1. Mobile Commerce Syed Babar Ahmad Deputy General Manager Babar.Ahmad@waridtel.com

2. CREATING A FOUNDATION FOR A WIN – WIN PARTNERSHIP

3. What is Mobile Commerce Mobile Banking Mobile Commerce It is more than just getting your access to the bank account – it is about using all the facilities that any financial institution can provide. Including: Making person-to person and person-to-institution payments and transfers using your bank or other account Depositing and withdrawing cash Getting access to credit Making investments in stock exchange and other institutions Retail purchases

4. How does this opportunity stack up? Large and rapidly growing population Ultra low banking segment (8k Branches, 4.5M customers) * Mass level mobile penetration (90M @~52%) Unavailability of credit especially micro credit to rural market Lot of small pockets of rural population At one end of an expatriate remittance corridor Mobile connected users surpassing Internet connected users Large youth segment * MCB Presentation to PTA

5. Pakistani Market

6. Developed Countries

7. Who are the key Stakeholders? Micro and Commercial Banks and other FIs Mobile Network Operators (MNO) Technology Enablers (SIM / Phone / Platforms / POS) Pakistan Telecommunications Authority State Bank of Pakistan Utility Companies Stock Exchanges & Investment Houses NGOs and Private lenders Retailers End Users / Customers

8. Core Competencies In order to see how to make a win-win partnership we must see what each stake holder brings to the table: MNOs – Managing billions of small transactions across billions of customers cost effectively on a daily basis Banks – Access to lending funds and current cash management infrastructure, as well as working within an existing legal framework Technology Partners – Own finished out-of-box product, ready to rapidly deploy and work on setup and maintain basis SBP / PTA – Willing to create a framework conducive to rapid takeup of the service, protecting both the end users and the investors and enhancing the overall fiscal development of the economy

9. Regulation and consumer acceptance are seen as the main impediments to growth in mobile wallets. Key hurdles to mobile wallet deployment % of Survey Respondents EDC –GSMA 2008 Survey

10. Barriers to Adoption - Cooperation between banks & mobile carriers and agreement on a business model are seen as the most significant barriers to adoption in the next three years While last year’s survey indicated that merchant and consumer adoption are the top two barriers, this year’s survey shows that bank and mobile carrier cooperation and business model could prove more challenging * Other includes limited handset support, unsophisticated user interface, lack of standardization, etc. Consumer adoption Merchant adoption Agreement on common mobile payment platform Agreement on business model Security & fraud related issues Availability of capital 2007 2008 Cooperation between banks and mobile carriers Agreement on business model Merchant adoption Consumer adoption Agreement on common mobile payment platform Security & fraud related issues Regulatory restrictions Other* Availability of capital EDC – MPW 2008 Survey

11. Top Reasons for low adoption of M-Commerce 1.Regulatory Framework 2.Customer Acceptance 3.Business Model still not clear (till date!)

12. Regulatory Framework One of the major reasons for the slow take-up of this service has been the lack of, or near sighted framework which tries to emulate the existing banking system processes on mobile without considering the very different nature of these customers. Because of this lack of customer focus, often times the KYC processes are so cumbersome that it leaves very little room for growth in banked segment

13. Customer Acceptance This is again because of lack of customer focus: Either, the technology is too complex for the intended customer to use Or, the pricing is set at a level which limits the widespread usage Or, sometimes the actual functionality is limited because of limited outlets available for mobile transactions and cash in/out

14. Business Case Clarity Most important for Pakistani market – i.e. who pays for the technology, marketing, and servicing the combined customer and who gets to keep the majority share of the revenues: MNOs Banks Technology Providers

15. Currently We are headed to… 15 Banks MNOs Customer Retailers, Merchants, Public transport companies

16. The WIN – WIN Preposition MNO Technology Provider MNO Bank Lend ers Inves tment Hous e Bank Customers

17. What must each player do? MNOs Agree on one Standard tech partner Open up their access to that tech partner Nominal charges (if any) for M-Comm usage Banks Agree on one Standard tech partner Competitive charges for M- Comm usage (cash handling only) Regulator Loosen the KYC requirements that are more in tune with the realities of our rural market Competitive charges for M- Comm usage Technology Connect to all MNOs and Banks Invest in marketing the product