The role of new technologies to increase efficiency and access to retail payment services

Transcription

1 The role of new technologies to increase efficiency and access to retail payment services A Focus on Government to Consumer and Business to Consumer Payments Paul Simpson Citi Global Transaction Services Global Head Public Sector and Wholesale Cards April 2009

2 Market Forces Are Driving Global Change Technology is the enabler Technology Innovation Paper to e-channels Checks and Cash to Cards Mobile phones: SMS to GPRS Info security and integrity Consumer Expectations Immediacy, mobility Convenience, simplicity Visibility and control Value more for less Governments, Banks and Infrastructures are UNDER PRESSURE to change Corporate Operating efficiency Globalisation of trade Technology infrastructure Regulatory compliance Regulatory Impetus Common language Transparency Governance Safety, robustness

3 Government to Consumer (G2C) and Business to Consumer (B2C) flows and execution is changing Infrastructure Optimisation Electronification and standardisation for payments and collections globally Government to Consumer Pensions, subsidies, aid, and medical, etc. Mobile as an enabler B2C, G2C and microfinance B2C and G2C payment flows and methods are changing. Business to Consumer Consumer incentives and card based incentives Benefits to Consumers Transparency, ease, real-time execution Supporting the Needy Getting funds into the recipients hands in an efficient and transparent manner.

4 Mobile: A Medium for Global Payments, Remittances, Microfinance and more Mobile phones are fast emerging as a channel for financial services. Value of Mobile Transaction Flows (US$ in Billions) CAGR: 55% CAGR: 28% Wallet Size for Service Providers (1) (US$ in Billions) Mobile is fast emerging as channel for financial services Emerging opportunities and requirements for partnerships between Mobile Operators and banks Emerging requirements for Mobile Operators to successfully execute and achieve financial goals Over 1 billion people in EM who don't have bank a/c but have a mobile phone Mobile can reduced the cost of delivering financial services by over 50% (M-Pesa experience) Mobile money service could reach circa 300MM un-banked in the next 3-4 years Mobile can be an efficient distribution protocol for microfinance as over 3.3 billion people have a mobile phone. Mobile Population (In Millions) ,671 6,750 6,828 6,906 6, ,782 3,122 3,419 3,670 3, Mobile Content Mobile Payments (2) mpayment Users Mobile Users World Population Source: Juniper Research, Mobile Payments Markets: Strategies and Forecasts

5 Mobile: A Medium for Global Payments, Remittances, Microfinance and more Mobile Accounts to Exceed Bank Accounts in Many Geographies. Future mobile payment model will enable transactions to cross networks by using banks as aggregators/consolidators. Nigeria Inflows (US$ in Millions) ECOWAS Inflows (US$ in Millions) SSA Inflows (US$ in Millions) CAGR: 26% CAGR: 19% CAGR: 15% 1,033 3,329 2,548 6,182 5,970 11, Current Mobile Payment Model Potential Future Mobile Payment Model Mobile accounts could be levered to provide additional access and services to individuals. Mobile is even being used by governments to deliver currency to soldiers and sailors on the battlefield, on ships and on military excursions. This technology can be applied more broadly across non-military needs.

6 Technology is enabling the world Management of Global Aid/Donor Flows Evolutions in technology driven by necessity and the desire to put more money in recipients hands, have allowed Citi to provide customized payment solutions that provide aid and donor flows in over 100+ countries. Citi has strong credentials in managing aid flows for both donor organisations and their beneficiaries. Global Donors (Bi-/Multi-laterals, Private Foundations, Public Charities) Partner Organizations On the Ground Aid Organizations The United Nations Origin In-country Global Disbursements A streamlined payment solution to effect local currency funding to partner organizations or affiliate office. Global Visibility Access to cash at the right time in the right place Visibility over current operating cash and debt Forecasts of operating cash to support urgent aid disbursements.

7 Businesses are participating in the evolution Business to Consumer and Government to Consumer Payments are moving cards Government distribution of payments to consumers Pension / Benefits Unemployment and welfare benefits Un- banked community Replace cheques Health benefits Disaster relief Floods, Continuity of Business, Banking issues Tax and GST refunds Scholarships, grants and business loans Business distribution of funds to consumers Consumer incentives/rebates Payroll Sales incentives Per diem and cash allowances Travel allowances Payment of contractors Employee benefits/incentives Micro Purchase Card Claim Reimbursement Card

8 Governments are Participating in the evolution Some examples of Citi clients that are helping to drive the evolution United States of America Department of State European Bank for Reconstruction and Development Australian Government Reserve Bank of Australia Government of the Hellenic Republic Government of the Nigeria Republic of Austria Government of the Italian Republic Kingdom of the Netherlands Federal Republic of Germany Federal Government of the United Arab Emirates Deutsche Post Government of the United Kingdom Government of the State of Kuwait Central Bank of Nigeria United States Postal Service Government of the Tanzania Republic of Poland Kingdom of Norway Banque de France Government of the Russian Federation

9 Case Studies Government to Consumer and Business to Consumer Flows Mobile remittances in Africa Pension Payments Reserve Bank of Australia/Department of Works and Pensions (UK) Department of Defense - Travel Card Social Benefits via Card - Unemployment Benefits Maryland On-line Tax Collections Government of the Philippines

