Banglalink mWallet

1. Banglalink mWallet Delivering Mobile Financial Services in Bangladesh May 2011

2. Market Overview

3. Bangladesh Market Overview Major KPIs impacting the formulation of the remittance business Socio/Economic Country • Population 158 M • GDP per capita $1,600 • Literacy rate 47.9% • Rural population 33.5% Mobile market Country • Mobile penetration 38% • ARPU $ 2.25 • Data revenue share 5% • SMS rate per user BDT 0.25 ~ 2.00 Banking market Country • Unbanked population 87% 49 • Number of banks 3 • Number of mobile banking operators Source: AAA

4. Bangladesh International Remittance Outlook Send markets Developed economies Receive markets Bangladesh $10 billion $20 billion 9 mn 6.1 mn 2015 2010 2010 2015 Global Remittances (estimates dollars)* Global Migration (estimates people)**

5. Migration & Employment Overview • 6.1 million expatriate workers • 63% workers migrate to UAE and KSA in 2009

6. Migrant Demographic Profile • Unskilled and semi-skilled workers comprise 67% of migrant population • 63% workers migrate to UAE and KSA in 2009 • Average migrant earnings range between USD 500 and USD 2,000 monthly • Average remittals by emigrants range between 30% and 40% of total salary

7. Remittance Channel Usage - Factor of Many Conditions • Remittance channels in Bangladesh are regulated and monitored by Bank of Bangladesh • Banks have 43% share of total remittance market • Factors increasing remitter’s affinity towards formal remittance channel include: • High level of education • Large transaction • High salary • Average age of migrant workers holding a bank account is 36 years • Bank account ownership increases in older age groups of migrant worker * IOM, 2009 Survey

8. Beneficiary Profile • 61% of total household income of beneficiary families is generated by remittance • Average annual income of respondents receiving remittance amounted to US$ 2,455 as compared to US$ 1,459 of non-recipients * IOM, 2009 Survey

9. Mobile Wallet Service & Consumer Experience

10. Service Drivers • High cost of access to banking • services/High transaction costs • Presence of banks mainly in big • cities leading to difficulty of access Presence of rural Community 8% Banked • Presence of large migrant population • Difficult • geographical • terrain • Limited • transport • services Migrant Population 20% Poor transport infrastructure 60% Popularity of Mobile phone • Domination of mobile phones • Very low fixed line penetration • Geography more conductive to • development of mobile networks

11. Objective Banglalink Mobile Wallet leverages the mobile to build a far-reaching convenient , reliable and secure payment services network Purchasing Power Parity USD 1000 – USD 2000 Purchasing Power Parity USD < 500 Banks Purchasing Power Parity USD < 1000

12. Serving Low-income Customers - Different customer, different product “Regular” Bank Customer BOP segments • Stable income • Purchases multiple products ($$ for bank) • Basic literacy –rational decisions • “Close” relationship (speak same language) • Unstable income • Limited “spare” cash –bank has to compete for share of pocket • Low literacy –rational and irrational decisions (only numeric literacy presumable) • Relationship through third party • Frequent interaction with telecom retailers (usually prepaid) • “Regular” Bank Customer BOP segments

13. Banglalink mWallet • Cash In/Cash Out • Domestic Transfer • International Money Transfer • Utility bill payment • Mobile Ticketing • Payroll services • Disbursement and repayment of micro loans using mobile money for Micro -finance Institutions • Services • Services in Pipeline

14. mWalletStrategic Priorities Agent Network Ecosystem & Open Services Approach Mobile Financial Service Marketing Pricing

15. Agent Networks – Optimize Supply • Backbone of the remittance services network • Last-mile for service delivery to customer • Responsible for maintaining cash/liquidity in the ecosystem • Responsible for customer marketing and support • Interface between customer and telco Note: Number of OTC transactions have been reduced to scale by 90%; Reflect cumulative mobile financial services transaction trends in Banglalink

16. Critical Success Factors for Agent Networks Availability & Accessibility Liquidity Agent Incentives Agent Education Customer Support Size of agent network Volume of transactions conducted by the agent network Right incentive structure key to promote service at point of sale Relationship with agent network supervisor Relationship with agent network supervisor Spread of agent network Cash Cycle and Incentive

