Celpay Partners PresentationNovember 2007
Rolling out of New Mobile Banking Business in Zambia and DRC
Presented by:LAZARUS MUCHENJE
CEOCELPAY HOLDINGS LIMITED
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Celpay Partners PresentationNovember 2007
What does Celpay do?
Celpay ..…
Mobile banking services and payment solutions
The Principle uses ....
- Mobile phone as basic instrument for payment instructions
- Menu options for users to send payments to others
- Money is taken from deposit accounts. No credit
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Celpay Partners PresentationNovember 2007
Introduction
ALWAYS BEAR IN MIND THAT YOUR
OWN RESOLUTION TO SUCCEED IS
MORE IMPORTANT THAN ANY OTHER
ONE THING.
Abraham Lincoln
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Celpay Partners PresentationNovember 2007
CELPAY GROUP STRUCTURE
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Celpay Partners PresentationNovember 2007
Group Structure
FIRSTRAND FACTS
• One of RSA,s largest integrated financial institutions
• R772bn ($119bn) worth of assets
• R37.8bn (5.3bn) net asset value
• Employs 40,000 people
• Retail franchise footprint of 680 branches and 4,185 ATM’s and 50,000 card acceptance devices
• Top 10 listed companies on JSE Securities Exchange
• World famous brands under FirstRand include;• Rand Merchant Bank, the number one
merchant bank in South Africa• First National Bank, among the top 3
commercial banks• Wesbank number 1 asset financing company • Discovery, number 1 in health care
insurance• Outsurance, Number 1 short term insurer • Momentum, one of the top 3 insurer in
health plan management
Celpay Zambia Limited
CELPAY HOLDINGS (PTY) LTD
FIRSTRAND GROUP
Celpay DRCsprl
Celpay Holdings
BV
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Celpay Partners PresentationNovember 2007
Where is Celpay?
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Celpay Partners PresentationNovember 2007
What does Celpay Do?
“3-channel” electronic access to a bank account§ Mobile phones § Internet§ Point of Sale Devices
Partners with banks and Network Operators
Facilitates electronic financial transactions§ Real time§ Mobile§ Safe§ Convenient
Value added services/third party applications§ Individual electronic auto top-up§ Wholesale airtime distribution§ Stock ordering§ Telephone recharge§ Payment requests/Bill payments§ Payroll payments§ Corporate distribution payments facilities
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Celpay Partners PresentationNovember 2007
ENVIRONMENT REVIEW
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Celpay Partners PresentationNovember 2007
BANKING ENVIRONMENT
Sophisticated markets (e.g. South Africa)
Well established and strong banking sector;Good penetration;
Banking a trusted sector;High level of technology
and innovation.
Developing markets (e.g. Zambia):
Banking established for a significant period;Processes bureaucratic and old-fashioned;
Technology limited and developing.
Conflict/post-war (e.g. DRC):
Lack of trust in the banking sector;Low level of savings;
Marred by inaccessibility;Lack of services and infrastructure;
Corruption: environment of distrust.
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Celpay Partners PresentationNovember 2007
Regulatory Framework
n Bureaucratic procedures in the enactment of new laws
n Fragmented laws relating to the financial sector
n Lack of guidelines and directives under principal Acts
n Lack of adequate legal framework for regulating foreign currency
transactions
n Lack of financial sector consumer protection laws
n Inadequate skills for enforcement of the law relating financial crimes
n Tendency not to report financial crimes to the relevant law enforcement
agencies
2006: World Bank Paper
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Celpay Partners PresentationNovember 2007
Zambia and DRC relative to Africa
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Celpay Partners PresentationNovember 2007
Banking in Zambia & DRC
15%
8%
11%
66%
Formal Bank
Formal Other
Informal
Financially - Excluded
Source : Finscope: Measuring Financial Access In Zambia (November 2006)
ZAMBIA
DRC
98% of the population are unbanked in 2008
Less than 2 % are banked in 2008
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Celpay Partners PresentationNovember 2007
Opportunity?
