1. Mobile Wallets
Alternative to savings accounts ?
September 2012

2. Mobile phones can do almost anything these
days
"I'm amazed at all the cool stuff I can do with my
new phone. Yesterday I sent a photo to my mom,
bought some music, watched a movie, trimmed
my sideburns and neutered my cat!"
Mobile Wallets FINAL.pptx 1

3. How many of you have received SMS alerts
from your bank on your phone?
How many of you have a smart feature
phone?
How many of you have a mobile banking
application installed on your phone?
How many on you are aware of USSD based
mobile services?
How many of you have transferred money
using mobile banking?
Mobile Wallets FINAL.pptx 2

4. Huge untapped potential for MFS in India
Fundamental drivers for adoption Transactions on mobile channel
of mobile payments in place remain small
% % '000 cr
1 FY 12
100 72 100 % of HHs earning
Younger 54 7,100
> INR 1.5 lac pa 7,077.5
Richer 50
44 46 % of popln
Demographic 0 0
b/w 20-50 yrs of age
201 202
2 0
2 # / 100 150.1
150
High 200
119
Mobile 83
100
# of subscribers
Penetration 0 100
per 100 pop 83.4
201 202
2 0
3 % of txns
50
Prevalence 100
46 e-payments
of Paper 50 83
Payments 54 17 paper payments 1.8
0 0
201 202 NEF POS ECS Mobile
2 0 T (credit & (Debit)
Source: RBI Data, Euromonitor , EIU, BCG Payments Model debit)
Mobile Wallets FINAL.pptx 3

5. One reason : lack of consumer awareness
Penetration far lower than other Lack of awareness about channel /
payment channels utility key reasons
% of customers who have used the channel
at-least once in past 1 year % Reasons for not using mobile channel by non-users
100 96 96 30
92 Private Sector Banks 27
26
Public Sector Banks
79
80
20
60 17
38 38 12
40
10
29 28 10
25 26
22 7
19
20
11
7
0 0
Branch ATM Debit Mobile Call Internet Mobile Don’t Not aware In- Do not Safety Hidden
Card Banking center Banking Banking feel the convenienceknow how concerns charges /
(SMS) (Non need to to use High fees
SMS)
Reasons
Channels
Note: Sample Size : ~13,900 customers
Source: FIBAC survey 2012
Mobile Wallets FINAL.pptx 4

6. Despite readiness, low adoption vs other
nations
India scores high on readiness for Significant gap between potential and
mobile financial services adoption
Market Environment High Readiness Adoption & Availability
2 2
Phillipines Kenya
Brazil Pakistan Tanzania Phillipines
1 Kenya India 1 Ghana
Indonesia
South Africa Uganda South Africa
0 0 Malaysia Indonesia
Bangladesh Uganda Mexico Malaysia
Afghanistan Nigeria Bangladesh Pakistan
Argentina Nigeria India
-1 Tanzania -1
Ghana Brazil
Argentina
-2 -2
Afghanistan
-3 -3
-3 -2 -1 0 1 2 -3 -2 -1 0 1 2
Low Readiness Institutional Environment Market Environment
Note: Country scores are based on the difference of the unweighted average country result on each of pillars included in a specific environment and the total
sample mean for that environment. The difference is expressed as the number of standard deviations of a country score from the mean.
Note: "Adoption and Availability" metric includes measures of adoption of MFS services, the diversity of mobile payments services and the diversity of other
mobile financial services; "Market Environment" refers to combination of "Market Competitiveness" (includes measure of financial sector and telecom sector
competitiveness and innovation) and "Market Catalysts" (includes govt leadership, data collecting and monitoring ); "Institutional Environment " refers to a
combination of "Regulatory Proportionality" (Financial sector, telecom sector and MFS regulation) and "Consumer Protection" (includes regulation and
enforcement and administration)
Source: WEF Mobile Financial Services Development Report 2011 (in collaboration with BCG)
Mobile Wallets FINAL.pptx 5