17. Agent Network • Agents in the domestic market are selected from a pool of 100,000 retail agents • Current 5,000 Mobile Cash points • Rural to Urban ratio is 40: 60 • Agent Selection • Financial Credentials • Agent track record: 5 year record of airtime stock sales per agent • Regional sales officer assessment • Idle cash (35,000 taka per transaction) • Ability to balance payables and receivables • Ability to handle 10 remittance transactions per day • Valid trade license • Location and proximity to customer • Agent literacy and education levels • Agent reputation Banglalink Regional Sales Officer (12) Distributor (115) Dealers 2,000 SIM Selling Outlets 35,000 Airtime Retailers 100,000 50 million mobile users Mobile Cash Points 5,000

18. Agent Liquidity • Optimal Services Mix: Maintains optimal ratio between cash inflow and outflow transactions • Seed Capital: Make upfront investment of 150,000 BDT (2238 USD)to enter the business which serves as a form of guarantee in a solvency crisis • Cash Reserve Ratio: Maintain a minimum fixed cash reserve ratio equivalent to meet on-demand obligations for cash • Transaction Thresholds: Caps daily wallet-based withdrawals (5,000 taka) in order to maintain system-wide liquidity. • Encourage-B2B Transactions: Enables agents to use e-float to purchase airtime, and pay distributors • Lender of Last Resort: Extend discretionary emergency liquidity assistance’ against airtime as collateral • Doorstep Delivery: Deliver cash at the agent doorstep, saving time and opportunity cost of rebalancing liquidity holdings Note: Numbers are indicative

19. B Agent Incentives Agent Commission Structure • 5,000+ retailers offer remittance services • 95% transactions are done using the OTC channel • Incentive schemes based on combination of fixed commission on registration and percentage of value per transaction

20. Mobile Financial Services Agent Network Ecosystem & Open Services Approach Mobile Financial Service Marketing Pricing

21. Mobile Wallet Ecosystem • Utilize players’ key area of strengths and expertise opportunities in the m-commerce space   Mobile Wallet Ecosystem

22. Open Services Approach • Open Services Approach • Open Services: Forge bilateral and multilateral partnerships with MTOs and banks to expand services network • Open Business Models: Facilitate service interoperability by • Allowing customers to send remittances to mobile users on any network • Support for OTC Transactions • Open Technology : Work with technology partners who share the vision of financial inclusion via interoperability

23. Mobile Financial ServicesBuilding blocks Agent Network Ecosystem & Open Services Approach Mobile Financial Service Marketing Pricing

24. Service Pricing • No monthly fees • Zero minimum balance • Low transaction fees • Zero fee on encashment

25. Mobile Financial Services -Building blocks Agent Network Ecosystem & Open Services Approach Mobile Financial Service Marketing Pricing

26. Marketing Indicative Growth in Mobile Money Transactions • Press ads • TVCs • Billboards • RDCs • Leaflets • POS branding • PR • SMS Blasts • Retail outlets Successful marketing mix creates buzz Awareness to Usage No. daily of transactions (in 000) Time (over period of 6 months)

27. Ad campaigns

28. Transactions Growth • Between April and October 2010, the MFS platform witnessed: • 38% month-over-month growth in total transactions • 443% month-over-month growth in total transaction value • Out of total transactions in the seven month period: • 47% accounted for money transfers • 53% accounted for utility and mobile ticket services

29. How it Works

30. Registration 2 1 5 6 4 3 5a Registration Customer visits the BL Retailer and submits Account (Mobile Remittance) Opening Form and KYC documents BL Mobile Cash Point Retailer takes registration fee from the customer, Registration complete Bank Subscriber Retailer initiates registration from their handset using USSD Menu Based on the bank reply, BL notifies the retailer The customer information Is passed to the bank Creates customer wallet account and generates PIN which is mapped on to the customer’s MSISDN Sends a SMS alert that account has been generated and PIN through SMS Bank System registers the customer and notifies (Positive/negative) mobiquity

31. Cash-In 4 7 3 5 6 1 2 Sends intimation to subscriber Retailer’s BL MFS PIN Bank Code (e.g. DBL) Transaction Amount Customer deposits cash with a retailer mobiquity Customer can now use the money in the stored wallet account to transact BL Mobile Cash Point Debit Retailer Wallet with Transaction Amount + Total Fees Subscriber Verifies the Retailer PIN, Wallet balance Credit Bank Wallet with Transaction Amount Forwards the transaction to bank system after blocking the retailer wallet balance equal To Transaction Amount + Total Fees Verifies the customer Wallet and approves the transaction Performs the necessary transaction operation before sending confirmation to BL system Bank