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Celpay Partners PresentationNovember 2007
Existing Conditions
n LOW BANKING PENETRATION LEVELS
n RAPID GROWTH IN MOBILE TELEPHONY TAKE UP
n MOBILE SUBSCRIBERS AT LEAST 5 TIMES BANKING
POPULATION
n POOR BANKING INFRA STRUCTURE DUE TO HIGH COSTS
n HIGH CASH USAGE FOR TRANSACTIONS
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Celpay Partners PresentationNovember 2007
CELPAY BUSINESS MODEL
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Celpay Partners PresentationNovember 2007
Business Models for Mobile Banking
• Additive model:
– Existing banked customers;– Additional channel;– Alongside or as part of other channels (e.g. internet).
• Transformational model:– Beyond existing banked;– Products meet known needs of the unbanked – Wizzit, Celpay
Source: DFID report (2007)
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Celpay Partners PresentationNovember 2007
Celpay Business Model
Banks
Bank A
GSM
Network Operator 1
POS DEVICES Merchants
INTERNET Merchants & Individuals
CELL PHONE Individuals
CHA
NN
ELS
Bank B
Bank C
Network Operator
2
Network Operator 3
Multi-banked
MNO
Multi-channel
No monthly charge
No minimum balance
No bank account
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Celpay Partners PresentationNovember 2007
Technology Choice
WIG/SIM TOOLKIT
USSD
SMS
WAP
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Celpay Partners PresentationNovember 2007
Key Partners
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Celpay Partners PresentationNovember 2007
Key Clients & Bank Partners (Zambia &DRC)
Customer BaseCustomer Base
Bank Partnerships
$20m Transaction Value Monthly
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Celpay Partners PresentationNovember 2007
CELPAY SERVICES
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Celpay Partners PresentationNovember 2007
Celpay Services to Customers
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Celpay Partners PresentationNovember 2007
Product Mix
PREPAID AIRTIME SALES ARE THE LEADING SERVICE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Payments Transfers Prepaid Balance Enquiries Other
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Celpay Partners PresentationNovember 2007
Challenges
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Celpay Partners PresentationNovember 2007
Environmental Challenges
Legislative
Market Readiness
Costs
Illiteracy
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Celpay Partners PresentationNovember 2007
Business Challenges
Account opening process
Depositing/ withdrawals
Co-operation from Partner banks
Customer and Agent training
Profitability, Profitability, Profitability
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Celpay Partners PresentationNovember 2007
Celpay Successes
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Celpay Partners PresentationNovember 2007
Celpay Successes
• B2B transactions highly succesful
• G2P - DDR project in DRC
• Previously unbanked informal traders
• C2B adoption – starting to take up now
• Over 100 POS devices in Zambia and 75 POS devices in DRC
accepting payments from mobile phones
• P2P payments showing some adoption
Product well received by both formal and informal players
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Celpay Partners PresentationNovember 2007
Celpay Successes – Transaction Throughput
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
2002
2003
2004
2005
2006
2007
2008
2009
Year
Valu
e (U
S$)
Projected
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Celpay Partners PresentationNovember 2007
Initiative to service the unbanked
• Investing in a Cash Point network
• Initiative approved by Bank of Zambia (BOZ)
• In partnership with Post office
• Payroll for workers who currently get paid in cash
• Withdrawals and remittances at cheaper outlets
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Celpay Partners PresentationNovember 2007
Key Lessons Learnt
Payments not savings
Initial market resistance to technology take up
Security very important
Difficult to stimulate transaction quantities
Adaptability / Versatility in each market
Corporates and SMMes early adopters
Acquiring at merchants – minimal take up
Prepaid airtime – Best seller!!
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Celpay Partners PresentationNovember 2007
AML & CFT
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Celpay Partners PresentationNovember 2007
AML
Full KYC procedures for each client
How do you register customers as a m-fs provider?
Who should register customers the m-fs or the the bank?
How do you make sure that people do not make transactions higher than
the threshold after which one needs to identify themselves in a bank
branch?
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Celpay Partners PresentationNovember 2007
CFT
n Celpay not an attractive avenue for funding terrorism
(daily total transactions= US$40)
n Customer due diligence conducted (KYC)
n Compliance with all Regulatory measures in place
n Need for clear regulation for m-fs.
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Celpay Partners PresentationNovember 2007
Concluding Remarks
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Celpay Partners PresentationNovember 2007
ALL PROGRESS OCCURS BECAUSE
PEOPLE DARE TO BE DIFFERENT
Harry Milner
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Celpay Partners PresentationNovember 2007
THANK YOU
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