7. Mobile financial services alive with
innovation
Mobile Wallets FINAL.pptx 6

8. Broadly, three categories of innovation
1 Mobile Banking 2 Mobile Wallets 3 Mobile POS
• Channel for banked • Payments channel • Low cost card readers
customers independent of bank a/c attached to mobile
phone
• Mobile app for smart • Store of value / card
phones; USSD / information • Card based POS at
BREW / SMS small merchants;
• POS, fund transfer, bill home delivery
• All use cases : fund payments vendors
transfer, remittance,
billpay, balances, etc
Mobile Wallets FINAL.pptx 7

9. 70% spends happen through banked
customers
62% of all households in India are Banked households contribute to
banked today more than 70% of all spends
# of HHs (mn) % of Consumption Spend
150 40
Unbanked 47% Unbanked HHs
Banked Banked HHs 32%
111
73% 30
9% 26%
100 24%
77 59 3%
74% 20 19%
14%
21 5%
50 88% 38
10 21% 23%
10
16 56 52 14% 12%
2 28
0
14 0
Affluent Aspirer Next Billion Strugglers Affluent Aspirer Next Billion Strugglers
% Banked
A well executed mobile banking platform can address a large
proportion of consumption spend in India
Mobile Wallets FINAL.pptx 8

10. Mobile wallet – primarily targeted at
unbanked
Several mobile wallets launched
in India and abroad
• Remittance solution -
saves time and Examples from India
money
• Savings instrument
Unbanked
Customers
Examples from other geographies
• Pay using mobile
wallets vs cash / card
• Ring fence account Kenya
Uganda Philippines
for unsafe POS
Banked
Customers
Mobile Wallets FINAL.pptx 9

11. Three models have been tried globally
Telco Led Collaborative Bank Led
Kenya South Africa Pakistan
Philippines South Africa
Kenya
Philippines Philippines
• Distribution through • Distribution through • Distribution led by
telco network telco network bank
• Deposits held in • Deposits held in banks • Deposits held by
prepaid account banks
• Branding either joint or
issued by telco
with bank assuming • Bank's brand
• Telco's brand minor role
• Telco agnostic
Mobile Wallets FINAL.pptx 10

12. Making wallets work has not been easy
100+ mobile money services
operational / being launched Few have been successful
No.of mobile money services Successful
150
119 Kenya Uganda South Africa
6 0
9
100
26 Partially Successful
33
Tanzania Pakistan Philippines
50
45
Unsuccessful
0
US South Africa India Haiti
Africa APA LA ME E. Total
A
C C Eur
Success of mobile money undertaking highly dependent on
environment, value proposition and execution strategy
Source: Gartner, Company data, BCG analysis
Mobile Wallets FINAL.pptx 11

13. Will mobile wallet be the next big thing in
India?
A solution primarily for the unbanked or for
1 Target Segment
existing banked customers as well ?
Are banks best placed to launch wallets ?
2 Market Structure Would the bank-telco collaborative model take off?
Will it change if cash-out is allowed for telcos?
3 Regulation Does current regulation on KYC norms need to
adapt to the reality of mobile wallets ?
Should USSD be made ubiquitous, will it help?
4 Technology
Are there security concerns ?
Will mobile wallets be a tool primarily for
5 Use Cases
remittance or for other payments as well?
How will wallet providers build distribution and
6 Distribution
awareness for mass adoption ?
Mobile Wallets FINAL.pptx 12

14. We have a tendency to underestimate future
"I think there is a world market
for maybe 5 computers"
Thomas Watson, IBM chairman
"640KB ought to be enough for
anybody"
Attributed to Bill Gates
Mobile Wallets FINAL.pptx 13

15. Unused slides

16. Mobile banking - channel for banked
customers
Can address all mobile payment Can serve a large existing population
needs for banked users leveraging different tech platforms
1 # of HHs (mn)
Fund Transfer 150
Unbanked
Banked 111
2
Remittance 100
77 59
21
3
50 38
Bill Payments 10
16 56 52
14 28
4 0
Ticketing Affluent Aspirer Next Billion Strugglers
5
App
Balance Enquiry USSD / BREW / SMS based
Based
Source: Euromonitor, BCG Indian Consumer Survey December 2010
Mobile Wallets FINAL.pptx 15