A brief presentation made for Rabobank Groep ICT on Rabo Development partner banks and the launch of mobile banking in Zambia, Tanzania, Malawi and Rwanda (2008-2010).

1. Mobile Banking is MainstreamRabo Development : Case Studies in Mobile Banking & Payments Development A brief presentation on mobile banking and payments developments within Rabo Development (Rabobank International); as well as some case studies of how Rabobank uses lessons learned in developing countries. Dan Armstrong 02 December 2010

3. Landscape of Mobile Banking and Payments Rabobank, ABN AMRO, ING, SNS, etc. 1990-1999, continues … 2002, continues … (quite popular) IVR Banking & Payments SMS Account Activity Alerts Multi-ChannelBalance-Checking Others … Full-Service Mobile Banking Remote Payments and Electronic Wallets Mobile Contactless Payments (NFC) Java WAP STK USSD iPhone Windows Mobile 6.5/7 Samsung JET, Bada Android Etc. VISA MobileAndroid ( ?) Note: not exhaustive, there are other technologies used in the world, but these are the major ones.

5. Easy-to-use, menu-driven navigation

6. Works on every phone

7. Cumbersome

8. Bank-pushed method; normally offered for free to customers

9. Simple to understand (can be)

10. Works on every phone

11. Can be applied to many products (accounts, loans, offers, discounts, etc.)

12. No transactions or advanced features

13. Customer-pulled method

14. Simple to understand (can be)

15. Can be applied to many account types

16. Can be done via SMS, WAP, USSD or apps

17. Is a “killer app” in many regions, including Western Europe

19. Full-service = transactions, inquiries, actions, information

20. Saves trip to the ATM or bank, supports virtual channels, saves direct bank costs

21. Can be made to work on many phones, but app-based functionalities require specific phone strategy, development, costs

22. More complicated to launch and maintain, but allows for transaction charges

23. Except for mobile network operator distribution networks (M-PESA, MTN Mobile Money, ZAIN ZAP, Tigo Cash), bank wallets have enjoyed limited success world-wide

24. Some successes: Apple iTunes Store, PayPal, some Japanese products, public transportation.

25. Likely a step too far for developing (and developed?) banks, customers can directly access their bank account!

26. Card-emulation products in trial since 2004

27. Lack of mobile network operator business case (and they normally buy wholesale phones)

28. Difficulty in making a business case for a contactless phone vs. contactless cards.

29. Handset availability - there are no phones!SIM Tool Kit  Apps V1  Apps V2  USSD  WAP  etc.

30. Remote payments can take on different forms … Complicated landscape currently surrounding “remote payments”, as differentiated from “proximity payments” Online versions: Paypal, iDEAL, credit card, Facebook Payments, internet banking, etc. In the future, is the mobile phone simply a small internet device? However, different .. Security (authentication) issues User-experience issues Trust issues 2010 seems to be a “hybrid year” .. Old mobile payment models going away (SMS, WAP, OTP-only models) Clear trend towards mobile applications Increased usability of mobile banking, mobile payments, in-application payments and e-value However, standards? 3-corner model vs. 4-corner model clearly an issue .. VISA Mobile

32. Profitability for apps?

33. In-app payments?

34. Proximity payments???

35. Hardware sales, lock-in?

36. M-PESA (Kenya) a huge success, but not many other countries have had similar experiences.

37. P2P money transfer first, expansion to payments , savings accounts (MKESHO)

38. However, business goals are churn reduction / loyalty to the SIM card?

39. GCASH (Philippines) leapt from P2P money transfer for retail payments quickly.

40. Can be a strategy in countries without POS; however, is it mobile operator core business?

43. Customer Network: many of the global food companies

44. Expertise: dedicated research team (80 professionals)

45. Agri products: weather derivatives, price hedging instruments

47. Economic, political and social stability

48. Rural area and agricultural sector important for economy

49. Open for foreign investments

51. Zanaco Zambia: “One of the World's fastest economically reforming countries.” (The World bank, 2010) 40+ years of success, growth and stability, successful expansions, privatisation and IPO 450.000 customers, 1.200 employees Year-on-year profitability, K3 bln in assets, mature risk management regime. Healthy account portfolio including: Retail: account services, personal loans, e-banking, Xapit, remittances, cash services Corporate: credit facilities, e-banking, cash services, treasury and investments, trade services Successful branch network (50), automation and professional working practises, personnel and administration Transformation to modern banking tools (100 ATMs, internet banking, mobile banking) Pilot collaboration with Zampost, rolling out to ~100 new locations in 2011 Rabobank: 49% (2007) ZamPostPOS

