), it is most probably addressing a need or making life easier for the subscriber and this is the single most important driver for a successful deployment of mobile banking.

So what make people use mobile banking? Not a lot of people around that can answer this question as not a lot of people have got people to use the service.

First of all the service must address a specific need - a reason for using the system (preferably regularly). This is not as easy as it seems, because it will have to change behaviour and people don't do this easily. Furthermore the reason is different for different communities and target markets. It takes skill and insight to get this right.

Second, it must be easy and fun to use. It must be intuitive and work... every time.

and Thirdly, consumers must feel that the solution can be trusted and is secure.When it gets to money, the average consumer is quite conservative. It is not about how secure the system is, but rather how secure it is perceived to be.