Held in Ho Chi Minh City, Vietnam, the ASEAN Bank Forum 2012 aimed to provide market insights on how retail banks can engage and retain customers. The forum is an annual event that offers an interactive platform for bankers and technology corporations to discuss and evaluate growth opportunities in the banking sector. Jeffrey Bahar, Deputy Chief Executive Officer of Spire Research and Consulting, was invited to grace the event as a keynote speaker.
Read more about the event coverage here:
http://www.spireresearch.com/newsroom/events/spire-joins-asean-bank-forum-2012-as-keynote-speaker/
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121204_ASEAN Bank Forum 2012_A Successful Model of Mobile Financial Service (MFS) as Banking e-Channel for Emerging Markets
1. A Successful Model of Mobile
Financial Service (MFS) as Banking
e-Channel for Emerging Markets
Prepared for: ASEAN Banker Forum – HCMC, Vietnam
Prepared by: Spire Research and Consulting
Date: 5 December 2012
2. Agenda
Topic Slide
Mobile Market Situation 3
Mobile Banking Readiness 5
What is Mobile Financial Services (MFS)? 7
Mobile Financial Service:
The current development, road ahead, various 8
eco-system, Country Specifics
Mobile Financial Service:
12
In Summary
3. Mobile Market Situation (1)
Asia Pacific Trends and Developments
Growth Factors 4500 98%
101%
94%
Increased affordability of handsets 87%
4000 Pentration…
79%
3500
Cost-effective pre-paid services 68%
3000
56%
Investment in mobile network 2500
47%
infrastructure (3G, 4G rollouts) 2000 37% 3858 4012
3649
3372
1500 3019
Reduction in mobile usage prices 2588
1000 2116
(voice and data service) 1376
1727
500
Limited fixed line infrastructure has 0
established mobile as a primary 2007 2008 2009 2010 2011 2012 2013 2014 2015
alternative Asia Pacific Connections (million) and Penetration Rate
World mobile phone penetration: ~61%
Asia Pacific penetration is ~79%
Source: ‘Asia Pacific Mobile Observatory 2011’ By ATKearney, World Bank database 2011
4. Mobile Market Situation (2)
Figures: Vietnam vs. Asia Pacific Countries
*All
currency values are in USD CHINA
Mobile penetration rate standardized as of 2011 GDP: 7.29 trillion
GDP/ capita: 5,430 SOUTH KOREA
Population: 1.3 billion GDP: 1.1 trillion
Mobile subscribers: 1.02 B GDP/ capita: 22,424
Mobile Penetration: 79% Population: 49.7 million
Mobile subscribers: 52.7M
PAKISTAN Mobile Penetration: 106%
GDP: 0.21 trillion VIETNAM
GDP/ capita: 1,194
Population: 0.17 billion GDP: 0.12 trillion
Mobile Subscribers: 120M GDP/ capita: 1,411 JAPAN
Mobile Penetration: 71% Population: 87.84 million GDP: 5.86 trillion
Mobile subscribers: 112 M GDP/ capita: 45,903
Population: 0.12 billion
INDIA Mobile Penetration: 126% Mobile subscribers: 260M
GDP: 1.8 trillion Mobile Penetration: 96%
GDP/ capita: 1,489 THAILAND
Population: 1.2 billion GDP: 0.34 trillion
Mobile Subscribers:679.05M GDP/ capita: 4,972 PHILIPPINES
Mobile Penetration: 61% Population: 69 million GDP: 0.22 trillion
Mobile subscribers: 79M GDP/ capita: 2,370
(as in 2012) Population: 94.8 million
Mobile subscribers: 86M
MALAYSIA Mobile Penetration: 114%
Mobile Penetration: 94%
GDP: 0.27 trillion
SINGAPORE
GDP/ capita: 9,656 INDONESIA
GDP: 0.23 trillion
Population: 28 million GDP: 0.84 trillion
GDP/ capita: 60,500
Mobile subscribers: 30M GDP/ capita: 3,495
Population: 5.3 million
Mobile Penetration: 120% Population: 0.24 billion
Mobile subscribers: 6.5M
Mobile subscribers: 260M
Mobile Penetration: 196%
Mobile Penetration: 88%
5. Mobile Banking Readiness (1)
Landscape of Industry Competitiveness
0.6
Moderate competitiveness
Highly
Competitive
0.4
0.4
0.345 0.366
0.32
0.293
0.2
0.187
0
India Indonesia Vietnam Malaysia Philippines Singapore
Market Competitiveness Index (HHI Score)
Capacity and viability of investment in an mobile-banking business depends on the market
competitiveness
Monopolistic market can be conducive to m-money business, needs larger investments
Competitive market needs to address the issue of interoperability to create economies of
scale
Source: Mobile Financial Services Development Report 2011-World Economic Forum, MasterCard Mobile Readiness Study, Bloomberg & Google Analytics, ‘The
state of the internet’ Akamai Technologies
6. Mobile Banking Readiness (2)
Access to Financial Services
Access to Mobile and Banking Services by Country Higher needs for access to
250% financial services:
Singapore Pakistan, Indonesia, Vietnam
200%
Mobile Penetration
India, Philippines
150% Vietnam Malaysia Higher mobile penetration
South Korea
Indonesia Philippines allows opportunities for mobile
100%
India Thailand banking
China Japan
50%
Pakistan
Vietnam has high financial literacy
and mobile penetration, but low
0%
0% 20% 40% 60% 80% 100% 120% access to finance =
Banking Penetration OPPORTUNITY!
