2. Opportunity Social & Development Impact Secure mobile payments creates low-cost infrastructure for delivery of financial and other livelihood services to the BOP Increased access to financial and livelihood services creates second and third order long-term social impact Smoother income and consumption benefits health and child development Transaction and cash flow data collected via mChek creates financial reputation or record and catalyzes even more access to services By lowering operational and cash handling costs for any business, mobile electronic payments opens up new business models that did not before exist, thus creating opportunities for entrepreneurship and micro as well as macro development Profitable Business Models Improves traditional models Mobile payments creates win-win-win for all parties (banks, telcos, merchants), integrating into and improving existing business models Collaborate for expansion (e.g. telcos, banks) Value proposition Operational efficiency to serve existing customers Low-cost expansion Increased revenue Opens new business models for the BOP New fee structures appropriate for BOP Business models for livelihood services beyond financial and payments (e.g. health, education, information access) Micro-entrepreneurship using mobile point of sale (POS) Mobile ads subsidize cost to end users mChek CONFIDENTIAL
3. Early mChek Initiatives: Cashless Economy Opportunity: Enabling suite of mobile transactions for BOP users creates win-win-win for stakeholders Mobile access will increase value of Bank Accounts: 30% of households have savings account and mobile phone but 2/3 of these access the savings less than once per month MFI Operational Cost Reduction: Could halve the 2/3 of MFI ops costs that go towards infrastructure and managing transactions Solution: Cashless Economy via MFIs Use high-frequency and trusted MFI transaction channel to reach users Relatively small marginal effort to mChek-enable other entities in local economy Transactions enabled: Loan disbursements and repayments, local merchant and biller payments New access to remote services MFI Groups Cash Points or BCs MFI Merchant MFI Groups Employers Bill Collector Banks Bank mChek CONFIDENTIAL
5. Cashless Economy – FundingSeeking Grants for execution of Cashless Economy pilots mChek CONFIDENTIAL
6. Brainstorming collaboration with Google Phase 1 – Analysis and interpretation of payment and banking behaviors Test and prove institutional efficiencies and savings to accelerate expansion Refinement of core business model Phase 2 – Exploration and testing of new services business models Development of “organic” credit bureau and rating system for BOP borrowers, consumers, producers Leveraging the mobile channel for delivery of additional livelihood services Mobile advertising to supplement core business model Enablement of micro-entrepreneurs through Mobile POS Mobile aggregation of local SMEs and long-tail of businesses mChek CONFIDENTIAL
8. mChek Innovations Expand Addressable Market and Differentiate mChek from Competitors Source: BCG study, 2007 “Ringing in the Next Billion Mobile Consumers” Source: mChek surveys across three MFIs (SKS, Equitas, GrameenKoota) on mobile phone penetration among urban and rural borrowers mChek CONFIDENTIAL
12. More than 50% of user transactions are made through mobile, with primary mobile uses being airtime purchase and balance inquiry (2/3 of transactions)
13. Largest wireless operator in Philippines provides, mobile payments and banking tied to wireless account (4 million users/900,000 active)
14. Pilot: Store owners/MFI borrowers get wholesaler discount for using mobile payments and banking
17. Smart is currently testing first Microfinance pilot. Only known pilot besides mChek
18. Indian MFI that implemented a small pilot testing the Business Correspondent model. Only tested deposit and withdraw for bank accounts, no loan payment
19. Pilots: Andhra Bank and A Little World/Bank of India; 1K users and ~2-3K transactions total
22. mChek’s pilots are unique and ground-breaking compared to these previous, conservative testsmChek CONFIDENTIAL
23. Initial BOP Target Market: India Economic and lifestyle characteristics of India’s BOP highlights needs and opportunities mChek CONFIDENTIAL
24. Characterizing the Indian BOP market Based on an international definition of poverty, India has more than 900 MM people or 80% of the population earning less than $2 per day 800 MM of the total population (72%) lives in rural areas, the vast majority working in the farming sector A significant minority is composed of those below the age of 15, who reflect more than 295 MM of the low income population Nearly all of the Indian low income work in the informal sector, including farming and informal enterprises Characterized by volatile cashflows Salary paid largely in cash 61% of all Indians are literate, with less than half of women literate High cross-state variance, with rates as low as 47% in Bihar and as high as 90% in Kerala Upper/MiddleClass(60 MM)1 LowerMiddle Class(170 MM)1 Less than $2/day~Rs. 50/day (PPP)(500 Million) Low income segments Less than $1/day~Rs. 25/day (PPP)(400 Million) Indian poverty line2 India’s massive low-income population lacks access to critical financial and livelihood services which mChek can enable 1 McKinsey defines a strata of middle and upper class citizens that make Rs. 2 lakh and above per household that we call here “Upper/Middle Class”. 2 The Indian government uses a more restrictive version of poverty based on caloric intake, which equates to Rs. 10 to Rs. 18/day (excl. PPP adj)Source: World Bank (2000), Indian Census (2001), ILO, Martha Alter Chen, McKinsey Global Institute mChek CONFIDENTIAL
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26. MFIs with new ‘mobile phone loans’ provide synergistic channel to reach BOP users* Given the high growth of the Indian mobile market, by mid-2008 urban penetration is most likely near 60% and rural penetration near 8%.Sources: Voice & Data, MR Rao (SKS) Interview, The Hindu, LIRNEasia, Telecom Regulatory Authority of India, Gartner mChek CONFIDENTIAL
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28. Monetization ‘subsidizes’ BOP-specific appsSource: LIRNEasia, “Who’s Got the Phone: The Gendered Use of Telephones at the Bottom of the Pyramid” 1 Previous literature in developed markets have found significant disparities in mobile phone usage between men and women. The difference between India and developed countries may reflect contrasting cultural norms or income-related effects. mChek CONFIDENTIAL
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30. mChek’s m-commerce and mobile POS creates entrepreneurial opportunities with no capital investment by the micro-entrepreneurSource: BCG study, 2007 “Ringing in the Next Billion Mobile Consumers” mChek CONFIDENTIAL