10 Case Studies: Mobile Remittances in Africa and Middle East Situation 95% of Tanzania s population do not have access to banking services. Formal banking services are largely restricted to urban populations. M-payments can offer secure and low cost money transfer capability to those people in the most rural geographies. Business Proposition Domestic m-commerce proposal jointly developed by Zain, Kuwait headquartered MNO, and Citi for launching a C2C money transfer service in Tanzania. Central Bank of Tanzania provided a No Objection for launching the M-commerce proposition in Mar This is the first m-commerce proposition approved by the regulators that covers not only the C2C flows, but extends to C2B, B2C and B2B flows. "This represents the latest chapter in our work to push the boundaries of mobile communications. For any market in the world, the combination of services we are providing would be exciting; when set in an African context, the implications are especially profound." Situation As well known, many of the developing Middle East markets have a high percentage of immigrant workers population. Immigrant workers typically do not have access to banking services and may be disadvantaged to establish convenient and secure means of cross-border remittances due to location of their employment. These high volume, low value cross-border remitters could significantly benefit from speedy, convenient, sure and low-cost money transfer capabilities at the tip of their hand. Business Proposition Cross-border mobile remittances proposal jointly developed by a leading Middle East based MNO, and Citi for launching a C2C money transfer service from a rapidly developing market to a selected destination countries globally. Regulator in respective jurisdiction have approved this proposal in Jan Dr. Saad Al Barrak, Zain Group CEO

11 Pension Payments: Reserve Bank of Australia This Central Bank in Asia Pacific acts as a banking service provider (shared service centre) for various government agencies. Citi helps this Central Bank in making pension payments to pensioners living overseas Need Distribute pension payments to thousands of pensioners living overseas 56,000 pensioners, 100+ countries; 4-weekly payments Offer flexible payment options to overseas pensioners Reduce cost of delivering payments overseas including foreign exchange costs and local clearing costs Solution WorldLink funds transfer capability offered to electronically transfer funds to over 100 countries. WorldLink ACH capability offered to reduce costs of electronically transmitted payments in 11 currencies and 21 countries by using low-value clearing systems Implemented CitiDirect Online Banking to support a straight-through process of transactions using file upload function WorldLink remote checks offered for foreign currency-denominated checks which clear locally (checks are used only when local regulations dictate) Results Flexibility: RBA chooses from a range of payment options including Funds Transfers, Checks and ACH. Reduced Risk and Exposure: WorldLink offers secure and efficient delivery of pension payments worldwide through a secure connectivity. WorldLink s Match Pay service and other fraud protection measures mitigate the risk of check fraud. Competitive Foreign Exchange Rates: Foreign exchange rates are applied at pre-agreed, competitive spread Local Payment: Payment is made in local currency to the pensioner enabling faster receipt of funds at a reduced cost

12 Case Study: UK Department of Works and Pensions UK Pensioners are able to obtain their benefits through multiple retail payment methods. One Account, Multiple Payment Options for the Beneficiary Mobile Payment (Alternative Solution) Barcode and Numeric Authorisation Closed Loop Immediate Access to funds Chip and Pin Card Closed-loop ATM Access/Link Personal Teller Service Contact-less Key Fob Closed Loop at selected Personal Teller service Immediate Access to funds 6 digit date of birth used as PIN Optional ID verification Magnetic Stripe Card Closed-loop Signature and ID Verification No Pin Could be same card stock as Chip card, but flagged in system as signature card Authorisation Code Numeric code requested by beneficiary over phone with CS Rep Each code is for single use for a designated amount Closed-loop Immediate Access to funds Chip and Pin Card AVAILABLE FOR DISASTER RECOVERY ONLY Open-loop MCC Code Restrictions ATM Access/Link Personal Teller Service Voucher (Alternative Solution) Open or closed loop Mirrors existing solution Immediate Access to funds Known process for beneficiary Personal Teller Service

13 Case Study DOD Travel Card Citi implemented the US Department of Defense Travel Card Business, the largest commercial card deal launched in the world Situation Provide travel cards for the US Department of Defense, the largest federal government travel card program ~$4.9B of spend (~60% of total federal government travel spend) ~1.2 million cardholders (~58% of total federal government travel cardholders) Departments cover Army, Navy / Marine Corps, Air Force and the Independent DOD agencies Cards are issued to DoD employees to facilitate payments of expenses for troop deployment, specialized missions, and business travel Need for greater specialized customer service and customized training Solution Innovative technological solution that reduces DOD s administrative overhead costs Dedicated Customer Services centers in both Singapore and Barcelona, with emergency card deployment across regions and a dedicated CBA reconciliation team Customized global training program to support DoD s mission critical operations Results 10 year contract awarded to Citi: 3 year award, with one 4 year option period and a subsequent 3 year option period Reduced footprint and workload for DOD in managing travel card spend Enhanced program management and visibility due to dashboard metrics and analytics Smooth transition to Citi, as key account managers were hired from the incumbent bank (BofA) to facilitate the transaction

14 Case Study: Maryland Unemployment Benefits Situation State of Maryland makes social benefit payments to over 800,000 citizens. Over $450 million is paid annually in unemployment benefits. 100% were paid via cheque. Goals Reduce the cost and operational burden of issuing cheques Move to electronic payments Solution Pay unemployment benefits on a Citi Prepaid Visa Card Results 100% electronic payment process Drastically reduced cost of fulfilling unemployment benefit payments Increased convenience and flexibility for beneficiaries

15 Tax Collections: Bureau of Internal Revenue, Philippines Payment 3.Verify Payment 4.Authorize Payment Work-flow 1.Log on to Website and complete form-filling 2.Initiate Payment CitiConnect Corporate client Tax Authority s Website 1.Create CitiConnect Payment 2. Query status of Payments Buyer s Process Seller Site s Process Providing tax-payers with the convenience and flexibility of making payments online and automating the back-office processes of tax authority by reducing/eliminating paper-work involved in the tax payments

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