New Challenges and New Opportunities in the ... - Bernardo Nicoletti
New Challenges and New Opportunities in the ... - Bernardo Nicoletti
New Challenges and New Opportunities in the ... - Bernardo Nicoletti
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<strong>New</strong> <strong>Challenges</strong> <strong>and</strong> <strong>New</strong> <strong>Opportunities</strong><br />
<strong>in</strong> <strong>the</strong> Global Cards Market<br />
<strong>Bernardo</strong> <strong>Nicoletti</strong><br />
P<strong>in</strong>ion Ltd., Director<br />
Dubai, UAE, Mar. 7, 2011
Chang<strong>in</strong>g <strong>and</strong> Challeng<strong>in</strong>g Environment ... The 4Cs<br />
Customers<br />
Empowered <strong>and</strong> dem<strong>and</strong><strong>in</strong>g<br />
Complex <strong>and</strong> confused<br />
Sometimes Malicious<br />
Computers<br />
<strong>New</strong> Technology<br />
Network<br />
Costs<br />
Inflation<br />
Complex Technology<br />
Outsourc<strong>in</strong>g<br />
Compliance<br />
Security Requirements<br />
Laws <strong>and</strong> Regulations<br />
GRC<br />
Achiev<strong>in</strong>g process payments <strong>in</strong> a leaner <strong>and</strong> more digitized manner
250<br />
Non-Cash* Retail Payment Transactions Per Capita*<br />
(Simple average for each region, 2006)<br />
200%<br />
181%<br />
215.1<br />
180%<br />
200<br />
160%<br />
150<br />
Plenty of Growth<br />
<strong>Opportunities</strong> <strong>in</strong><br />
<strong>the</strong> Middle East<br />
175.1<br />
140%<br />
120%<br />
100%<br />
100 80%<br />
60%<br />
55.6<br />
50<br />
40%<br />
24%<br />
22.4<br />
40%<br />
45%<br />
41%<br />
61%<br />
39%<br />
11%<br />
20%<br />
9.6<br />
11.6<br />
4.9 4.7<br />
18%<br />
2.1<br />
0%<br />
0<br />
East Asia <strong>and</strong><br />
Pacific<br />
Europe <strong>and</strong><br />
Central Asia<br />
Lat<strong>in</strong> America<br />
<strong>and</strong><br />
Caribbean<br />
Middle East<br />
<strong>and</strong> North<br />
Africa<br />
South Asia<br />
Sub-Saharian<br />
Africa<br />
European<br />
Union 15<br />
EU <strong>New</strong>er<br />
Members<br />
O<strong>the</strong>r<br />
Developed<br />
Countries<br />
*World Bank<br />
Regions
Integrated Card Strategy<br />
Customers<br />
analysis<br />
Portfolio<br />
design<br />
Solution<br />
Selection
Integrated payment systems strategy<br />
There is <strong>the</strong> need to associate each card to <strong>the</strong> moment when <strong>the</strong><br />
payment is made<br />
“When do you want to pay?”<br />
Attributes<br />
Before Now Later At your pace<br />
• Security • Daily life • Convenience • Customization<br />
• Expense control •Expense control • Flexibility • Payment<br />
• Anticipation • Immediacy • Ease of use deferment<br />
• Plann<strong>in</strong>g •Transparency • Customer • Support<br />
• Provision<br />
support • Flexibility<br />
•eCommerce • Availability • Adaptability<br />
• Trust
Creat<strong>in</strong>g a truly <strong>in</strong>tegrated payment systems strategy<br />
Prepaid<br />
D E B I T<br />
Debit<br />
Credit<br />
(deferred<br />
debit)<br />
C R E D I T<br />
Revolv<strong>in</strong>g<br />
Mass market<br />
(Immigrants <strong>in</strong>cluded)<br />
Gift Card /<br />
Prepaid<br />
Debit<br />
Credi<br />
t<br />
Revolv<strong>in</strong>g<br />
Upgrad<strong>in</strong>g<br />
Gol<br />
d<br />
Segment<br />
s<br />
Basic<br />
service<br />
(for free)<br />
Additiona<br />
l<br />
services<br />
Yout<br />
h<br />
High<br />
valu<br />
e<br />
Prepaid Debit Credi<br />
t<br />
Credi<br />
t<br />
• Security Pack (EMV+SMS alerts + ATM <strong>the</strong>ft <strong>in</strong>surance + Fraud <strong>in</strong>surance)<br />
• Image<br />
personalization<br />
• Insurance sales: Travel, Loans, Accidents <strong>in</strong>surances ...<br />
• Cobr<strong>and</strong>ed<br />
Cards<br />
Revolv<strong>in</strong><br />
g
Debit <strong>and</strong> Prepaid Cards:<br />
<strong>the</strong> present <strong>and</strong> future payment vehicle*<br />
