Liveblog: #DFSCITI 15 live notes

Liveblog:

#DFSCITI 15 live notes

Fri, May 1, 2015 at 8:59 AM by Doc Searls.

#DFSCITI 15 live notes

About the event
- Title: Disruption, Development and Innovation in a Global Context, at Columbia Business School
- Livestream: bit.ly/dfsciti15
- 35 speakers
- 4th annual event
- NOTE: There will be many typos below, and I won't get everything right. I'll try to correct the former when I get time.
Intro by prof. Eli Noam
- Most interesting and unthought through thing is the effect of new money and ways of transacting on people, especially around convenience. e.g. Pay me to get a place in line, or walk my dog. Pay me to vote.
- Effects on law enforcement. Robo-fines. (See Shoshana Zuboff on what she calls "surveillance capitalism."
Global emerging payments opportunity: Leon Perlman
- Jargon:
  - Mobile money
  - Cryptop payments
  - Much more
- Transformative tools for financial inclusion
  - mobile phones and prepaid cards
- Stored value, via mobile operators, vs. banking
- Money in-out via either phone or prepaid
- Merchant payments
  - phone
  - nearfield
  - bitcoin
Panel on payments in the deveoloped world
- Safwan Zaheer, Accenture
  - Payments changing in a massive way.
  - proliferation of devices and platforms, currencies
  - New players, FB, Apple, Alibaba
- Howard Hall, Consult Hyperion — state of global payments
  - Consult Hyperion is a small firm with global reach and perspective. London based
  - 7.2 population, 6.7 mobile subscriptions, 4.5 b mobile subscribers.
  - Fastest growing in Central and eastern eu
  - Adoptoin of mobile payments, : $721b in mible payment by 2016, 35% yoy growth. .45b mobile payment users
  - payment breakdown
    - 71% money transfer
    - 21% merch purch
    - 5% bil payment
    - 2% NFC payment
  - Adoption by region
    - Africa, asia PAC ... huge part of Kenya gdp
- Thjierry Millet — Practical experiences of Orange in the developing world
  - 1BN REVS, 30 M ORANGE MONEY CUSTOMERS, 400m orange revenue
  - Adpat strategy to each market, addressing 4 challenges
    - mobile money for unbanked
    - mobile banking in mature markets
    - money transfer evolutoi form cash to cash to wallet to wallet
    - contactless services
  - Offer segments (took a pic. too hard to take notes on)
  - Poland
    - top market for contactless
    - 60% of POS
    - 24 m contactless cards
    - up to 20% of payments and transact
    - Both TM and Otange have launched services, parnered with banks
    - 3rd postioned MNO launching htis year 80% market poetnential reach by end of 2015
  - How it works
    - get onboard iasily, for a full mobile anking experience , and benefit for tailored rewards
  - deployment
    - Orange cash france, finanse poland, third party bank in poland (2_third party bank in spain, four third party banks in france,
    - touchapss with Airfrance, boarding with SNCF, Ticket restaurant with edenred, parking with vinci
    - Mobilis NFC in spain
  - NCC payments in mature markets, GSMA & Operators main priorities to enable mobile payments to reach scale by the end of 2015
    - hub approach pswr market, giving issuers a one0stop shop
    - evolution toward tokenization solutions
    - Next steps: 3 ambitions
      - simplification
      - scale up merchant payments
      - a broader value proposition for the customer
- Q&A
  - Richard Heel: what about security and privacy?
    - Howard: that was the merchant lens. Security will be addressed. Will be critical
  - Kalb, Kalb international: when the market evolves, and every operator provides mobile money, waht goes up and down?
    - Volume has grown by 100 factor. transaction remains the same. Most of african countries, there are now identification requests, so number of SIMS per customer goes down.
  - kate cronin? what is the nature of partnerships? are they baranded? who does what?
    - Orange believes in partnership, operate in a fragmented market, can't work alone. Need to partner. Financial and mobile are complimentary. The merger of these two worlds become ... each partnership is different. The bank value chain is more important than Orange's. Anyway, varies.
  - Kate McKey, seagap. to Thiery again... Main barriers to customer adoption.
    - Will take time. In Africa we're starting with the unbanked. World moving to cash. Payment markets are fragmented.
Panel on Emerging payments in the developing world
- Carol Benson, Glenbrook partners
- Sacha Polverini, Gates foundation, Role of Digital Financial Services in Enhancing financial inclusion
  - Not a payment expert. More about policy
    - Financial service for the poor programme
      - Believe all lives have equal value
      - 28 programs, sanitation,, water. But this programme connects all the others
    - digital financial services and financial inclusion
      - Why does financial inclusion matter (see slide)
        
        typical dev country, 10-30% trasition iinto poverty, and 10-40% out
        
        live on $2-4 per day, 1.4 billoion people, above that is $4 day, above that is middle income
      - why does digital matter for inclusion?
        
