IBS Journal Supplement 2015


‘Banks have understood that, whatever they do,


they cannot do it on their own.’ John Broxis, MyBank


The mobile financial services sector


can be viewed as made up of three parts: o mobile payments – utility bill pay-


ments, mobile ticketing, top-ups, mer- chant/retailer payments); o mobile money transfers –


business-to-business (B2B), business/ government-to-consumer (B/G2C) – salary disbursements, pensions, rebates, welfare, and P2P, whether domestic or interna- tional); o mobile finance – including insur-


ance, savings and loans/credit. Gartner has estimated that the mobile


payments market alone will reach 450 mil- lion users and a transaction value of $721 billion by 2017. The rapidly evolving picture is mir-


rored by some vendors. A prime exam- ple is Amdocs. This Nasdaq-listed heavy- weight has traditionally been in the tel- cos sector but has been moving into the mobile financial services space of late, following its $20 million acquisition of Sin- gapore-based Utiba in March 2014. Utiba brought with it a platform called U:market which is described, interestingly, as a ‘light core banking system’. This platform had emerged over time, following the founda- tion of Ubita in 2001, and had been taken to underpin a number of projects around the globe ahead of the arrival of Amdocs. The acquisition marked a next step in


Amdocs’ own evolution, from its focus on carrier billing and mobile payments pro- cessing in North and South America, to direct carrier billing, payments processing, and then into the mobile financial services platform space. In part, as with the latest move, the broadening has often come via acquisitions.


In terms of using traditional legacy


core banking systems for mobile finance, Jonathan Kaftzan, head of marketing at Amdocs, uses the comparison of a truck trying to compete in a Formula One race. The truck has the same basic components as a racing car but was built for very differ- ent purposes. The Utiba platform supports basic banking requirements, including KYC, account management and reporting, but its ‘DNA’ is tailored to low-cost, real- time agile services, plus the challenge of supporting large agent networks, which can sometimes run to millions of outlets. ‘The core banking legacy is hard to adapt to the needs of mobile financial servic- es,’ says Kaftzan. A bank with the U:mar- ket platform will integrate it with its core banking system, as these will need to be aligned, he points out. A telco can also operate the platform but even then would need to have a trust account system at the back-end. Kaftzan describes U:market as a ‘zero


balance reconciliation system’, mean- ing that when money is sent from one account, it is deposited in another in real- time. ‘The banks really like that because it addresses AML.’ U:market also has rules for aspects such as ‘velocity’ – in other words, it monitors for unusual patterns of trans- actions and can block these if it detects possible fraud. One of Utiba’s first projects was in


the Philippines, to support the GCash mobile money service of domestic telco, Globe Telecom. The pilot saw the country’s Department of Social Welfare and Devel- opment working with LandBank to distrib- ute government payments to residents. This uses many outlets, including banks,


© IBS Intelligence 2015


airtime loading stores, phone shops, gro- cery stores, hardware stores and foreign exchange bureaux. Elsewhere, around the same time (2009/10), there were the telco-led initi- atives appearing, of which the most suc- cessful and famous is clearly M-Pesa in Kenya. Banks were in the background and telcos operated the entire business, mere- ly reporting to the banks the end-of-day balances and transactions. ‘The telco, in some ways, was the system of record,’ says Kaftzan. ‘In the last couple of years, banks have


been starting to get into the market more and more, with telcos only providing the network,’ says Kaftzan. In part, the shift is due to heightened interest from banks. ‘Before, there was some resistance to serv- ing the unbanked. Today, they understand that if they are using the right technology, this can help them to serve these people in a profitable way.’ And of course, the number of people


that remain unbanked is still mind-bog- gling (according to the World Bank, around 2.5 billion people lack a bank account, which is more than those that have one; at least 1.75 billion of the unbanked do have a mobile phone). Many people believe that the next


dramatic change will be the arrival of low- cost smartphones, which will have a big impact on how people access financial services and make payments across the globe, not solely in developed markets. If banks can provide a bank account and other financial services via the mobile phone, then that is a much smarter way than building a branch network, Kaf- tzan points out. It is perfectly feasible to


www.ibsintelligence.com 15


analysis: mobile banking


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