Pressure on credit<br />
Look<strong>in</strong>g for new revenue sources<br />
Potential for product bundl<strong>in</strong>g<br />
Changes <strong>in</strong> <strong>the</strong> macro-economic l<strong>and</strong>scape.<br />
Key regional <strong>in</strong>itiatives<br />
<strong>New</strong> Channels: Web <strong>and</strong> Mobile<br />
* Debit Cards as Profit Drivers 3 rd Edition Published 21 st May 2010, VRL F<strong>in</strong>ancial
Quite a Few + <strong>Opportunities</strong><br />
1b un/under banked<br />
Need a low cost payment solution<br />
5b cellphones<br />
No dom<strong>in</strong>ant payment structure<br />
Progressive Authorities<br />
Grow<strong>in</strong>g need for cashless<br />
Fragmented retail sector<br />
Gift for top tier only
Add Value To The Customers<br />
Prepaid Card Segments<br />
Employer to Government to Consumer to Bus<strong>in</strong>ess to Consumer to<br />
Employee (E2E <strong>and</strong><br />
G2G)<br />
Consumer (G2C) Bus<strong>in</strong>ess (C2B) Consumer (B2C) Consumer (C2C)<br />
Payroll Social Security Charity<br />
Rebates /Penalty<br />
Loan Distribution<br />
Gift/Family<br />
Benefits<br />
Food Stamps<br />
Internet/Mobile<br />
purchases<br />
Insurance<br />
Reloadable Store<br />
Health/Pension Unemployment Youth organization Store Refunds Remittance<br />
Per Diem Disbursements Travel Incentives Travel allowance<br />
Fleet Medicare/Medicaid Phone Rewards Phone<br />
Incentives Disaster Relief Fuel Vouchers Students<br />
.. Go for Prepaid Diversity … Many Killers Applications
Add Value to <strong>the</strong> Customer (cont.)<br />
Closed vs. Open Loop<br />
Reloadable vs. Non-Relodable<br />
S<strong>in</strong>gle vs. Multi-Application<br />
Multi-Payment<br />
Plastic Not Present (Virtual)<br />
Work on <strong>the</strong> Value Proposition
Internet <strong>and</strong> Mobile<br />
Broadb<strong>and</strong> <strong>in</strong>frastructure<br />
<strong>and</strong> e-commerce<br />
<strong>New</strong> onl<strong>in</strong>e payment<br />
models<br />
Social networks <strong>and</strong><br />
onl<strong>in</strong>e gam<strong>in</strong>g
Size of <strong>the</strong> total potential micropayments opportunity <strong>in</strong> Europe*<br />
by revenue (€bn)<br />
Total opportunity size<br />
34<br />
T<br />
V o<br />
D<br />
2015<br />
2010<br />
P<br />
C<br />
V o<br />
D<br />
N e<br />
w<br />
sp ap<br />
ers<br />
Iṉ<br />
ga me<br />
go<br />
od s<br />
M ob ile<br />
ap ps<br />
Di<br />
git<br />
al<br />
m<br />
us ic<br />
Books<br />
e<br />
M obi<br />
le<br />
V<br />
A S<br />
Total<br />
There is <strong>the</strong> potential for a fur<strong>the</strong>r<br />
doubl<strong>in</strong>g of micropayment<br />
revenues if suitable technologies<br />
(VoD-enabled set-top boxes,<br />
broadb<strong>and</strong> connections <strong>and</strong> mobile<br />
devices) become near-ubiquitous<br />
across Europe<br />
By 2015, we expect it to have<br />
more than doubled <strong>in</strong> size <strong>in</strong><br />
our base case, driven by TV<br />
VoD, digital music <strong>and</strong> mobile<br />
apps<br />
Currently <strong>the</strong> micropayments<br />
market is ma<strong>in</strong>ly composed of<br />
mobile VAS <strong>and</strong> digital<br />
music<br />
*Captur<strong>in</strong>g <strong>the</strong> Micropayments Opportunity, Value Partners, 2011
Prepaid – Power to redef<strong>in</strong>e markets ?<br />
Mobile<br />
Phone<br />
Manufacturer<br />
Who is <strong>the</strong> largest seller of digital cameras <strong>in</strong> <strong>the</strong> world<br />
?<br />
NOKI<br />
A<br />
Mobile<br />
Service<br />
Provider<br />
Industry<br />
?<br />
?<br />
?<br />
Who runs <strong>the</strong> biggest music bus<strong>in</strong>ess <strong>in</strong> India<br />
?<br />
Airte<br />
l<br />
Who will be <strong>the</strong> largest provider of f<strong>in</strong>ancial services<br />
<strong>in</strong> 2020?<br />
Copyright 2008, First Data Corporation. All Rights Reserved.