Indicators India Indonesia Philippines Malaysia Singapore Vietnam
Financial Literacy 55-60% 65-70% 65-70% 65-70% 70-75% 70-75%
ATMs per million 7 14 14 54 58 18
people
Payment Cards per
67 118 242 1,063 1,887 21
million peopl e
Composite access to
48% 40% 26% 57% High Low
financial services
Source: ‘Asia Pacific Mobile Observatory 2011’ By ATKearney, World Bank database 2011, MasterCard Mobile Readiness Study
7. What is Mobile Financial Service (MFS)?
Connecting Consumers Financially Through Mobile
Build Product Idea, build Product Concept and build Product Image/Branding
Generally done over-the-counter, in long queues
India State Bank provides the option of bill payments
Airtime recharge on
like electricity etc. on mobile phones after registering Bill & mobile phones is
for the service at the bank branch. Financial provided by every MNO
Payment as the basic service for
Account balance mobile users.
enquiry, balance transfers, mini- Banking Airtime
statements and cheque book Services Recharge
request etc.
High domestic and
Retail sector experiences the cross-border
maximum exchange of cash
migration indicates
or card transactions.
potential demand
Today, mobile money as a
substitute has huge potential. Retail/P2B P2P Example: Globe in
Payment Transfer Philippines allow
Example: Telkomsel in cross-border
Indonesia provide e-wallet transactions
service without bank
involvement Social
Public Value proposition is to provide
Security
Services cost-effective, time-saving
/G2P
Increasing need for faster services Access and structured service to
Payment
like transport creates a massive demand. economically underprivileged
Government’s initiatives to provide NFC
enabled transport access could be Example: Philippines
banked on like in Singapore. government payments
8. Mobile Financial Service
The Current Development
Criteria India Indonesia Malaysia Philippines Singapore Vietnam
Bill Payments
P2P Transfers
Banking Services
G2P Transfers
Public Service Access
P2B Payments
Airtime Recharge
Philippines
Currencies of two-major mobile wallets, Smart and Globe, are not interchangeable
Mobile operators have struck deals with banks to provide micro-loans and insurance. Like Globe
Singapore
Singapore has the most development infrastructure though lack of trust among the consumers
Singapore launched the NFC tap and pay services this year on mass-scale
Malaysia
Significant improvements in contactless infrastructure like ‘Touch n go’
Western Union and Maxis collaborated to provide cross-border remittances
Though the volume of transactions is growing, margin is low
9. Mobile Financial Service
The Road Ahead
3 Phases Forward
Higher
Value
Mortgages
Private Banking
Wholesale Banking
Investment banking
Micro-insurance
Credit Cards
Consumer Lending
Saving
E-wallet accounts
Payment
Lower Remittance
Value Transfer
Now Next Near Future
Lower Risk Higher Risk
Leveraging on existing infrastructure May require infrastructure
10. Mobile Financial Service
Various Ecosystem
BANKS
End MFS MNOs
Users
ECO-
SYSTEM
Regulators Agents
11. Mobile Financial Service
Country Specifics, Different Focus Areas
Country Readiness
Create convenience in the
Efficient regulatory system, consumer perception of the MFS
Focus Areas
Singapore financial system &
infrastructure
Coordinating various mobile
High mobile penetration with
payment players for more choices
high per capita consumption
Wide gap between willingness
to use and actual usage Expanding mobile payments
(other e-channels available) at POS
Country Readiness
Broaden the MFS services
Highly regulated MFS system and service access
Focus Areas
Vietnam with limited openness for
foreign investment Coordination among banks &
High mobile penetration MNOs to create better portfolios
Wide gap in rural and urban of MFS
infrastructure
Wide gap between willingness Improvement in regulations
to use and actual usage and consumer familiarity
12. Mobile Financial Service
In Summary
MFS is an alternative e-channel
for the large unbanked population Banking and
telecommunication
Banking service
regulations need
Airtime
to be aligned
recharge
Situation
Current
With increasing
Money transfers competition,
interoperability
needs to improved
in order to gain
economies of scale
MFS
High unbanked Asian countries score
population high in mobile
Low access to payment
finance Strategies readiness including
Vietnam
Competitive strategies to banks:
Differentiation, Cost leadership, Customer Segmentation
Marketing and promotion to increase familiarity and willingness to use
13. Tel: (84 8) 3521 8734
Fax: (84 8) 3521 8736
6th Floor, Phuong Tower
31C Ly Tu Trong, Ben Nghe Ward
District 1, Ho Chi Minh City, Vietnam
vn.info@spireresearch.com
www.spireresearch.com
Hinweis der Redaktion
Good Morning Ladies and Gentlemen.Coincidentally, three earlier speakers – Hung, Sin and Hori-san – cover very similar topic: Mobile Banking, or Mobile Financial Service in SPIRE’s term.Let me build a story why this Mobile Financial Service is such a ‘hot’ topic.The year end Dec is typically a period where people is making prediction on what trend will happen next year 2013.Like the fortune teller looking in the crystal ball. One interesting point of looking into the crystal ball at globaltrends.com highlighting the 10 key trends to watch in 2013. On #10 it is a bold sentence: “Who needs bank anyway? Reshaping the financial system. Look out for mobile wallets and mobile banking. That what it says. Spire Research and Consulting has the same view for ASEAN banking industry. We see the trend of launching Mobile Financial Service emerging up strongly from our bank and telco clients in Indonesia, Malaysia and throughout the region. Likewise, when talking to some of you, some of the banks in Vietnam are going into Mobile Financial Service too.
