Comments Regarding American Banker’s Article On Mobile Money for Banks

We want to share with you a letter that we have posted to the American Banker site in response to their article on our new offering Mobile Money for Banks which we announced yesterday. We also welcome your comments on this.

Daniel,

I read your American Banker article yesterday concerning our mobile money announcement with some surprise, and I thought it might be helpful to clarify a few important points.

Naturally, analysts differ in their opinion about the maturity of the mobile money market.  We received very positive feedback from many analysts and bankers as we discussed our plans, and the extensive speculation in the article about Obopay’s timing misses the point of how transformative and different mobile money is from many existing categories.

The title of your article incorrectly says that Obopay is in the “bank transfer segment”.  When I think of the “bank transfer segment”, I think of legacy ACH and billpay vendors which are already used by thousands of banks across the U.S.  In contrast, “Mobile Money” is focused on helping banks solve a separate set of issues:

-          Providing the millions of mobile, cash-based merchants in the U.S. with a solution for accepting card and ACH payments directly into their DDA.

-          Enabling consumers to send money to anyone – instantly.

-          Rapidly deploying services in a way which reinforces the bank’s brand – to include brandable services via web, SMS, and WAP, as well as smartphones like the Blackberry and iPhone.

Concerning the speculation in the article that Obopay may be “too late” to this market, when we look across the landscape of U.S. financial institutions, what is remarkable is how few of them offer the services I describe above.  What is further interesting is the extent to which the carriers and other non-bank competitors are positioning themselves to offer services like this.  When millions of Americans recently used their phones to send money for Haitian relief efforts, they did so with zero involvement from the banks.  By and large, banks now recognize that they quickly need to enter the market and many have targeted mobile payments as a key area of investment this year. Mobile Money is the most important innovation in banking in 30 years.

Bob Hedges, Managing Partner of Mercatus (yes, an analyst) said it best: “Any bank that isn’t looking at how to enter the mobile money market as quickly as possible is risking the loss of business to competitors, the carriers, or PayPal.  Given the considerable level of consumer interest, what banks need is a solution that is easy to implement, inexpensive, and fast to deploy.  We should anticipate a wave of bank deployments over the next six months.”

I was further surprised you would suggest that our focus on the bank market is some sort of new endeavor for our company.  Our partnerships in recent years with both MasterCard and FIS are just two proof points which indicate that banks have been a key element of our strategy for some time.

Finally, in any company which is focused on changing the way the world moves money, there is a process of innovating, deploying, observing, learning, and applying those lessons in ways which benefits customers’ lives.  Obopay has been doing that for 5 years, and throughout has remained laser-focused on mobile money and its growing importance around the world.  I am very proud of what we have accomplished.  We will let the analysts and writers in our industry argue about whether we are “too early” or “too late”, but we will continue to engage with those who are awake and aware of how the world is fundamentally changing.

I hope this response clears up misconceptions for your readers. We look forward to continuing the conversation with those who are as passionate about mobile money as we are.

Regards,

Michael Diamond

Senior Vice President

Obopay

michaeldiamond@obopay.com

http://banks.obopay.com

http://blog.obopay.com

1 comment May 12th, 2010

Mobile Money Is The Most Important Innovation In Banking In 30 Years

Mobile Money is reaching a tipping point in the US. I just returned from traveling around the world meeting with bankers discussing their successes with mobile. All the bankers I talked to are working on mobile banking. But it isn’t just about the rest of world anymore – it’s happening here in the US as well and it is changing everything.

Today Obopay announced a new offering, Mobile Money for Banks. US banks are beginning to understand how big and transformational mobile will be for their business. And Obopay has developed a bank offering that benefits from our innovation on three continents. It gives the banks what they need to have a strong innovative offering and provides it in a way that they can do a very fast, low cost implementation with a complete mobile money transaction set. 1 month to advanced bank branded mobile money which includes mobile applications, web widgets, and most sought after consumer use cases. Mobile payments have reached a tipping point.

The offering is way beyond bank transfer (repackaging ACH) and traditional niche P2P services.  It includes a number of industry firsts for mobile payments, all based on successful use cases we have experienced: the ability for small sellers and cash based merchants to get paid through mobile phone, website or email; instant payments from one family member to another; and P2Ps that are instant and optimized for a mobile experience. Analysts and our primary research confirms that banks must act now to implement a mobile payment program or risk losing this revenue stream to their competitors or non –traditional providers like Paypal, Apple or Mobile Carriers. With Mobile Money for Banks we are giving them the ability to lead not follow.

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May 11th, 2010

Obopay CEO Shares Strategy to Transform Mobile Payments

CEO Carol Realini on What’s Next with Obopay and Mobile Payments

Carol Realini, CEO Obopay, Inc.

Carol Realini is the driving force behind Obopay which has allowed customers to send and receive money through mobile phone SMS since 2005. In this exclusive NEXTcast interview, Realini reveals Obopay’s strategy to bring mobile payments to the masses. Listen to the interview

March 9th, 2010

Obopay Named One of MIT Technology Review’s 2010 TR50!