        econoics of trad transact don't work for providers or the poor
        
        econ barriers include customer acquisition, account maint costs, variable returns
        
        Market coord fail produce fragmented networs that increase costs
        
        information asym inhibit adotion and create risk, leading to inadequate prod and dormanc
        
        reg & policy barriers increse cost...
      - Financial services for the poor (FSP)
        
        Driving solutions for financial inclusion with three objectives
        
        reduce cost of fin transcat for the pooor
        
        improve poor people's capacity to mitigate financial shocks and capture income generating opportunities
        
        generate economy wide efficiencies by connecting large numbers of poor people to go biz doners and other counterparts.
        
        see www.gateletter.com for BMGF's 201 annual letter, featuring Big Bet for fin inclusion
    - pathway to digital financial inclusion
      - See complex slide
        
        basic connectivity
        
        enablilng environent....
      - Challenges to reaching scale: of the 255 live branchless banking services around the world, only 21 have reached more than 1 million active customers. Issues
        
        business models: provider, product des, pricing, platform
        
        : agents, issuers, trnsactoin limits, registratoin
        
        customers: sign up, active use, product design, pricing, platforms
        
        agents: sign up training, managmement, liquidity, branding equpment
      - building a DFS ecosystem, complex slide
        
        biz models, policy regulation, customers, agents
        
        interop, G2P, merchants, dfs ref model, ana, rural, women, smallholder farmers, biometric, startup, mobile money
        
        w
    - ITU focus group on digital financial services
      - leading UN agency for info and comms, ict
      - uniqe example of public private partnership
      - main areas of activity
        
        ...
      - Key obmejectives
        
        promote dialog between FS and telco regulators
        
        raise telco reg awareness of the role D/MFS plat to promotie FI
        
        Given the increas participation of MNOs in prov of DFS, there is a need toclarify roles
        