We will start our presentation with the LANDSCAPE OF MOBILE PHONE INDUSTRY in Vietnam and Asia, as the device enabler for Mobile Financial Service.We will address is the READINESS for mobile banking.Then going into more details on Mobile Financial Service – the current development, the road ahead and country specific challengesAnd then wrap up the topic with a sumary.
In Asia Pacific region, the mobile phone industry has grown tremendously reaching to 80% mobile phone penetration. This is because: The handset and mobile phone service is more affordable Technology advancement also drive down the usage cost Mobile phone has grown faster than the fixed telephone line
Mobile penetration rate in Vietnam is over 100% at 126%. This is a relatively higher percentage than your neighboring Asian countries.The absolute number of over 100 million subscribers is also an exciting number compared to 30 million in Malaysia or 70 million in Thailand.
The HHI Market Competitiveness Index reflects the competition level among the telco operators.The lower the number, the competition is higher. India and Indonesia has lower figures, the competition is fierce in India and Indonesia.With higher competition, launching Mobile Financial Service will be more challenging to be launched by operators. Vietnam is in the middle. Not too difficult, not too easy too.
High financial literacy and access to financial services could help in defining the extent of need of MFS. If the financial services through traditional modes have reached most of the population, then MFS gets positioned as a complimentary service. People can use the traditional as well as mobile services with similar ease. But when the banking is limited to a certain percentage of people, MFS provides an alternative solution to reach the untapped population. Financial literacy among people would then help in identifying the kind of services that consumer friendly.ATM and payment card users would have to made to switch to MFS. Non-users of payment cards would be less reluctant in using MFS since there is no opportunity cost for them and they have not identified the advantages of using a card.India: With low ATM and Payment cards penetration, composite access to financial services (includes services by banks, MFIs) is at 48%. Though the numbers have improved over the last 7 years with the popularity of micro-finance institutes and financial inclusion correspondents, banks still hesitate to invest in risky territories. Indonesia: It is higher than India on financial literacy but access to financial services is limited to only 40% of the population. Thus the demand for services is already there.Malaysia: Malaysia has a higher banking penetration than the other countries, except Singapore but half the mobile penetration levels. More than half the population in Malaysia has composite access to financial services. With higher access to banking services and payment card penetration relative to India, Indonesia and Philippines, it is necessary to move the card holders to mobile services.Philippines: Philippines, similar to Indonesia and Malaysia has 65-70% financial literacy rate with 27% banking penetration rate. High literacy rate combined with high mobile penetration rate allows leveraging for the absence of banking facility. Since the majority of consumers are financially aware, there awareness and needs could be met through mobile services (with 96% mobile penetration).Singapore: Singapore has the highest financial literacy rate among the five countries (higher in global ranking also).
India: Within the current framework of MFS, advanced financial services and loan payment services are not available through mobile applications (of banks as well as of MNOs/third party)Through the mobile apps for banking institutions like State Bank Freedom, only account transfer (of the same bank as well as other banks through NEFT scheme of RBI), balance inquiry, airtime top-up, bill and retail payments can be made. No financial services of bank can be performed through those applications. Mobile money transfer in allowed only for domestic transactions. International money transfer is not available.With a variety of government disbursement and payment schemes, mobile technology could become an alternate service to explore.There are tie-ups between commodity exchanges and mobile service providers for the dissemination of crop information through text messages Indonesia:At present, Indonesia provides similar mobile financial services as India. With a variety of government disbursement and payment schemes, mobile technology could become an alternate service to explore.Malaysia:Apart from bill payment, P2P transfers, basic banking services and retail payments, Malaysia offers public service access through mobile phone.There have been significant improvement in contactless infrastructure like ‘Touch n Go’ in the country.With inbound cross border remittance forming ~0.5% of the GDP, Maxis, the leading mobile operator, has tied up with western union to bank on the cross-border remittances.Philippines:Bill payments, retail payments, banking services and money transfers(including remittances)One problem that exists is the non-interchangeability of mobile wallet money. Currencies of the two major mobile wallets Globe and Smart are not interchangeable.One distinct feature of MFS in Philippines is the G2P payments. Conditional cash transfers are also made through mobile phones. Transactions are processed through Green Bank’s mobile banking facility and Globe’s GCash platform.Singapore:Singapore is the most developed in terms of MFS, it rolled out mass deployment of NFC based payment services last month.