Obopay was named one of the “50 most innovative companies in the world,” by the editors of Technology Review who “looked for those that over the last year have demonstrated their superiority at inventing technology and using it both to grow as businesses and to transform how we live.”

MIT stated, “We identified the companies that have the most promising technologies, whether they are giant corporations or fledgling startups with initial venture capital investments. Then we examined their business models, their strategies for deploying and scaling up their technologies, and the likelihood that they will succeed. The result is the first annual TR50.” You can read more about Obopay’s achievement here.

February 26th, 2010

Blog Post for Nokia Money Initiative in India

What is Nokia and Obopay announcing today?

We just launched the first commercial version of the Nokia Money in India. Read about it here.

The launch is starting with a commercial pilot in Pune, which is one of the country’s largest metropolitan areas in the region. It is being offered in partnership with Yes Bank and is being called Mobile Money Service by Yes Bank powered by Nokia. It’s the comprehensive service which allows you to transfer money to another person just by using the person’s mobile phone number, pay bills, as well as recharge your prepaid SIM cards.

We’re also working to enable consumers to pay merchants for goods and services in the next few months.

What is so special about your service offering?

In many ways our offering with Nokia and Yes Bank are taking mobile payments and banking to the next level. This new service is one of the most comprehensive services available in the market. It’s going to change the game for mobile payments. Obopay brings operating experience with mobile payments from around the world. The offering combines Nokia’s retail reach, brand awareness, and handset expertise to provide unparalleled access and ease of use for these services. Additionally, the service offers a comprehensive feature set that enables people to use it to meet all of their daily payment needs including utility bill pay, top-up minutes, send money using P2Pand pay merchants using P2M features. It’s also the only service that is designed to convert physical cash to e-money, which is being delivered in a way that provides unprecedented access to financial services through Nokia’s retail reach. It’s also the only mobile payment service with a user-friendly application that can be accessed by the masses. Our application uses secure SMS, rather than requiring the user to have a mobile data plan.

Why did you select India as the first emerging market to launch Nokia Money initiative?

We chose India because of its enormous scale and potential as the home to a population of 1.5 billion people.  It’s also got the fastest growing cellular market in the world. Right now there are 500 million mobile phones in India, but it’s expected to be more than 900 million by the end of 2013. 41% of India’s population does not even have a bank account.  Combined, the market potential here is huge in India.

Nokia and Obopay also bring significant experience and resources to the Indian market. Nokia is among the leading brands in India in market share with over 200,000 retail stores throughout.

We also have a lot of operating experience in India. We have been live in India with YES BANK since 2008. We have a deep understanding of the complex marketplace, the regulations, and ecosystem.

With our combined experience and market potential we felt there was no better place than India for a service offering like this.

What are your expansion plans in India?

We plan to extend the launch over the upcoming months and aggressively roll out the service to all major cities in India within a year.

What does Nokia and YES BANK add to the service offering?

Nokia brings the strength, trust, and the vast distribution of their brand. They’ve got 200,000 retailers across India who could serve as authorized Nokia Money agents.  They also bring enormous handset expertise and uniquely developed mobile elements.

YES BANK, who is a long-time partner of Obopay, is the fastest growing bank in India. In fact, it was awarded the “Most Innovative Bank in India.”

We’re a strong company and have strong partners for this service and will continue to grow the ecosystem of partners including mobile operators, banks, distributors and merchants to bring Nokia Money to the market successfully.

How will this impact the lives of Indians?

This service has enormous potential to empower the lives of its users. It has the potential to bring finical services to the hundreds of thousands of Indian Citizens who have previously not had access to them, improving their lives in the process.  It’s safer, convenient, and more efficient than cash.  It gives consumers and merchants the ability to manage their finances in ways that were not available to them before. It’ll enable business to get paid faster, which will increase productivity.

February 15th, 2010

Last Day at Davos

“I know first-hand in Kenya, where farmers have seen their income grow by as much as 30% since they started using mobile banking technology and one World Bank study found that a typical developing country, a 10% increase in the penetration rate for mobile phones led to an almost 1% increase in per capita GDP. Put this into context, that would for India translate into almost $10Billion a year.”

Hillary Clinton, Sec of State

The last day has been good. Wrap up with the technology pioneer WEF team. We gave them feedback on how they could improve the program. Mostly about communications and preparation before the event. They have a buddy system but some buddy’s were more helpful than others. It is essential that you prepare for the event ahead of time since once you are here there is too much going on to set up all the meetings you want on the spot.

We also recommended trying to get the technology pioneers a little more involved in the larger events. We discussed the value of that to WEF and to the pioneers. It was clear that making that happen was non-trivial. They coached us on how to get ourselves more engaged with WEF and an indirect result could be more involvement with sessions.

