Post on 10-May-2015
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E-CASH - MOBILE BANKING IN MEXICO
Didier Gutierrez Luis Morales Nokwazi Mzobe Takayuki Saito Ashish Tandon Irene Zubillaga
March 6, 2012
MACRO
-ENVIRO
NM
ENTAL FACTO
RS
MexicoDemographic
Economic
Technological Social & Cultural
Legal
Political
Demographic Economic Technological Social & Cultural
Legal Political
•114,975,406 population for 2011; 11th in the world•Approx. 78% of the people live in urban areas•Literacy rate 86.1%•Age Structure: 0-16 =28.2%, 15-64 = 65.2%, +65 = 6.6%•Immigrants to the US: 11.5 M (including temporal residents)
•Real GDP growth rate 3.8%; composition: 3.9% Agriculture, 32.8% Industry, and 63.4% Services•2011 Unemployment rate 5.1%; Labor force of 47.77 million•Inflation rate 3.5%•Gini Index: 51.7 (2008)•After oil, the second source of income for the state, is US remittance 21,271 million dollars•Part of NAFTA
•VoIP has gained huge popularity•Teledensity stands at 18%; ranging from 41% to 5%•Triple play service has started in Mexico (TV Cable, Telephone and Internet)•ADSL, is one of the fastest growing telecom markets
•76.5% Roman Catholics; 5.7% Protestants•92.7% Speak Spanish•60% Mestizo; 30% Amerindian; 9% Caucasian; 1% unspecified•Literacy rate 86.1%
•Legal System: civil law system with US constitutional law theory influence; judicial review of legislative acts•Accepts ICJ jurisdiction with reservations; accepts ICCt jurisdiction
•Federal republic, with three main parties: PRI, PAN & PRD•Considered to be politically stable, yet there is a ‘civil war’ against drug dealing
IND
USTRY AN
ALYSISBanking Industry Mexico
• Banking sector is dominated by commercial banks
• Four foreign-owned banks dominate the commercial
banking sector
• Services: online banking, loans, home and life insurance,
credit cards, savings deposits, promotions, transfer of
funds, lease of transportation, foreign trading and
purchase/sale of dollars, investments and mutual funds
through its large branch network and ATMs.
Mobile Banking Trends
• Mobile banking is emerging as a key electronic channel
for the global banking and financial services industry
• Global customer base projected to reach 1.1 billion by
2015
• Growing demand for microfinance, mobile remittances
and micropayments services from un-banked population
in developing countries is also expected to boost uptake
of mobile banking services
• Banking penetration in Mexico as of 2010 is around
54%
Opportunities for mobile money in Mexico• The acceleration of mobile remittance services alongside new
mobile payments highlights the opportunities for the mobile
phone to redefine the movement of money by:
• Lowering costs
• Increasing convenience
• Reducing fraud
30%
24%17%
8%
6%
4%1%
1%1%
8%
BBVABanamexSantanderBanorteInbursaScotiabankHSBCINGBajioOthers
Economist Intelligence Unit 2011
0
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
Dollars Number of Transactions
Mobile Subscribers ForecastFamily Remittances
Evolution of Payment Methods in Mexico
2010 2011 2012 2013 2014 2015 201670%
75%
80%
85%
90%
95%
100%
91 96102 107 111 115 117
Subscribers (Million) Penetration
• Mexico has 91.363 million of cell phone users in 2010
• 11th in comparison to the world
• Only 54% of the Economically Active Mexicans had a bank
account in 2010.
• Evolving from 35% in 2003
• 297M Interbank Electronic Transfers where made in 2011
• 98% on the international transfers to Mexico were made by
electronic sources
• Less than 1 million transactions were made offline
Banxico 2012 Monitor 2010
2002 20100%
10%20%30%40%50%60%70%80%90%
100%
67%
19%
16%
44%
16%35%
ChecksDebit CardsTransfersAutomatic Charges
Banxico 2012
Highlights
2007 2008 2009 2010
118
166
200
297
Operations (Millions)
IND
USTRY AN
ALYSIS
CUSTO
MER AN
ALYSISMarket Segments
• Policies
• ERP Integrations
• High volume of
transactions
Corporations
• Need of receipts and
fiscal compliance
• More than 30
transactions per
month
Small Business
• Less than 30 transactions
per month
• Looking for convenience
• Low price sensitivity
• Considering the ceiling
established by Banxico
Personal Users
Persona # 1: Juan Perez
Mexican resident who owns a cell phone. Appreciates the convenience of making a transfer to another Mexican resident with his cell phone. And the practical fact of withdraw his transferred money in any convenience store around the country.
