1. Congreso de Acceso a Servicios Financieros, Sistemas y Herramientas de pago Cartagena– March 2010 Aprendiendo de los diferentes modelos de banca móvil en el mundo Implementing new mobile money strategies to increase revenues for Banks, MNOs and Retailers

2. YellowPepper provides mobile financial services that allow consumers, businesses and institutions to effectively conduct monetary and financial informational transactions using a cell phone. YellowPepper

3. Current Status The Company The Company has successfully penetrated the banked market in six countries. Presently handles more than 5,300,000 transactions per month. Addressing over 1,700,000 unique users in those six countries.

4. Ecuador Colombia Bolivia Peru Guatemala Panama Soon: Dominican Republic Current Partner Operators

5. Ecuador Colombia Bolivia Perú Guatemala Panamá Cooperativa Alianza Minas Clients: Financial Sector

6. Nuestros Clientes: Sector Comercial

7. All regions: Colombia: Partners

8. Banked and Unbanked Access to Financial Services Source: Felabanc

9. Us Market: Share of Payments by type World is moving towards electronic money…

10. Just 3 emerging Markets above: Over 65% of population; only 9.5% of electronic transactions. HUGE GAP! Emerging Markets Share of electronic / card transactions : Emerging markets lag behind…

11. Just one aspect of electronic money infrastructure – Cards (plastic e-wallets) Emerging markets have not embraced electronic payments yet. Opportunities are large and growing. For banks, retailers, governments, Telcos, processors, others (e.g. Fbook, Skype, Microsoft, etc.) Payment cards per person – top 20 countries 2.69 0.03 Lots of room … lots of opportunity

12. Electronic money no longer a wish or fantasy – now a requirement for modern life E-Commerce / m-commerce driven demand; physical distance between service / product providers and consumers keeps increasing Virtual / dematerialized goods and services (are propelling a self servicing society or lifestyle); Retail automation allows and requires electronic money; organized retail prefers not to handle cash Less and less cash issued (governments, businesses pay through banks, payment cards) Technology advances in terms of (a) last mile connectivity and (b) lower cost of terminals Advances in mobile technology promises that this newest extension of the payment infrastructure, presents a large opportunity (note: architecturally and functionally, it is not entirely new territory). IFC Key drivers:

13. Electronic money brings transparency, inclusion, speeds up economic processes [WBG AGENDA: reduce corruption, money laundry, grey economy] Electronic money is deposited money – it is saved money and it isinvestable money. [WBG AGENDA: Savings Mobilization] Electronic payments infrastructure allows for the last mile connectivity between financial institutions and clients bringing down servicing cost and improving interaction; [WBG AGENDA: Access 2 Finance] The commercial opportunity is also large given the enormous gap that needs to be filled… [IFC AGENDA: Demonstration of commercial success] IFC Why does the World Bank Group / IFC care

14. Comparison of the cost of a banking transaction by channel in a bank in S.A. and % transaction migration to the mobile channel in 2 years: Bank Strategy Bank ChannelCost per Transaction Savings Vs mobile % Migration to Mobile Mobile$0.04 Teller$0.8795%23% Call Center$0.3990%50% ATM$0.2075%10% IVR$0.3288%50% Online$0.0740%2% Remittance Collection $5.0099%0%

15. RegulatoryAdvisoryinfoDev / CGAP[EPIS]Payments PracticeFinancial Services123456 Develop Payments - friendly Regulatory Framework Develop the necessary echo-system (A2F) Develop the necessary echo-system (A2F) Research and experimentat ion Fund seed- stage companies or initiatives Fund early/growth stage companies Scale through main- streaming IFC Core Business (help design, develop and grow commercial opportunities) Pro- progress, competition friendly policies [Under development] Advisory, consultative services and research IFC World Bank Group Offering:

16. World Wide tendency for both: Banked and Unbanked population The purpose is to increase the access to financial services Solution implementation has depended on available technology (Handsets + MNOs infrastructure) Most of the current solutions include mix architectures (Several technologies) Compare with other e-channels two new elements must be considered: The MNO and the handset The solution must consider a constant evolution base on environment requirements (New Business Models, New Technology, New actors, etc.) Current MFS Situation

17. New environment (Banks/Solution Suppliers/MNO/End users/) Different risks base on the technology and Business Model chosen Regulatory Policies Cultural differences and needs for the different countries in Latin American region. Integration into already existing monetary/transactional systems Challenges ahead (1/2)

18. Balance between technology and operational controls Registration of customers. Adoption of the services offered in the mobile channel Different technologies for different users Agent (Cash-in/Cash-out) network – M-Wallet Integration of major sector of the economy, like: utilities, retailers, distribution of mass consumer products, etc. Challenges ahead (2/2)

19. Available Technologies

20. M-Banking –Saving and Checking account –Credit card payment –Accounts balance request –Money Transfer –Utilities service payment –Other Bank e-services Service Options M-Wallet M-Payment B2B (Purchases) B2C (Purchases) Mobile POS (Purchases) Remittances (Money Transfer) M-Info M-Banking M-Commerce Top-Ups M-Payment M-B2B M-Commerce Virtual POS M-Wallet M-Remittance

21. ToolsThe standard handset features are used The handset web services features are used Custom application are developed for the handset A secure enviroment provided by the MNO is used Available Technologies SMS Voz/IVR USSD HTTPS Normal browser WAP J2ME - ApplicationsSIM Toolkit WIB (Wireless Internet Browser). S@T. Java Cards RiesgosNone encripition, the information could be monitored Same risk of an Internet access. (Clonning, Hijacking, Malware, Virus, Man in the middle. Phising) Same risk of a resident application in the PC. Application authenticity and integrity None Features available in All HandsetsHigh End Handsets In all SIM with the applications Dependence of the MNO None - The handset and network features are used None- The WEB/WAP service access is used None -The WEB service access is used Yes Objective Market Developing MarketsDeveloped Markets Developing Markets 21 Total Picture Source: Bankable Frontier Associates

22. Banks Cost Reduction Operating Expenses Reductions Fraud Reduction Revenue from the use of funds MNOs Significant Increase in SMS volume Increase in use and relevance of smart phones and mobile phones in general Stimulate transition to electronic top-ups Retailers New form of payment Reduction of cash and checks handling Expand e-Commerce M-Banking - Benefits

23. Banks Increase in deposits Source of viable new customers for the bank New business opportunities like B2B services New revenue from the use of funds MNOs Brand assertion and relevance to customer base Increase ARPU and reduce churn Stimulate transition to electronic top-up Retailers New form of payment Reduction of cash Expand e-Commerce Increase revenue from Cash-out, sales of kits, and increased traffic of consumers M-Wallet -Benefits

24. Conclusion The challenge for the nascent Mobile Money industry in Latin America is to successfully forge the alliances and cooperation needed to build the Ecosystem with innovative business models that will work for all the stake holders and ultimately that would benefit the end-user YellowPepper