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Mobile Banking & Payments

Kelly Buday
Director of Marketing, Firethorn

www.firethornmobile.com
Firethorn: Who We Are
• A mobile banking and payment service enabler headquartered in Atlanta

• Firethorn links or “federates” financial institutions and wireless carriers through


a secure and scalable technology platform

• Firethorn enables common banking and payment functions on virtually any cell
phone, PDA or other wireless device

• Founded and led by experienced professionals from Internet banking,


payments, technology and wireless communications industries

• Carrier partnerships announced with AT&T (Firethorn is the exclusive


provider) and Verizon Wireless

• Exclusive partnership with CheckFree; hosting provider, referral partner, bill


payment integration

• Bank deals announced with Wachovia, SunTrust Bank, Regions Bank,


BancorpSouth and Synovus, among others
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Keys to Success…The Federation

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The Time is Now…

• Emergence of “third screen” phenomenon


• 242 million mobile phones in the US

• Explosive Growth of Wireless Broadband Data Networks

• Exponential demand for mobile data and applications


• Data ARPU Growth (Average Revenue Per User)

• Increasing adoption for online financial services


• Online usage drives overall customer profitability

• Growing consumer demand for convenience = need for 5th delivery channel
• 61 percent of adults between 25 to 34 say they are interested in making
purchases with their mobile phone*

• Punchline: mobile banking is prime for market adoption


*Source: Bank System & Technology, June 25, 2006/ Visa USA (San Francisco) Research), CTIA 2007

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Mobile Banking is the News

US Banker Magazine
June 2007

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Consumers Expect Convenience & Control

A Device

Consumer

Name
address Bank Card
Pay to

123345634 2345

Checkbook Wallet
PDA
Keys
234 124 2345
VISA

Credit Loyalty
Grocery

234 124 2345


VISA
Membership
Debit GYM

Sky Miles
VISA

MP3 Points
Sam’s Club

Membership
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Consumer Need Access to Finances

• Four (4) retail banking relationships1


• One (1) or two (2) accounts with their primary
financial institution1
• Thirteen (13) credit obligations; nine (9) likely to
be credit cards 2
• Make fifty-eight (58) individual payment choices
monthly, 46 of which are in-store (check, cash,
credit/debit, gift card)3
• Cash and check constitute 47% of payments
(57% in ’01)3
• Two thirds (66%) of families need their next
1 A.T. Kearney, “How does your financial institution paycheck to meet expenses4
grow?”
2 Fair Isaac Corporation, “Average Credit Statistics” • Consumers will not log on to more than three (3)
3 ABA; Dove Consulting, 2005/2006 Study of
Consumer Payment Preferences
sites to view their financial information
4 Josh Hyatt, Money Magazine, American Payroll
Association, “Scraping by on $150,000 a year”

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Consumers Want Mobile Financial Services

• 49% would be willing to use mobile banking and


payments via their wireless device1

• 40% of US adults would access or manage bank


accounts from their mobile phone (eMarketer 2006)

• 75% of online bankers would likely adopt the solution1

• Celent estimates 10% of online bankers will be using


mobile banking by the end of 2007 (WSJ 21, Feb ’07)

• 86% would check credit card and account balances


a median of four times per month1

• 70% would prefer to obtain mobile banking service


1. MQA Research, Mobile Finance Survey, 1023 from their Financial Institution versus a cell phone
respondents, March 2006
provider or an alternative payment vendor1

• 1 in 4 customers would consider switching banks if


offered free mobile banking (Forrester 2005)

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What Are “Mobile Financial
Services”
• Mobile Financial Services are wirelessly enabled applications
and services, accessible through or operated on the handset,
that facilitate financial transactions and/or the management of
financial services.
Banking Retail Sending Mobile Mobile
On the Go Purchasing Money Internet Commerce Marketing

$
Check balances, Purchase goods Pay personal Purchase hard
and services at debts, transfer goods and Present, access
transaction
retail locations money abroad services via a and/or redeem
history and pay
using payment or send money WAP browse offers at the
bills anytime -
accounts to the kids - shopping point of
anywhere
embedded in wirelessly experience purchase
the handset

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Why Mobile Will Change Money

• 80% U.S. Market Penetration and Growing

• Cultural Phenomena – Ever Increasing Value &


Versatility

• Highly Personal, Trusted and Ever-Present “Swiss Army Knife


of the 21st Century”
• Unique Attributes:
Mobile Gives Money…
• Graphical User Interface

+ = • Robust Computing Platform


• Secure Storage
• Interactive Data Network
• Unprecedented Convenience

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Complexity of Mobile Commerce

• 21” + Monitor • 2.5” Screen

• Browser • Thousands of Devices

• Desktop Usability • Mobile Usability

• Open Network • Proprietary Network


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Internet Banking vs. Payment Networks

Internet Banking Payments Networks

Cost Center ($B)/Free Customer Access Profit Center ($B)/Interchange

Brand and Differentiation is Key Access, Distribution, Ease Of Use is Key

Highly Custom Branded UI/UX Universal UI/UX Across Brands

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Decisions. Decisions. Decisions.

