Congreso de Acceso a Servicios Financieros, Sistemas y Herramientas de pago Cartagena– March 2010

1. Congreso de Acceso a Servicios Financieros, Sistemas y Herramientas de pago Cartagena– March 2010 Aprendiendo de los diferentes modelos de banca móvil en el mundo Implementing new mobile money strategies to increase revenues for Banks, MNOs and Retailers

2. YellowPepper YellowPepper provides mobile financial services that allow consumers, businesses and institutions to effectively conduct monetary and financial informational transactions using a cell phone.

3. The Company Current Status • The Company has successfully penetrated the banked market in six countries. • Presently handles more than 5,300,000transactions per month. • Addressing over 1,700,000 unique users in those six countries.

4. Current Partner Operators Ecuador Colombia Bolivia Peru Guatemala Panama Soon: Dominican Republic

5. Clients: Financial Sector Ecuador Colombia Bolivia Perú Guatemala Panamá Cooperativa Alianza Minas

6. Nuestros Clientes: Sector Comercial

7. Partners Colombia: All regions:

8. Banked and Unbanked Access to Financial Services Source: Felabanc

9. World is moving towards electronic money… Us Market: Share of Payments by type

10. Emerging markets lag behind… Emerging Markets Share of electronic / card transactions : Just 3 emerging Markets above: Over 65% of population; only 9.5% of electronic transactions. HUGE GAP!

11. Lots of room … lots of opportunity Payment cards per person – top 20 countries 2.69 Just one aspect of electronic money infrastructure – Cards (plastic e-wallets) Emerging markets have not embraced electronic payments yet. Opportunities are large and growing. For banks, retailers, governments, Telcos, processors, others (e.g. Fbook, Skype, Microsoft, etc.) 0.03

12. IFC Key drivers: • Electronic money no longer a wish or fantasy – now a requirement for modern life • E-Commerce / m-commerce driven demand; physical distance between service / product providers and consumers keeps increasing • Virtual / dematerialized goods and services (are propelling a self servicing society or lifestyle); • Retail automation allows and requires electronic money; organized retail prefers not to handle cash • Less and less cash issued (governments, businesses pay through banks, payment cards) • Technology advances in terms of (a) “last mile connectivity” and (b) lower cost of terminals • Advances in mobile technology promises that this newest extension of the payment infrastructure, presents a large opportunity (note: architecturally and functionally, it is not entirely new territory).

13. IFC Why does the World Bank Group / IFC care • Electronic money brings transparency, inclusion, speeds up economic processes [WBG AGENDA: reduce corruption, money laundry, grey economy] • Electronic money is deposited money – it is “saved” money and it is “investable” money. [WBG AGENDA: Savings Mobilization] • Electronic payments infrastructure allows for the “last mile” connectivity between financial institutions and clients bringing down servicing cost and improving interaction; [WBG AGENDA: Access 2 Finance] • The commercial opportunity is also large given the enormous gap that needs to be filled…[IFC AGENDA: Demonstration of commercial success]

14. Bank Strategy Comparison of the cost of a banking transaction by channel in a bank in S.A. and % transaction migration to the mobile channel in 2 years:

15. IFC World Bank Group Offering: Pro-progress, competition friendly policies Advisory, consultative services and research [Under development] IFC Core Business (help design, develop and grow commercial opportunities) Scale through main-streaming Fund early/growth stage companies Fund seed-stage companies or initiatives Research and experimentation Develop the necessary echo-system (A2F) Develop Payments -friendly Regulatory Framework

16. Current MFS Situation • World Wide tendency for both: Banked and Unbanked population • The purpose is to increase the access to financial services • Solution implementation has depended on available technology (Handsets + MNOs infrastructure) • Most of the current solutions include mix architectures (Several technologies) • Compare with other e-channels two new elements must be considered: The MNO and the handset • The solution must consider a constant evolution base on environment requirements (New Business Models, New Technology, New actors, etc.)

17. Challenges ahead (1/2) • New environment (Banks/Solution Suppliers/MNO/End users/) • Different risks base on the technology and Business Model chosen • Regulatory Policies • Cultural differences and needs for the different countries in Latin American region. • Integration into already existing monetary/transactional systems

18. Challenges ahead (2/2) • Balance between technology and operational controls • Registration of customers. • Adoption of the services offered in the mobile channel • Different technologies for different users • Agent (Cash-in/Cash-out) network – M-Wallet • Integration of major sector of the economy, like: utilities, retailers, distribution of mass consumer products, etc.

19. Available Technologies

20. Service Options • M-Wallet • M-Payment • B2B (Purchases) • B2C (Purchases) • Mobile POS (Purchases) • Remittances (Money Transfer) • M-Banking • Saving and Checking account • Credit card payment • Accounts balance request • Money Transfer • Utilities service payment • Other Bank e-services M-Remittance M-CommerceVirtual POS M-B2B M-Wallet M-CommerceTop-Ups M-Payment M-Banking M-Info

21. Total Picture Source: Bankable Frontier Associates

22. M-Banking - Benefits • Banks • Cost Reduction • Operating Expenses Reductions • Fraud Reduction • Revenue from the use of funds • MNOs • Significant Increase in SMS volume • Increase in use and relevance of smart phones and mobile phones in general • Stimulate transition to electronic top-ups • Retailers • New form of payment • Reduction of cash and checks handling • Expand e-Commerce

23. M-Wallet -Benefits • Banks • Increase in deposits • Source of viable new customers for the bank • New business opportunities like B2B services • New revenue from the use of funds • MNOs • Brand assertion and relevance to customer base • Increase ARPU and reduce churn • Stimulate transition to electronic top-up • Retailers • New form of payment • Reduction of cash • Expand e-Commerce • Increase revenue from Cash-out, sales of kits, and increased traffic of consumers

24. Conclusion • “The challenge for the nascent Mobile Money industry in Latin America is to successfully forge the alliances and cooperation needed to build the Ecosystem with innovative business models that will work for all the stake holders and ultimately that would benefit the end-user” • YellowPepper