Telekom Austria’s new bank has the existing A1 brand and
logo used for its mobile services and will operate via its phone
shops


Philippe Millet, Orange Money: not a bank, but working with BNP
in a number of west African countries



Société Générale: working with Atos Origin on mobile banking apps 
 
 
 
 

Operators, banks and specialist companies are gradually getting themselves organised to operate mobile banking services.
In the past few months France Telecom and Telecom Austria have both made significant moves towards running specialist operations. Vodafone has expanded the M-Pesa service run by its Kenyan operation Safaricom.
Banks are also spotting the opportunities. Mobile money specialist Monitise is working with Standard Chartered Bank to develop mobile services for the bank’s clients. French banking group Société Générale is working with software consultancy Atos Origin on an app — initially just for Apple iPhones and the iPod Touch — to allow customers to check their bank accounts.
Telekom Austria has launched its own Visa card to ease mobile payments for customers and is looking for growth in a market where credit cards are still a rarity. The company claims to have already won around 6% of its national credit card market with its in-house bank and it hoping to win a larger share as it moves into new market sectors.
The company set up its own bank to handle mobile payments in 2002 but in April 2010 it launched its own Visa card, which is being offered to customers through its shops.
The company set up its credit card operation because the European Union’s banking regulations mean payments can no longer be added to mobile bills, said A1 Bank’s COO, Thomas Capka.
The biggest customers are the city of Vienna, which uses mobile payments for parking, and Austrian railways, which also allows mobile payments for fares, but new EU banking laws prompted the launch of the card.
 
 
Loyalty programme
 
“We are promoting it via our shop network, Telekom Austria shops and our partner shops,” said Capka. The A1 card — named after the brand that Telekom Austria now use for their converged fixed and mobile consumer services in Austria — is linked to the group’s loyalty programme.
“We combine telco features with banking features. There is an SMS alert for all transactions.”
Telekom Austria sees a significant opportunity for the A1 card, in a country where credit card penetration is only 35%. “Cash is still important in the Austrian market,” said Capka.
The group is looking for interoperability deals with other mobile payment services, including one involving Vodafone and O2 in Germany, he added.
At the same time France Telecom has put Philippe Millet in charge of its new Orange Money division. “Orange Money is our name for our mobile banking offer,” said Millet, who is head of operations at the unit. “We have been working on the development for a couple of years now.”
Orange Money is “not a bank”, he said, “but we will work in close partnership with a bank in each country”. French banking group BNP will be the partner “in a number of countries”. Orange is particularly strong in the Francophone countries of west Africa, where French financial institutions such as BNP are also present.
A customer for the new service will not have to have an existing account with the bank “but will have to have an account with Orange”, said Millet, who also chairs the 37-operator interchange for IP-based international services, the i3 Forum.
Banks have a low penetration in emerging markets, he points out. “Only 3% to 5% of people have bank accounts, but 40%-60% have a mobile phone.” Orange Money will allow customers to carry out banking transactions using their mobile phone account, and to store their money electronically. “It puts money in a safe place,” he said. “People can travel and have their money safe. They can go to another partner of Orange Money and get cash back.”
At first, customers of Orange Money will be able to transfer funds only to other Orange Money customers “for regulatory reasons”, said Millet. But the division is looking for ways to transfer funds to others.
 