• WAP

• SMS

• Individual Application

• Carrier Supported Application

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Which way is WAP?
• Suitable for viewing balances and transaction history, but not for
secure financial transactions
– Unmanaged security experience
– Browser security patches require device replacement
– Consumer usability issues; slowness, timeouts, loss of signal

• Expiring technology that will not support future functionality like


contactless payments

• Misperception WAP is faster to market and mirror of Internet banking


– Mobile banking is not Internet banking
– Application development/device management still required
– Incumbent on institution to manage devices and usability

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Sending out an SMS

• Suitable for balance inquiries and transfers but little else

• Does not provide for bank recognition

• Does not drive new account openings and/or cross-selling

• Expensive for the customer, drives down banks’ profitability

• Prone to security breaches, namely man-in-middle attacks

• Will not support future functions, such as contactless

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I Did It My App
• Incumbent on institution to:
– Build, host and maintain their own application
– Certify its application on wireless carriers’ networks
– Develop future functionality
– Insure sufficient security and compliance
– Market solution and educate users

• Is cost, labor and resource intensive

• Creates silo effect around institution as market evolves

• This approach not supported by most wireless carriers

• Lack of support for ongoing device management

• No carrier marketing support


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Individual Mobile Application Analogies

Number of Brand Names


Providers
Email 10+ majors Hotmail, GMail, AOL, AIM, Yahoo!,
Hundreds of minors Earthlink, Comcast, Charter, Time
Warner
Instant Messaging 8 Majors MSN, Google Talk, AIM, ICQ, Yahoo!,
LCS, Sametime, Reuters

Media Hundreds CBS, NBC, Fox, CNN, ESPN MTV,


Nickelodeon

Sports NFL: 32 Panthers, Patriots, Giants, Yankees,


MLB: 30 Mets, Braves, Spurs, Suns, Mavericks,
NBA: 30 Rangers, Ducks, Capitals, Tiger Woods,
Phil Mickelson, Vijay Singh
NHL: 30
Golf: Hundreds

Banking & Payments 25+ Majors Wachovia, SunTrust, Regions, Synovus,


Thousands of “Minors” BancorpSouth

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Firethorn Mobile Consumer Wallet
• Includes everything in consumers’ wallets today
– Debit/Credit Cards
– Loyalty/Membership Cards
– Insurance Cards
• Single, secure downloadable application…bank-branded
– Managed by Firethorn for financial institutions
– Authorized by wireless carriers
– Controlled by the consumer
• Vision supported by leading financial institutions
– Wachovia, Regions, SunTrust, BancorpSouth, Synovus, among
others
• Vision supported by wireless carriers
– Firethorn only mobile banking and payments application
authorized on AT&T network; also partnered with Verizon
Wireless
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Driving Mass Adoption
• Distribution & Discoverability
• Discoverability and ease of use is critical

• Simplicity and Consistency


• Mobile applications for new services must be
– Intuitive
– Easy to learn/explore
– Deliver perceived value quickly
• Consumers will not adopt disparate “islands of service” en masse

• Integrated Service and Support


• Wireless subscribers expect coordinated support from wireless operators for
wireless service, devices, as well content/other service providers
• Ability to call one number if device is lost or stolen will be expected

• Security
• Customer Expectations: introduce services with sensitive information in
controlled fashion to avoid high profile security events (undermines trust)
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Embedded Apps Drive Adoption
The “Front Door” Approach
AT&T intends to create an embedded “wallet platform” through
which trusted providers offer their branded services. Advantages
include:

• Promotes significantly greater consumer adoption due to


discoverability and increased trust

• Application and service providers pre-certified by AT&T prior to


inclusion

• Consumers not required to download various applications from


multiple, potentially untrusted providers (but can at customer
option)

AT&T does not intend to support disparate third party applications


for MFS

• Introduces unmanageable risks

• Limited resources to secure and improve the core wallet


application
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Mobile Banking as a starting point
•Aggregated banking solution
– Server integrating with Financial Institutions
– Contains financial institution’s branding
– Future plans to support different account types

•Java client w/ built-in security


– Downloaded from FI’s Online Banking Web Site
– Requires PIN upon client invocation
– Local storage is encrypted and stores no sensitive
personal data
– Remote client de-activation in the event of a loss
phone
– AT&T authorized/certified

•Service features include:


– Account Balance Inquiry, Funds Transfer, Bill View/
Payment, Transaction History

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Co-Branded Marketing Example

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BancorpSouth Co-branded Statement
Stuffer

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BancorpSouth Co-branded POS Poster

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BancorpSouth Co-branded Banner Ad and
Online Banking Login Page Ad

• Banner Ad

• Online Banking Login


Page

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Thank You.

June 27, 2007


www.firethornmobile.com

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