Juan’s Needs: • Not having to open a bank account• Saving time (not going to a bank)• Convenience: Immediate Money and
Speed
Persona # 2: Mary Lopez
Mexican in a foreign country, and owns a cell phone. Works in a foreign country and need to send remittances to her family or relatives in Mexico.
Mary’s Needs:• Not having to open a bank account• Send remittances to their families and
relatives in Mexico. • Convenience: Immediate Money and
Speed
CUSTO
MER AN
ALYSISPersonal Users
International Operators
BUSIN
ESS MO
DEL – E-CASH
Retail Stores BANKST-MOBILE AT&T
Mexican Operators
Telcel Movistar
e-cash
PURCH
ASE PROCESS
Online RegistrationSMS Registration
Text Message Code
Security Configuration
COM
PETITOR AN
ALYSISE-Cash comparison - strengths & weaknesses
E-Cash comparison - opportunities & threats
Cash & Traditional Banking
• No need to be face to face to do the transaction• Create your currency denomination• E-Cash is new, thus it needs to get customer's trust• Check accounts do not generate interest• Traditional banks offer a wider range of services, hence possible expansion to offer
wider range of services• Reduce the cost of international transactions
Internet Banking
• No need for Internet connection• No need to have a bank account• Add the option of international transactions• Possible Hacking remains a weakness for both
Cash & Traditional Banking
• Growth rate of mobile users + market size• More services could be embeded in the application• Offer an easier way to transfer money internationally• International laws and regulations
Internet Banking
• Offer an easier way to transfer money internationally• Barriers of entry will be erected through the partnerships• Reduce Partnerships uniqueness by approaching everyone in the market• Share the same risk in terms of acceptance of new technologies by costumers• Open a new channel for illegal international and national transfers• E-cash has the threat of higher partnership risks• International laws and regulations
MARKETIN
G STRATEG
YMarketing Objectives
Marketing Objectives
• Achieve 18% of the Telephone users in 5 years• Industry Experts expects that
mobile banking reach 15% of the bank users in the next three years
• That 3% of the transactions from US to Mexico are made through our solution
• $98M USD in 2016• $53M USD from National
• $45M USD from International
2012 2013 2014 2015 2016$0
$20
$40
$60
$80
$100
$120
0
20
40
60
80
100
120
Revenues and Transactions
International National Transactions
National 2016Mobile Users 117Between 15 and 55 yrs old 99.45Market Share 18%Clients 17.9Avg. Trans per Month 6Avg. Price per Transaction (USD) 0.5Revenues ($M USD) 53.7
International 2016Electronic Remittances 75Market Share 3.0%Transactions 2.2Avg. Price per Transaction (USD) 20
Personality
Message
Promise
Vision
Substitute the use of cash in 2050
Provide our customers the most secure and convenient way to transfer money
• Affordable• Convenient• Practical• Trustworthy
• Energetic, fast, precise, family oriented, community oriented
MARKETIN
G STRATEG
YBrand Map
For Mary and Juan who want to transfer money anywhere, any time. E-Cash is a unique service that provides a simple and secure way to send and receive money.Unlike Traditional Banking, E-Cash delivers an easy to use mobile money solution.