 
Network of partners
 
“We’re building a network of partners that will accept Orange Money. The more transactions you can do the less cash you need.” And he’s hoping that some companies will be able to pay their employees through transfers into Orange Money accounts.
“As we grow we will be working on international remittances and on microfinance,” he added. “This is not online banking: it’s a new service to reach more people via the services of a telecoms company.”
It’s penetration into a largely unbanked market that attracts Richard Johnson, group strategy director of Monitise, particularly in India.
India has a population of 1.1 billion people, but only 200 million of the 600 million working population have bank accounts. But almost 600 million have a mobile phone. Around 91% of the $703 billion spent by Indians annually is in the form of cash.
Monitise has just launched a joint venture in India with Visa to accelerate the delivery of mobile financial services such as banking, bill payments, mass transit ticketing, mobile top-up and other services to Indian consumers.
Separately, it is also developing mobile banking services in the country with Standard Chartered Bank, with services for SCB’s customers expected to go live in the next twelve months.
The company sees opportunities with “the consumer with multiple bank accounts who needs to stay in constant touch with their balance or a mobile phone user who has never been in a bank or has no previous financial relationship”, said Johnson at a conference in Mumbai. He praised India’s central bank, the Reserve Bank, as having a “progressive approach” which “can lead the way in providing mobile financial access”.
 
 
Driving development
 
The Indian government has made mobile banking a key area of driving the country’s development and is actively encouraging banks and telecom companies to develop services to both people with bank accounts and those mobile phone users without them.
One of the world’s pioneers in money transfer is M-Pesa, the Vodafone service that is operated by Safaricom in Kenya. It was launched in 2007 and already has 9.5 million users. Now Safaricom has launched M-Kesho, which will allow customers to save cash and earn interest on it.
“Basic banking and money transfer services play a key role in building a secure economy,” said Cenk Serdar, Vodafone’s mobile payment director. M-Kesho “will enable more people to save and as a result we hope this will have a positive influence on the whole economy”, he added.
Safaricom’s partner in M-Kesho is Equity Bank, which is already promoting M-Kesho on its website.
Equity CEO James Mwangi commented: “Nobody has put together all these services to provide this kind of convenience to the customer. This is in line with our mission to offer inclusive, customer focused financial services that socially and economically empower our clients and other stakeholders.”
The project “will drive customers to save into their bank accounts”, said Safaricom CEO Michael Joseph.
M-Kesho has limited availability at first, but Safaricom and Equity plan to roll it out across Kenya “over the next few months”, said a statement from the two companies.
In neighbouring Uganda, MTN announced in late May that it had picked up 890,000 customers for its MobileMoney service in just over a year since launch — representing one in six of its subscriber base. In the first 14 months they carried out 11.8 million transactions, transferring $195 million — an average of about $16.50, though MTN says the current average is around $21.
The company, which uses Fundamo software for its system, is hoping for more than 2,000,000 users by the end of 2010, increasing to 3,500,000 by 2012.
Orange Money is also focusing on Africa “for the time being”, said Millet, “because this is where it is most obvious to deploy the service.” The service will be given “different flavours” in order to expand into different countries.
 
 
National lotteries
 
“Orange as the operator will be bringing together various partners — the partner bank in each country and other banks, merchants and distribution channels.” The company is also looking at working with national lotteries, filling stations and microfinance institutions.
It’s clear that the market is already growing fast. Thomas Bostrøm Jørgensen, CEO of Luup, a mobile payments company which has worked with Deutsche Bank and the National Bank of Abu Dhabi, believes the market will be work €405 billion by 2013. “The mobile payments market is extremely active,” he said. “Our aim is to help banks drive revenue from this growth market.”
Luup is to integrate banking software from Temenos into its mobile payments system, and the two companies will work together — potentially extending mobile banking into new consumer and corporate markets in developed and developing countries.
At Monetise, Johnson commented on the need for partners in the extended financial business to start working together: “For the full potential of mobile banking and payments to be achieved, banks, payments networks and mobile network operators have realised that they must come together in partnership and collaboration,” he said.
Mobile payments systems are “far from standardised”, commented Millet, who is hoping that Orange Money will be “creating an ecosystem” for interworking between the different systems: his experience with the i3 Forum will be good background.
France Telecom may have a wholesale offering for Orange Money, he hinted: a system which it would provide to other operators for them to deliver to end-users under their own brand names.
One place he doesn’t expect the service to be operating is in France, at least on the present pattern. “Orange Money in France would not be the same,” said Millet. GTB