How do banks position themselves in e&m channels and payments

1. How do banks position themselves in e&m 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 e&m Expert Group

2. e&m payments -How do banks position themselves in e&m channels and payments • Agenda • Internett banking – the Nordic case • eInnvoicing- EPC/SEPA – e-commerce & mobile channel approach Dag-Inge Flatraaker – DnB NOR

3. Branches DnB NORD Subsidiary Rep.offices Asset Management DnB NOR –- By far the largest financial group in Norway (40 % market share)- Third largest in the Nordic market (total assets >200 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 Dag-Inge Flatraaker – DnB NOR

4. 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 Dag-Inge Flatraaker – DnB NOR

5. 1972 Bankgiro and ATMs National Giro system and ATM scheme 1980’s National card scheme EFTPOS Cashback introduced 1995 Cash-back offered as a separate service 1990-95 Interbank clearing and settlement NICS (clearing) and NBO (RTGS) 1996 Internet Banking introduced 2000 E-invoicing eFaktura (EBPP) 2001 Bank in Shops (BiB) introduced 2006 2003 Mobile banking Mobile access to financial services BankID (PKI) Trusted Services Payment infrastructures and channels in Norway Dag-Inge Flatraaker – DnB NOR

6. Payment infrastructures and channels in the Nordic countries – an example Dag-Inge Flatraaker – DnB NOR

7. Cash Check Cards* Direct Debit Transfers PL SP IT PT GE AT SE CH BE NL UK FR NORWAY SEEMS TO HAVE A HIGHLY FAVOURABLE PAYMENT MIX, WITH LOWEST RETAIL CASH USAGE Source: McKinsey Number of retail transactions per household (percent) 100% 1 758 1 970 1 505 1 702 1 467 1 515 985 991 1085 1 403 1 237 1 068 1 184 98 93 93 87 86 82 82 79 78 75 72 71 70 NO Dag-Inge Flatraaker – DnB NOR * Including E-Purse

8. 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 Dag-Inge Flatraaker – DnB NOR

9. 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. Dag-Inge Flatraaker – DnB NOR

10. 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 Dag-Inge Flatraaker – DnB NOR

11. EPC structure for retail payments Plenary * Secretariat Scheme Management Committee * Audit Stakeholder Forum E&M Expert Group Coordination Committee ** NGC Standards SG SEPA Payment Schemes WG Cards WG Cash WG Legal SG Programme Management Forum * Decision making body ** Process decision making body Dag-Inge Flatraaker – DnB NOR

12. The EPC response to mobile channels EPC Strategy on e&m • 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 Dag-Inge Flatraaker – DnB NOR

13. 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 Dag-Inge Flatraaker – DnB NOR

14. Mobile Banking • Using Mobile network • On-line Channel Authentication • Security Token • Alternative Channelfor Authorisation Mobile Contactless • Proximity payments • “Tap-and-Go” • NFC technology Usage of the Mobile Phone in Payments(categories) Reduce Cash Dag-Inge Flatraaker – DnB NOR

15. 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 Dag-Inge Flatraaker – DnB NOR

16. 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 Dag-Inge Flatraaker – DnB NOR

17. Information e-ID Account management e-signature Bill payments Online / Offline SMS, BROESER, CLIENTS login Trading TrustServices Banking Alerts POS Remotepayments Proximitypayments Tickets Vending SMS, BROWSER, CLIENTS Tickets NFC Top Up Fast food Content Parking ATM Mobile financial services Secure Element Source: Mobey Forum Dag-Inge Flatraaker – DnB NOR