How do banks position themselves in e

1
How do banks position themselves in em channels
and payments

• EPFSF/EIF joint event April 1 2008
• European Parliament, Brussels
• Dag-Inge Flatraaker
• General Manager, DnB NOR
• Chairman EPC Standards Support Group and EPC em
  Expert Group

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em payments -How do banks position themselves
in em channels and payments

• Agenda
• Internett banking the Nordic case
• eInnvoicing- EPC/SEPA e-commerce
  mobile channel approach

3
DnB NOR - By far the largest financial group in
Norway (40 market share)- Third largest in the
Nordic market (total assets gt200 billion Euro) -
One of the largest shipping banks in the world-
A main international bank in Energy
Helsinki
Copenhagen
Shanghai
Singapore
Chennai
Vilnius
Monchebank, Murmansk
Hong Kong
Luxembourg
New York
Houston
Copenhagen
Santiago
Helsinki
Rio de Janeiro
Stockholm
Hamburg
Warsawa
London
Tallin
Riga
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The Nordic and Baltic countries are well
positioned for the future. Example Norway

• Early adopters of new technology and high
  penetration in technology use
• 3 mill persons above 13 years with Internet
  access
• 2 mill people use the Internet daily
• 100 mobile penetration (40 in 1997)
• Fixed line penetration 73
• The most dynamic mobile internet market outside
  Japan
• The highest use of mobile content services
• Almost all households and corporates are using
  e-banking services (internet banking)
• Electronic multi-channelling and holistic
  approach has paved the way fora very efficient
  payment infrastructure

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Payment infrastructures and channels in Norway
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Payment infrastructures and channels in the
Nordic countries an example
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NORWAY SEEMS TO HAVE A HIGHLY FAVOURABLE PAYMENT
MIX, WITH LOWEST RETAIL CASH USAGE
Source McKinsey
Number of retail transactions per household
(percent)
1 758
1 970
1 505
1 467
985
1085
1 403
1 237
1 068
100
1 702
1 515
991
1 184
98
93
93
87
86
82
82
79
78
75
72
71
70
NO
Including E-Purse
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e-Invoicing - Streamlining the corporate value
chain

• What's at stake- potential huge savings for
  corporates- important in the context of the
  Lisbon Agenda
• Why banks- all people and businesses have a
  relationship with a bank- the banking industry
  can enable an environment of all-2-all
  electronic interface and communication in
  payments and electronic document exchange (e.g.
  order, order confirmation, invoicing, payment
  etc)- As banks we can ensure our clients of the
  legal validity of sender and receiver identity

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e-Invoicing/EBPP and the Nordic region

• Banks in the Scandinavian countries have for
  years been running national E-invoicing Schemes
• The Nordic banks have established a joint Nordic
  scheme for E-Invoicing
• Entails agreement on standardized formats and
  format conversion, Rulebook, Implementation
  Guideline (MIG) and Governance
• Will enable clients to exchange E-invoices
  between themselves across banks in the whole
  Nordic region (the first regional scheme in the
  world ?)
• Will, over time, enable huge savings for clients
  and could be an example to follow, we are
  building on international standards and are open
  for wider cooperation
• The Nordic banks welcomes European/SEPA and/or
  global solutions, the EU initiative helps driving
  this process.

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European Payments Council (EPC) and SEPA

• Established in 2002, purpose is to realize one
  Single Euro Payments Area (SEPA)
• One organization representing all European banks
• EPC has the authority to bind European banks in
  common decisions
• Strong pressure from the authorities
  (EU-commission, ECB)
• EPC covers the banking industry in all EU
  countries as well as EEA/EFTA-countries, which
  means 31 countries involving more than 8000
  banks/500 mio inhabitants/25 million corporates
  and SME's

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EPC structure for retail payments
Secretariat
Scheme Management Committee
Plenary
Audit
Stakeholder Forum
EM Expert Group
Coordination Committee
NGC
Standards SG
SEPA Payment Schemes WG
Cards WG
Cash WG
Programme Management Forum
Legal SG
Decision making body Process decision
making body
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The EPC response to mobile channels

• EPC Strategy on em
• EPC Plenary decision 18 December 2007- The
  Mobile channel for initiating payments is
  regarded as a priority area for the industry
  - Contactless payments are regarded as the
  most promising area to be prioritized first-
  The European banking industry will collectively,
  via EPC, work together with the mobile
  operators (and others) on cross industry
  cooperation
• Goal Together with GSMA (and EMVCo and others)
  explore/establish- high level principles and
  a framework for creating the necessary standards
  and business rules so that e.g existing SEPA
  schemes (SCT SDD) and SEPA cards can be
  leveraged- minimum requirements, standards and
  best practises for security for using a
  mobile to initiate payments
• SEPA Online Payments (SOP) at web merchants- EPC
  has decided to develop standards and a framework
  to allow for SEPA online payments at
  web-retailers

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Mobile banking - the next big step ?

• Need for cooperation on standards, security
  features and business models across industries
  (banks, telcos etc)
• Collaboration with Telecom/mobile operators
  necessary and key !!Mobile operators dominates
  today the mobile distribution(both handset and
  services)
• For both industries to succeed, business models
  needs to encompass both banks and mobile
  operators

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Usage of the Mobile Phone in Payments(categories)
Reduce Cash
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Mobile Payments Market some Mobile Payment
initiatives 2007
Belgium operators and Banksys launch SMS payment
Norway Telenor and banks launch BankID for
identification authentication
UK Vodafone and Citigroup announce remittance
venture
Netherlands NFC mobile payment pilots
(Rotterdam, Amsterdam)
Germany NFC implementation in public transport
in Frankfurt area
Austria operator-owned Paybox grows to 300,000
mobile payment users
France NFC pilots in Caen, Strasbourg, Grenoble,
Paris
Croatia 50 of parking fees paid by moble phone
Italy card issuer CartaSi launches ski pass
payment service
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Mobile financial services an example
Mobile services

• Mobile services as supplement to other
  channels(on-line banking, telephone banking,
  branches)
• Complete bank for clients not using PC's
• Banking services Account balances, transfers,
  bill payments,
  dialogue with the bank, alerts and incidents
• Added services Real estate, Stock trading,
  Insurance
• Payments services Payment for goods and
  services in the mobile
  channel, PC, TV, Payment instrument at
  point of sale
  ("wave and pay")
• Trusted services Authentication
  Signing

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Mobile financial services
Secure Element
Source Mobey Forum