32. Cash-Out 4 7 6 5 3 1 Retailer’s BL MFS PIN Sends confirmation to customer 2 Transaction Amount Customer visits Retailer for Cash Out mobiquity BL Mobile Cash Point Subscriber Customer receives the cash from the retailer. Cash Out Process completed Credit retailer wallet with transaction amount Verifies the Retailer PIN, Wallet balance Debit bank wallet with transaction amount Forwards the transaction to Bank\System after blocking the retailer wallet balance equal to transaction Amount Verifies the Customer Wallet and approves the transaction Performs the necessary transaction operation before sending confirmation to BL system Bank

33. Cash-Out at ATM ATM sends request to their bank Customer goes to any ATM Switch sends verification request to BL MFS Bank sends request to switch 2 7 8 1 3 4 6 4 5 Customer Bank mobiquity Cash dispensed, customer Receives the cash Switch connected to ATM interface BL Verifies the transaction Sends verification to bank Bank gives instruction to the ATM

34. International Remittance First Mile (UAE) Validates the customer and sends notification to bank 2 1 Deposits Cash Bank sends Beneficiary MSISDN , Coupon ID, Amount, and Beneficiary Name Bank 3 Sender (UAE) Agent (UAE) mobiquity • Verifies transaction • mMoney credited to master pool account if cash to cash transaction or to customer wallet if cash to wallet transaction Sender receives transaction PIN, exact amount in BDT, and sending bank name through SMS 4a Sender notifies the transaction PIN, exact amount in BDT, and sending bank name to the beneficiary 4b Beneficiary receives notification with coupon id 4 Cash to Wallet Channel Benefeciary (BL) Cash to Cash Channel Common Channel

35. International Remittance Last Mile ( Bangladesh) – Cash to Wallet Beneficiary sends confirmation (“YES <PIN>”) through SMS 11 Platform requests transaction confirmation 10 Platform sends conformation SMS with transaction ID 12 Retailer confirms the beneficiary identity through SMS 9 4 • Verifies Retailer on receiving request • Verifies customer on receiving Transaction PIN • Money debited from pool account and credited to agent account Beneficiary fills encashment form and produces ID proof Receives SMS notification with coupon ID and visits retailer Retailer enters beneficiary transaction PIN through SMS 5 6 Retailer verifies ID of the beneficiary Platform sends beneficiary details 8 7 Beneficiary (Bangladesh) Agent (Bangladesh) 13 Receives cash Platform sends conformation SMS with transaction ID mobiquity 12 14 Sends reconciliation report Bank

36. International Remittance Last Mile ( Bangladesh) – Cash to Cash 4b Beneficiary fills encashment form with transaction PIN, exact amount in BDT, sending bank name and produces ID proof Retailer confirms the beneficiary identity through SMS Receives transaction PIN, exact amount in BDT, and sending bank name from the sender 9 • Verifies Retailer on receiving request • Verifies customer on receiving Transaction PIN • Money debited from pool account and credited to agent account 5 Retailer enters beneficiary information through SMS 6 Retailer verifies ID of the beneficiary Platform sends beneficiary details 8 7 Beneficiary (Bangladesh) Agent (Bangladesh) Platform sends conformation SMS with transaction ID 11 Receives cash mobiquity 10 Sends reconciliation report 12 Bank

37. "MO TO <<Sender Name>> PIN<16 digit Unique Transaction PIN> > TK <Money Order Amount> COMM<Fees>IDT<< Issue Time:Date>> IPN <<Issuing Post Office Name>>” Domestic Money Transfer Issue 2 1 3 BPO Officer issues the money order either from the web or through mobile phone BPO Branch Electronic Money order sender comes to the BPO Office and hands over the Cash and Money Order issue Form Sender immediately receives the confirmation SMS with Unique Transaction PIN EMO Issuer Sender Mobile

38. ""PAYMENT SUCESSFULLY.PIN<PIN NUMBER>AMT<4000>BN<Beneficiary Name> BA<Beneficiary Address>RPC<receiving post office code>” Electronic Money Order Disbursement 3 2 5 4 1 BPO Officer verifies the PIN and other information from web or through mobile phone BPO Branch Beneficiary goes to the Post Office and submit the form with the Unique Transaction PIN and Amount Beneficiary receives cash from the BPO Official Automatic system generated “EMO Paid” SMS is sent to the sender mobile number Sender sends the Amount and 16 Digit TPIN to beneficiary through own means e.g. Phone/Fax/Letter etc. EMO Sender Sender Mobile EMO Receiver/Beneficiary