52. Distribution : Zanaco Branch & ZampostNetwork

53. Images of Zanaco

54. Xapit Instant Banking Launched in late 2008, USSD II mobile banking & ATM card Sign-up for an account and get mobile banking and a VISA debit card in 5 minutes. 231.000 customers to-date (>50% of Zanaco base), 183.330 with a “Xapit Account”. 20+ bill payment partners, prepaid airtime, etc. June 2010 Usage: 21 transactions per month (average), 1.56 mln transactions per month total MNOs: ZAIN, MTN & CellZ (all) *444#

55. Case Study : FMB Mobile (Malawi)

56. First Merchant Bank : FMB Fast Account FMB 19 branches, corporate and retail banking, 600 employees 1/11 commercial banks in Malawi FMB Mobile / FMB Fast Account Launched summer of 2010, >40.000 new customers to-date (and new bank accounts) Successful to-date – packaging of ATM card, bank account and mobile banking functionality Includes immediate (small) balance on customers’ account, facilitating usage of the new product

57. Case Study: NMB (Tanzania)

58. NMB: National Microfinance Bank Ltd. (Tanzania) 1,8 mln customers (500k increase with the launch of mobile banking/payments) Consumer and small-business focused Dedicated to providing sustainable, viable access and direct financial services. Proud of our history of support for Tanzanians of all income levels, government and businesses. Close By Extensive (largest) network with 145 branch locations and 300+ ATMs nation-wide. Branch network designed to cover minimally 80% of Tanzanian districts. Empowering Entrepreneurs Paying special attention to micro, small/medium-sized and rural business. Tanzanian agriculture is close to NMB’s heart (KILIMO KWANZA) and they play a roll in all parts of the supply chain. Rabobank : 35% (2005) Case Study: NMB mobile (Tanzania)

61. Features the most desired consumer applications: Balance Inquiry Mini-Statement Money transfers to any NMB account TanescoLuku Prepaid Electricity Purchase Vodacom and ZAIN Prepaid Airtime Top-Up NMB Services like ATM card block, settings Works with NMB Personal Account, TPDF Account, Student Account, Wisdom Account Simply dial *155*66# to access No need to fill-in forms or visit an NMB branch to sign-up, simply dial *155*66*123# NMB mobile: Launched in August 2009 360.000+ active customers to-date Prepaid airtime, bill payment, prepaid electricity Vodacom, Zain, Tigo, Zantel (99% mobile penetration) SMS Alerts to 220.000 customers monthly June 2010: 1.86 mln transactions per month total NMB mobile NMB mobile 1. Balance Enquiry 2. Mini-Statement 3. Money Transfer 4. Prepaid Services 5. Other Services 6. Help

62. Example: Mobile Banking Menu (USSD) Your NMB account balance is: TSH 000,000.00Enter “9” to return to the main menu. NMB mobile Balance Enquiry Mini-Statement Money Transfer Bills & Payments Purchase Airtime Bank Services Help *155*66# NMB mobile Please enter your NMB mobile PIN. NMB mobile 1. Balance Enquiry 2. Mini-Statement 3. Money Transfer 4. Bills & Payments 5. Purchase Airtime 6. Bank Services 7. Help Pease enter the recipient account or phone number registered for NMB mobile that you wish to transfer money to: Enter the amount of money to be transferred: Please confirm your money transfer:TSH 000,000will be transferred to Enter “0” to confirm transfer and send. Money transfer successful!TSH 000,000was transferred to NMB mobile Ref. No: 12345678Enter “9” to return to the main menu.

64. NMB Milestones ATM Money Transfer NMB Personal Account: ATM Roll-Out Begins Internet Bankingfor Corporates NMB SMS Salary Alerts TanescoLuku Payment via ATMs Vodacom Airtime via ATMs 100 ATMs within 1 Year 2006 2007 2008 2009 NMB Business Account NMB TPDF Account NMB Bonus Account 85.000 SMS Salary Alerts Users IPO: NMB Welcomes 27.000 new Shareholders! NMB Wisdom Account (pensioners) 200 ATMs within 2 Years

65. Case Study: BPR (Rwanda)

66. BPR Mobile Banking Banque Populaire du Rwanda 1.3 mln customers, 1.400 employees, 189 locations nation-wide Rabobank: 35% (2008) BPR Mobile Banking Launched September 2010, >40.000 customers to-date (11 weeks) USSD II mobile banking & SMS Alerts Prepaid airtime, bill payments, electricity, DStv, StarTimes MTN & Tigo (90%+ mobile penetration)

67. BPR Branch Network

68. BPR’s customer survey validates the vision .. Would you trust a mobile phone for transfers and purchases? Would you like to carry less cash? Would you use a mobile phone for banking? Would you be willing to pay for it if it added value? Results: BPR Mobile Banking customer survey, April-May 2010, 7 branches & 170 customers interviewed.