Positioning
Money at the tip of my fingers
e-Cash
Research PlanM
ARKETING
STRATEGY
Primary Research How Where Objective1 Surveys Survey on Facebook Facebook
Questionaires at Government offi ces/ Post offi ces/ Grocery Stores Mexico & US
2 Focus GroupsRandomly select potential users, invite them to provide feedback
Mexico & US
Gathering opinions, beliefs, and attitudes about issues of interest to your organization; Testing your assumptions; Encouraging discussion about Mobile Money
Secondary Research How Where Objective1 Bench-Mark Study Articles, Research Journals, Blogs E-Cash offi ces Get Best Practices i.e. with M-Pesa in Kenya2 Competitor Analysis Articles, Research Journals, Blogs E-Cash offi ces Understand Competitor plans and objectives3 Industry Trend and Analysis Articles, Research Journals, Blogs E-Cash offi ces Understand size of Market, Potential for growth
Testing platform How Where Objective1 Beta testing with Focus group Monitor and test userbility Mexico & US Test platform and get firsthand consumer feedback
Post-launchPrimary Research How Where Objective
1 Surveysms based survey after 1st transaction, then after every 10th transaction
Mexico & US Gathering opinions, attitudes, areas of improvement
2 Focus GroupsRandomly select users, invite them to provide feedback. Every 3 months Mexico & US Gathering opinions, attitudes, areas of improvement
Segmentation, Consumer habits & Needs
Pre-launch Research
Campaign objectives• Create awareness of mobile banking and E-CASH in
Mexicans inside and outide the country• To actively inform people the advantages and solutions
of our service• Get people to visit our website, and take advantage of
our introductory product• Get Mexicans to feel their transactions are safe and
immediate • Become known as the best and trustable way to make
transfers
Touch point strategy:• Announce: Create mass awareness of E-Cash introduction
to the market• Educate: Educate Mexicans on how convenient and safe is
our service. Also educate our partners on how this will continuously increase their profitability
• Act: Create engaging consumer & mobile banking to bring E-Cash to life. Also create engagement with our partners and leverage on them to grow fast
Media insights regarding target consumer:• Heavy Radio Listeners & TV watchers with preferred consumption of
Spanish and Latin channels and stations• Public transportation users (commute)• Heavily influenced by culture and peer pressure giving Word of Mouth a
critical role for their lives
Campaign dates: April 1 – October 1 MARKETIN
G CAM
PAIGN
Juan Mary
Print Ads: •Buses•Trains •Retail stores
Print Ads: •Buses•Trains •Retail stores
TV: 2 major networks•8:00-9:00 pm Soap Opera•9:00-10:00 pm News
TV: Spanish networks
Social Media: •Facebook (4hrs/week)•Twitter
Social Media: FacebookTwitterLinkedIn
Road shows:•Smaller Towns
Radio
Soccer Games:•Stadiums
Church and Community Centers
EXHIBIT 1 – FIN
ANCIALS
Strategy Objective Method
TV Reach and impact massively while educating the customer
Commercials, sponsorship on targeted programming. Combine with partner’s TV commercials
Social Media Create awareness, education and continuous engagement
Through the Social Media: Facebook, Twitter, LinkedIn and Partner’s web sites.
Print Ads Create awareness & education
Spaces on public transportations and billboards in heavy traffic highways
POS Create awareness & education
Print Ads in partner’s retail stores (Walmart, Oxxo, Telcel, etc)
Radio Create engagement and excitement at launch
Activations at key radio stations- that have critical reach
Communications (Church/Communities
Continuously educate and highlight the convenience of our service
Continuous investment on Print Ads and workshops in churches, community centers, etc.
Consumer Activation Exhibit the differentiators benefits and drive consumer engagement by actual trials
Promotions with partners in order to offer the trial
MARKETIN
G STRATEG
YOVER
Offering + Money transfer service + High Security
Value + Transfer money any time, any where + Simple and secure
Experience + Control your finance at the tip of your fingers + Efficient use of your time + Easy to use
Relationship + Trusted Advisors + SMS Based Survey
Sales EnablementM
ARKETING
STRATEGY
1. Sales training session:
• Materials
• Feedback, etc.
2. Incentives and Compensation
3. Customer Analysis Data
• Customer behaviors
• Customer feedback
4. Buyer Personas
5. Directory of Technical Experts: Customer Service
6. Pre-Written proposal for our partners and customers
1 2 3 4 5 6 7 8 9 10 11 12 -
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Sales Fixed Cost Variable Cost Total Cost
Our Break-Even point is 1.3M Transactions
ANN
EX 1 - COM
PETITOR AN
ALYSISCash Traditional Banking Internet Banking
Strength
• Ease to use• Portable• Widely accepted
• Customer Service• Full range of services
to the customer.• More securer than
mobile banking
• Rapid growth of Mobile and wireless market
• Substantially better interest rate than those offered at traditional banks
• Protect our environment by using e-banking.