I went to two sessions – one was a CNBC live broadcast on Gender equality in the workforce. The picture above is the CEO of Coke talking about how Coke is aggressively pursuing more women at all levels. He seemed genuine and committed. That being said there are many complex issues with workplace, culture, and home. Others on the panel were COO of Facebook, CEO of Booz. Good job for traditional global inc. issues, not as great on international issues or SME issues. Nothing about access to capital.

The other was the Global Economic Outlook. What follows are my notes. Very brief and may be of interest. I am sure you can go online and get more comments from WEF. Larry Summers was articulate but talk about unemployment of MEN in the US. They should get someone to media train this guy. It was embarrassing that someone that high up in the US government was so politically incorrect.

A good day. I am very tired from a long week but this was the best conference I have ever been to. All the technology pioneers felt the same.

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Notes from Global Economic Outlook session.

India. Growth is strong. need policies to bring down deficite – slowly. Complex. Investment needs to be increased. Financial reform.

Japan. Change structure of economy. Lehman shock gives us the opportunity. More focus on local consumer. Capitalism needs reform to prevent these speculation drivers of growth (subprime crisis). International regulation.

China. 8.7 percent. Consumption growth is strong. Regional disparity getting better. Structure change and deal with over capacity. 33 percent investment growth. 15 percent consumption growth – need this to get larger – closer to 33. Overcapacity big issue. Pure export driven has to change. Structural issue. Need international cooperation.

DB CEO – legacy assets – still may be an issue. Regulatory issues – have to deal with these. Regulators part of the solution.

US – Summers. Statistical recovery, human recession. Moderate gdp growth rate expected. Unemployment is a Big issue. 1 in 5 not working. Recovery will mean 1 in 7 or 8. Job creation and credit access esp for med size business is key. Optimistic about US commitment to global economy (immigrants implied here)

Strauss – Kahn. Improving re-balancing. Growth – now looking at india and china to fuel growth. US will not. Corporate cross border banking.

February 1st, 2010

More from Davos

“Obopay, founded by Carol Realini, particularly struck my imagination, and was enthusiastically explained by Tom Standage …the opportunity was clear enough, without Standage’s endorsement. Obopay offered people who had never had a credit or cheque card the means to send money to relatives, or pay for utilities or food using their phones.

“Half of the world’s adults [or 2.5 billion people] have no access to banking,” Realini said. Obopay, and companies like it, could empower those people, making them more economically productive, and overturn banking. That’s the kind of thing I look to technology to achieve.” – Jason Pontin, Editor in Chief and Publisher of Technology Review

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This has been a great event for mobile banking and Obopay. Mobile Banking is discussed in many sessions and conversations. Yesterday I attended a private workgroup on Mobile Banking. Since it is private I am not allowed to discuss it but I believe the WEF will write a report that I will hopefully be able to share with all of you.

The Technology Pioneers program is a dream come true for a entrepreneur; recognition and a chance to build a very broad and deep network around the world.

It is hard to get into a rhythm at Davos. The day starts early and ends when participant just can’t stay awake any longer. I have not yet made it past 11PM – but the evening activities go way later – until around 2 PM. On the first few days I wanted to do everything. Then I realized that was impossible so I have now settled into an approach that is 1/3 sessions, 1/3 preset 1-1 meetings, 1/3 general networking.

I can’t say enough how full every day has been. And how amazing. Almost all of the corporate attendees are CEO’s. I have had an opportunity to talk to CEO’s of 3 major Mobile Operators, 2 of the world’s biggest banks, and many others. Not only do you meet them, you connect with them. We are all here as “equals” so the normal barriers between people breakdown. It is a unique gathering.

I am not sure what I was thinking but at one technical pioneer event there was an “incident”. There was a journalist – who will go unnamed – who was berating a technical pioneer. This journalist didn’t understand or appreciate the value of the tech pioneers business. So I got up and told the journalist that he was out of line and to back off. He really was out of line and also I think he didn’t understand the business because he couldn’t even imaging the environment of an emerging market. His context was so stuck in Silicon Valley. Time for Silicon Valley to open up its view of the world and understand the emerging markets and the next 3 B consumers.

(If someone from Obopay’s PR agency was at this meeting they would have wanted to put duck tape over my mouth. This is not the kind of thing a entrepreneur and CEO should be doing with a major journalist. I just couldn’t sit by and let this go on without speaking up.)

At that same meeting there was a process where the attendees selected those tech pioneers whose companies were the “best”. The criteria was subjective – but I think the most important factors were – was this going to be a large global successful business and was this business going to change the world. I’ll am happy to report the results – Obopay was selected as one of the top pioneers.

Jason Pontin, Editor in Chief and Publisher of Technology Review, wrote an article about this – check it out.

Davos Day 2: OboPay Is One of the Fairest

The attendees of the World Economic Forum chose the startups they like most.

http://www.technologyreview.com/blog/pontin/24732/?ref=rss

February 1st, 2010