69. Mobile Banking Balance Inquiry Mini-Statement Money Transfer (BPR Accounts) Prepaid Airtime MTN Tigo (pending) Bill Payments RECO Prepaid Electricity StarTimes Africa TV DStv MTN Postpaid Bill Tigo Postpaid Bill (pending) Bank Services Change BPR Mobile Banking PIN Change Language Order Cheque Book Help What can you do? Also: Free SMS Salary Alerts!

70. Customer signs-up at a connected branch at the Customer Service desk They identify themselves with their ID We validate ID and automated account We then search for the customer on the mobile banking system website (by account no.) and enter their mobile phone no. BPR Mobile Banking will send a SMS to the registered phone no. with a welcome message and an initialmobile PIN Newly registered customer will dial the USSD code and will be prompted on first logon to change their mobile PIN All accounts with the same customer ID will be automatically linked to the phone no. How will customers sign up?

73. Work out any kinks, get customer feedback

75. Soras & Sonarwa Insurance

76. Rwandatel (3rd mobile operator)

77. B2B Payments

78. Merchant PaymentsBPR Mobile Banking Roadmap Strategy Q3 2010 Q4 2010 Q1 2011 Q2 2011

79. Phase I: Planning (2 weeks, 26 April – 07 May) Phase II: Design & Architecture (2 weeks, 17 – 28 May) Phase III: Build (5 weeks, 31 May – 09 July) Phase IV: Test & Acceptance (3 weeks, 12 – 20 July) Phase V: Friendly User Test (3 weeks, 02 – 23 August) Launch (24 August, Rwanda International Trade Fair) – Sept. Live Launch Timing Friendly User Test Test & Acceptance April May June July August I III IV V II

80. BPR Mobile Roadshows & Sign-up Success

81. BPR Mobile Roadshows & Sign-up Success

82. Our partner banks have a number of approaches to products, channels, segmentation and market-engagement. However, a full “Product/Channel Management” regime is rarely in place. We have tried to implement a basic product management regime. This will support: End-to-End Product Responsibility Change Management Business Cases Formulas (e.g. using products for segments, business goals) Normalised Tariffing, Competitive Analysis In addition to the “Product Life-Cycle”, Product Management can also be used to coverthe “Customer Life-Cycle” Product & Channel Management ChannelStrategy ChannelDevelopment ChannelMarketing ChannelManagement

83. Customer “Life-Cycle” (Rabo Mobiel) Orientation Provisioning Changes / Updates Service Deactivation 2. 1. 3. 4. Service Request Customer Problems Service De-Provisioning In-Life Usage Orientation: product values & messages, marketing campaign, information to customers & branches, offer / service definition, tariffing Service Request/Provisioning: request-initiation, back-office processes & systems, customer confirmations, error handling & exception cases, reporting In-Life Usage/Changes/Updates/CS: daily usage & reporting, faults & change management, customer queries & problems Service Deactivation/De-Provisioning: customer-initiated processes, bank-initiated processes (e.g. fraud or misuse), back-office processes

84. In order to better manage some of the problems issues (e.g. processes, tariffing, development and launch of new products), partner banks should implement a “Product Lifecycle” approach. In this approach, specific products or groups of products would enjoy better: Ownership Price vs. performance analysis Development, improvements, communication, sales support KPIs / MIS on performance Product “Life-Cycle” (Zanaco Example)

85. Mobile has the capability to leap-frog internet access in Africa, and it’s working. Technology (and security) needs to be balanced with usability. Proving the products’ worth is critical in Africa. Focus on usability campaigns, promo teams, local activities Above-the-line marketing messages Continual development / channel enrichment Very cheap pricing works, but not free. Product/Channel Management is easy to implement when introducing new products and channels, and can be retroactively applied to other business areas. We can learn a lot in Western Europe from our partner banks in Africa and South America! Lessons Learned

86. Thank You!