        Identify key issues where the FG can adopt priciples, best parctices, etc.
- Simone di Castri, @ludicastri, GSMAssociation, State of digital financial service in the developing world
  - global adoption servey
  - def of mobile money
    - banking is essential banking servcies thorugha mob phone delivery is differnet
    - mobile money is use of ICT and non-bank retail channels to extend delivery of financial service to clients not reached by bran-based financial sercvices
      - custo can sign up ewithout a bank accounet
    - as markets become more compeititve, MNOs are shoing an interst in interop
    - Moobile money plays a role in extending financial access
      - networks grow
      - activity remained constant for agents
      - partnerships are incresing
      - more than 10x move mobile money agents than bank branches in 25 markets
  - 299 rgistered accounts, 2013 m active accounts
  - sub saharan africa is hottest, thanks to active infrastruc and favorable regulation.
  - 10 top mobile markets
    - Ivory coast, kenya, Lesotho, Namibia, Parguay, Swaziland, Tanzania, Uganda, Zimbabwe
    - baks and non bankes issue emoney and use ageints forf cashin in and cash out oprations
    - there is a sustainable market driven approach to interop.
    - sustainable industry. good regulation counts.
  - reg frameworks in mobile money markets
    - Enabling regulatory approach outperforms non0enabling regulatory approach
  - 717.2m mobile money transactions monthly, worth $16.2 b
    - domestic P2P transfers and airtime top-ups dominate in volume and value, but fastest growth was in international remittance, driven by anew model which uses mobile money as both the senging and receiving channel
    - 23.1 of all value moving through mobile money involved ecosystem partners
    - active users conducted an average of 1.6 P2P transfers in ?14
    - cross border mobile money transfer: promising new model is emeerging: cross border transfers use mobile money accoutns to both send and receive
    - users can access mobile money services through ...
    - Mobile money providers are taking steps to offer ecosystem parners easier access
    - mobile insurance servcies are growing
    - indreasingly using mobile money wallets to access savings accounts
    - mbile credit fuelled by new partnerships between MNOs and banks to provide mass market short term loans.
      - 50% increase in thenumber of mobile credit.
Uptake of digital financial services in the developing world
- Carol Benson, moderator
  - mobile money is the intersection of two industry with interop i their blood. has produced a world of mobile money withoiut interop.
  - Interop is a practical construct. We need our payment instruments to be usable everywhere. Voumes should incease with usability.
  - The acquiring side of the developed world affects interop, in the sense of choice
  - The perception is that cash is free? how to reconcile the need for a commercial model with payments. Only the scandinavian countries are getting past cash
  - fraud is rarely anticipated. It's only when it shows up that controls come along. So, if we want blossoming...
  - if payments are just a platforml for a large step, what is the next step?
- Ludwig Schulze, Mistral Mobile, New York
  - Interop fascinating. Should be the goal
  - AMEX and Visa are not interop.
  - Expect emerging markets to do the same.
  - Be aware that there is an unfair expetation of interop
  - Concerned with b2b ... security is inherent, closed loop. When moving to mobile, can be attacked.
  - increase in tension between telcos and banks.
  - When savings gets hit, retail banks are going to say we'll provide a treasury function. Others will not give up,and try to stop it all.
  - Banks have sat too quietyly for too long.
- Simone di Castri, GSM assoc,
  - money laundering, terrorism... many using mobile money becuase they don't trust the usual suspects. 12 providers launced a code of conduct. concrned about bad acting. best services and agents, stability....
  - keep the focus on transformation, something different and valuable. Paypal, square are amazing but not life-changing. example of a woman who takes the money in a wallet, tends to be aken better care of. Storage venue is underestimated by govs, regulators.
- franciois du Plessis, Econet Wireless, Zimbabwe
  - In the developed world, mobile is added to trad services, while in africa, the new transformation rate is very high. Now have 4.5 million subscriber customers on mobile systems. More than 50% ae active. Have 17k agents now. Many are employed through the network in a country with unemployment of 80%. 48% of GdP going through mobile.
  - What hapens to agents? Would like to move to a cashless socieity. The agent netowrk might become superfluous, but would like to keep it active.
  - Savings are a big possibility. Many do in mattresses more coop between... sending money home is expensive.
- Sacha Polverini, Gates Foundation
  - two aspects, who pays and tax
  - having transactions traceable means the tax people will be there.
  - industry killed ? with many abuses.
  - seing increased use of mobile money as places to save. Basically they don't cash out. That's Uganda.
  - Poor have a different economic cycle, seasonal. Need to smooth that cycle for farmersk somen
- Alvin Okari, Millicon international, Rwanda
  - Interchange fees inhibitied interop. Customers want to freely transact, with burden of extra payment. P2P's biggest burden is costs. In Tanz, the customer bears no extra cost, which has incresed mobile payments. Bank has been supportive. Regulation is valuable. Vodphone agreed to come on board.
  - seeing mobile cash-out fees are lost in interop (?)
  - True spirity of this is for people tobring the money they have in mattresses. current nonperforming loan % is less than 2.
  - Moving money from where it can't be accounted for to where it can.
- Ann Camarillo, Boloro, Dubai
  - Driving adoption ...
  - I go into a market, Bolero is a payments scheme creates interop.
  - any funding source that's legal we'll connect to.
  - We create places to use it.
  - Started with P2P for moible money
  - Now giving more places to use wallet and fund.
  - types of places that will stimulate the next phase of adoption is getting on a bus, parking, taxis, ecommerc,e vending machnes, microtransactions. These are the killer apps.
  - In many cases we can expect agents next
  - Bus drivers get 4% of theintake as an incentive to not take extra.
  - Want the merchants to see this is better than what we have today. In jordan the cost of cash is 45%.
  - In Kuait there is no mobile wallet. Bus companies are still driving adoption.
  - Everybody wants to do it. Just working on a numbers.
  - Thjere is a cost for the vehicle. start there. Make sure the e owner of the device can see all the ttransactions.
  - Beyond payments. we're not there yet., goinb beyond P2P. Don't see savings yet, but businesses interested in micro-sendngs.