39. Mobile Ticketing • Transaction can be initiated by registered customer or agent • Customers can book tickets for any destination in Bangladesh • mTickets can be printed at any 500 Banglalink Service points or the railway station • Tickets can be bought from the Dhaka and the Chittagong stations to any destination in Bangladesh welcome to Banglalink mobile train ticketing service enter your pin mobile ticket 1. buy ticket enter journey date (only dd) 1 *131# **** type *131# press answer to enter the PIN Enter your PIN Press answer to enter your choice Enter the option no. of your choice Press answer to enter journey date destination station 1. chittagong 2. chitosi_road enter first 3 characters of destination station source station 1. dhaka kamalapur 2. dhaka airport 3. chittagong 15 chi 1 Press answer to enter Your choice Enter the first 3 chars of destination station Press answer to enter the 3 chars of destination Enter the option no. of your choice Press answer to enter your choice Enter journey date Continued

40. Mobile Ticketing Continued select passengers 1. one male 2. one female 3. two adults 4. three adults 5. four adults 6. 2 adults 1 child 7. 2 adults 2 child 8. 3 adults 1 child select class 1. ac_berth 2. ac_seat 3. fc_berth 4. fc_chair 5. snigdha 6. shovan chair 7. shovan select train 1. Subarna express 2. Mohanagarprov 3. Mohanagargod 4. turna_express 1 1 2 enter the option no. of your choice press answer to select the train train selected press answer to enter your choice enter the option no. of your choice press answer to select the passenger option the cost of the requested ticket is bdt 2,000 (including service charge). please select 1. confirm 2. reject 0 ticket booked successfully txn id: xxxxxxxxxxxx enter your pin 1 xxxx 1 response message enter your pin press answer to enter the pin enter option enter the choice to confirm the transaction select passenger option

41. Mobile Bill Pay • Customers can pay bill for the BPDB Mymensingh and Rangpur zone • Bills can paid through individual’s own mobile phone or at Banglalink bill-pay points • Bill amount is deducted from customer’s mWallet balance welcome to Banglalink mobile train ticketing service enter your pin Services Bill pay Mobile Ticket Money Transfer Location Mymensingh, Tangail, Sherpur 1 *131# **** type *131# press answer to enter the pin Enter your pin press answer to enter your choice enter the option no. of your choice press answer to enter your choice Bill amount 256 Bill no. 476391929 Bill paid successfully txn id: xxxxxxxxxxxx Consumer no. 22989712 1 xxxx Response message Enter Pin Enter bill amount to be paid Enter consumer number Enter bill number Enter the location of your choice

42. Comviva mobiquity Platform

43. Banking the Unbanked • Large population of financially hungry users • 75% - 80% households have no access to bank accounts Fraction of households with an account in a financial institution Source World Bank

44. The Unbanked • Significant segment of the unbanked belong to the base of pyramid segment • Direct correlation between income and banking access *Source: World Bank

45. Potential Impact of Mobiles • Exponential growth in mobile telephony services penetration • Emerging markets (characterized by poor banking infrastructure) contributing over 50% of new subscriber adds • Mobile offers the potential to accelerate delivery of formal financial services to the BOP segment at a lower cost than traditional banking and payment methods 1.6 billion bank accounts 6.5 billion world population 4 billion mobile users & growing Source CGAP

46. Solution - mobiquity™ Comviva has developed the award-winning mobiquity™ platform and applications running on this platform to address market requirements. • mobiquity™ mMoney • Stored Wallet functionality for providing access to financial services for unbanked segment with MFI applications for Microfinance Institutions • mobiquity™ mBanking • Banking services via the handset to make banking services Mobile • mobiquity™ mPayments • Range of merchant payment and different bill payments options over the mobile

47. mobiquity™ mMoney Architecture Multi Bearer Access Modular Architecture Enhanced Security Open API Network Independent • Scalable platform with open APIs to third parties • Open-to-all - network agnostic and handset independent • Secure

48. Entity Management Entity Management involves registering & profiling of various entities which are part of and interact with mobiquity™ MFS system

49. Business Management Business Management Module of mobiquity™ platform allows the system operators to create & assign the different business profiles to different entities in the system.

50. Wallet Management • A wallet is a virtual account identity created and hosted in the mobiquity™ system. Each wallet type clubs together similar type of Payment modes/Business scenarios. • (mobiquity™ also has the ability to create and maintain stored wallets and handle stock as well as payments/transactions via the same.)