Evolution of prepaid offer <strong>in</strong> Italy:<br />
The Post Office launched first <strong>and</strong> <strong>the</strong>y have 6 million of cards <strong>in</strong> 2009*<br />
2004<br />
Reloadable prepaid<br />
card <strong>in</strong>troduced <strong>in</strong> <strong>the</strong><br />
market<br />
2005-2008<br />
Consumer shows<br />
self-segmentation <strong>in</strong><br />
usage patterns:<br />
2009<br />
Vertical products<br />
target<strong>in</strong>g specific usage<br />
Prepaid Cards are Essentially Electronic Money<br />
* Mastercard
A Lean & Digitize Example:<br />
for Prepaid Cards<br />
Account<br />
Receivables<br />
S1 Payments<br />
Platform
How do you stop Frauds<br />
Before <strong>the</strong>y stop you<br />
© Intell<strong>in</strong>x Ltd. All Rights Reserved.Intell<strong>in</strong>x Ltd. All Rights Reserved
The Bus<strong>in</strong>ess Need<br />
• Anti Money Launder<strong>in</strong>g (AML) is <strong>in</strong>creas<strong>in</strong>g <strong>in</strong> importance, especially with Prepaid.<br />
• Some <strong>in</strong>stitutions have been f<strong>in</strong>ed (BofA) or have lost <strong>the</strong> bank<strong>in</strong>g license<br />
• Unclear <strong>the</strong> situation with new regulations<br />
There are Solutions<br />
• Design <strong>and</strong> change rules<br />
• Extract, Validate, Transform <strong>and</strong> Load Eng<strong>in</strong>e<br />
• Case Management (False Positive)
Def<strong>in</strong>e a bus<strong>in</strong>ess model with a precise Customer/Product mix<br />
Develop a cost-effective, secure <strong>and</strong> easy to use solution<br />
Target critical mass quickly<br />
Integrate payment data with customer profiles <strong>and</strong> transaction data<br />
Comply with regulations <strong>and</strong> fight frauds<br />
Buy experience through consultants <strong>and</strong> service providers
The (Near) Future<br />
Integrate<br />
Be Each Customer-<br />
Centric<br />
Mobilize<br />
Product<br />
Process<br />
Infrastructure<br />
Move from Prepaid Cards to Prepaid Instruments to improve <strong>the</strong> flow
Appendix
Worked <strong>in</strong> 10 Countries <strong>in</strong> several companies<br />
Project Leader <strong>in</strong> Airplus<br />
Program Leader <strong>in</strong> Galileo<br />
CEO <strong>in</strong> Sigma Plus<br />
CTO <strong>in</strong> GE Money<br />
CIO <strong>in</strong> GE Oil & Gas<br />
CIO <strong>in</strong> AIG UPC Lat<strong>in</strong> America<br />
Director for P<strong>in</strong>ion with projects <strong>in</strong> several cont<strong>in</strong>ents<br />
Six Sigma Master Black Belt<br />
<strong>Bernardo</strong>.nicoletti@p<strong>in</strong>ion.net Cell: +39 348 470 7016<br />
www.p<strong>in</strong>ion.net<br />
www.bernardonicoletti.com
P<strong>in</strong>ion Services Ltd.<br />
P<strong>in</strong>ion Services Limited is a lead<strong>in</strong>g global bus<strong>in</strong>ess <strong>and</strong> technical consult<strong>in</strong>g<br />
company, specialized <strong>in</strong> payment systems.<br />
Offices <strong>in</strong> <strong>the</strong> UK <strong>and</strong> India, comb<strong>in</strong>e both offshore <strong>and</strong> onshore resourc<strong>in</strong>g to provide<br />
value effective support<br />
P<strong>in</strong>ion has core strengths <strong>and</strong> expertise <strong>in</strong> payment systems <strong>and</strong> particularly <strong>in</strong><br />
support<strong>in</strong>g Postilion <strong>in</strong>:<br />
• Project management<br />
• Bus<strong>in</strong>ess Analysis<br />
• Interfaces development<br />
• Test<strong>in</strong>g<br />
• Implementation support<br />
• Production support Service<br />
Some references;
* Accenture<br />
A Typical Card System*
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