Weakness
• Secure to keep it by ourselves• Does not generate interest• Easy to falsify• Transaction has to be done in
person• Devaluation risks
• Need to go to the branch
• Time limitations• International
transactions are complicated and costly
• Lack of awareness about the new channel among the mobile users.
• Security concerns about the new channel
• No Personal Customer Service (when we faced troubles and questions)
• Hacking, spyware program, computer virus and breaking online password are the weakness of e-banking or online banking.
Opportunity
• New technologies to produce safer bills
• Ecofriendly bills
• Geographic expansion • Rapid increase in the Mobile user base and acceptance of the Mobile technology even in Rural areas makes a bigger market available for mobile banking to expand.
• With technology advancements in Mobile handsets rich features can be embedded in the application.
Threat
• Newly joining companies• Traditional banking, Mobile
banking• Internet banking
• Newly joining companies
• Acceptance of new technology by users.
ANN
EX 1 - COM
PETITOR AN
ALYSISTelcel / Banamex
TransferTelefonica / Mastercard E-Cash
Strength
• Telcel has more 80% of the Cell Phone Market Share in Mexico
• Banamex is the second largest bank in Mexico
• Strong security
• Telefonica is the 2nd largest Cell Phone Operator in the country
• Partnership with Mastercard
• Easy to use• No need to have a bank
account• No need for Internet• Functions in all Cell Phone
Providers
Weakness
• Bad customer service• Bad reception in some
areas
• Need to have a bank account
• Still need to interact with your bank
• You need a credit/debit card
• No compatible with American Express
• People need to learn how to use it
• People need to learn to trust it
• Hacking, spyware program, computer virus and breaking online password are the weakness of e-banking or online banking.
Opportunity
• Will offer the services to the unbanked
• Partnerships with Online stores
• Market size• Faster and easier way to
transfer money internationally
• Market value
Threat
• They don’t develop their own software
• Fierce competition with Telcel
• Partnerships• Harder to regulate by the
government
ANN
EX 2 - FINAN
CIALSE-Cash PnL
Year 1 Year 2 Year 3Net Sales 16,873,220 25,271,550 38,039,107Cost of Goods Sold 2,530,983 3,790,733 5,705,866Fixed Costs 5,061,966 5,061,966 5,061,966Operating Costs 2,580,000 2,627,155 3,903,911Depreciation & Amortization 1,518,590 1,518,590 1,518,590Total Costs 11,691,539 12,998,443 16,190,333Operating Income / Earnings Before Tax 5,181,681 21,125,806 32,616,607Less Tax (30%) 0 6,337,742 9,784,982Net Income 5,181,681 14,788,064 22,831,625% Margin 31% 59% 60%
Best Case
E-Cash PnLYear 1 Year 2 Year 3
Net Sales 5,624,407 8,423,850 12,679,702Cost of Goods Sold 843,661 1,263,578 1,901,955Fixed Costs 5,061,966 5,061,966 5,061,966Operating Costs 2,580,000 2,527,155 3,803,911Depreciation & Amortization 1,518,590 1,518,590 1,518,590
9,160,556 9,107,711 10,384,467Operating Income / Earnings Before Tax -3,536,149 4,378,105 7,357,202Less Tax (30%) 0 1,313,432 2,207,161Net Income -3,536,149 3,064,674 5,150,041% Margin -63% 36% 41%
Worst Case
ANN
EX 2 - FINAN
CIALSModel for Chapter 11, Basics of Capital Budgeting 12/12/08
Data on Projects S and LWACC for both projects: 10%
Initial Cost: TotalYears: 0 1 2 3 4 InflowsProject S: -$2,480,000 $16,873,220 $25,271,550 $38,039,107 $0 $80,183,878
(Text Section 11-2)
0 r = 10% 1 2 3 4-2,480,000.00 16,873,220 25,271,550 38,039,107 10015,339,290.9120,885,578.8928,579,344.42
0.00NPVS = $62,324,214.22 Sum = NPV for Project S
NPV
After-Tax, End of Year Net Cash Inflows, CFt:
Project S