- Q&^A
  - David Nussenbaum — what about ID? How's that work? What does it mean to identify? Bank? Regulatory? How do peoiple enter the payments environment
    - Sacha: It's a major issue. Was surprised at how may countries have no national ID, and how many people have multiple ids. They get a letter from the village chief. Customer acquisition is key. And cumbersome. In Mexico, they passed a law allowing a ? bank account. Progressive requreements based on the features of the account. Was not followed by anybody. Same happened in West Africa. Reason is that if you have a non-sophisticated system, then it goes to the next extreme. Tech can solve some issues, but not all.
  - ? Noticed that Nigeria and SA are not on the top ten.
    - Simone: data isn't there. REgulation discriminates against mobile providers. Similar barriers elsewhere. Problem with megamarkets, india, egypt, indonesia, additional relationships with central bankers and their lobbyists.
    - Sacha: there is no awareness of mobile money in some places. So no good user case. e.g. Nigeria. Operators waiting to see what happens.
    - Ann: started in middle aeast. first expansion is in SA and Nigeria. Parnters are taxis, Barklays bank. Grocery stores. Not easy to bring in the traditional players, but they;ll come along.
    - Armako? Glad cost of cash came up. In columbia had an event, in emerging markets much of the economy is informal, and the feds are an enam...
      - Alvin: as a teleco or... merchants and micromerchants, give them the benefits of merchante banks secruty, which is a bigger problem than taxation.
      - Simone: issue isn't this vs. that, but framework for partnerships that enlarge the fiancial sector overall.People will need formal services, eg. banking. and to grow into that.
Disruption , development and innvation in a global context
- Jason Oxman, UD ETA
  - Waht's happening at the point of sale? What happens on the merchant side? Innvation in the industry. Two halves: merchant, and issuing side. The latter works iwth consumers. ETA is the trade association.
  - we all share a common interest.Incumbenet players who haven't changed in a long time are embracing
  - tokenization is important, but so is encruption, and EMV, chps in cards, are driving upgrades in equipment and wireless forms of the same
  - merchants are exploring other options. Mobile pament are about security and tech, the reward of using mobile payments. Got together to create MCX, launching a new currency.
  - Will there be a winner? apple, google, MCX?
- Bill Gajda, visa, Tokenization in Payments
  - Jason: bill embodies the change. He came from telecom, ericsson, telecom canada. does innvation partnerships at VISa, in NYC
  - New digital token on a mobile device, visa paywave. visa checkout.
  - Tokenization is the first subject. think about what Uber has done, transforming a clunky business. Has eliminated payment. used in France, Shanghai. Didn't need to understnand local tipping practices. Pelple love to shop and hate to pay.
  - To get there at scale, the whole system has to evolve. Need to participate in the evolution of payments. Allow to 3rd parties ways to access.
  - Next evolution is tokenization. Look at Apple Pay and Watch.
  - Rapid growth of digitla payments make data protection more critical than ever
    - ecommerce is growing, but m-commerce more.
  - How to conect all devices to payment credientials?
  - The miniute cash is digitized, VISA jumps to 60% fo the payment share. Problem i to put account numbers into devices, such as an orange phone.
  - Odd to put an identifier into a soft thing: cloud . Need to replace PANs with global tokens. Worked with MC and AMEX, and then Apple Pay, for the new global standard.
  - How tokenization works
    - With visa token, a cardolder's PAN is linked to one or more limited use tokens, in a vault. Apple doesn't want data on the phone. It wants a token. The PAN becomes bound to applepay. Customer puts in a PAN, replaced by a token, used over and over again. It's secured on a hardware device, certified many times over. Clouds can be refreshed every week or ... helps the way an org works
    - Individual tlekns are assigned to each mobile device and marchant
    - when the purchase is made, the merchant and acquirer submit the token just as they would normally submit a PAN. (the number on a card)
    - Visa Tokwn Services trnaslates the token into the PAN, and sens both tothe issuer for authorization.
  - Key benefits of tokenization
    - identify and contain
      - Aplle is everything.
      - Google coming along later this year
      - Many other token requesters later
    - Safeguard personal information
    - Only tokens need replacement — a serucity issue.
    - Seamless experience: looking at everything with tokens, identify and contain. If you lose a device, you don't have to replace a credential.
- Andy Shober, chief sales, MCX, Disruption in payments: the Merchant Perspective (no slides)
  - Jason: Brian moody, new boss, seasoned expert, came on recently.
  - this is about what it will take to get consumers engaged.
  - MCX came together to decide how mobile will involved. Collectively about $1.2 billion. What they're seeing is what we've been hearing about today.
  - We don't think cusotmers don't hate paying. They don't think about paying. It's not part of the shopping experience.
  - Find a means by which the shopping experience improves.
  - Anybody who says they have it figured out is wrong. I'ts too new.
  - MCX came together to protect data. The greatest battlefield is about monetization of the customer experience. How can that be leveraged. Merchants have an existential stake in relations with customers.
  - Bringing some balance to the ecosystem. Meaningful number. Paying visa is the next biggest cost after emplyees. will have a meaningful impact.
  - As merchants have watched the space evolve, watching retrenching, saying we've ht the hockey stick. Look at the merchants that have been leaders. Uber.
  - People are comfortable giving out their location. Worth giving out location, e.g. with uber.
  - 17% are using QR?
  - working on tough stuff. Not just pauyment. Loyalty systems, offers. What about if we had the ability to...?
  - What about security. Not being outside at night.
  - Changing sit0down dining. Waited 15 minutes for a check. And turned into a negative. Next step is a check with a code. You can pay, leave a tip, and have it integrated with merchant systems.
  - Look at the state of the market today. Some systems tailored for dining, others for NFC. Apple, Google, Samsung.
  - MCX is a startup. Legacy systems ... moving from starting systems with employees. You need merchants who can show how things work. Start with staff. Want that first expreience is a good one. Not baseball, no 3 strikes.
  - Want pelple to say you saved me time, loyalty noted...
  - Those companies that can look at consumers, help them save time, money, and achieve a secure transaction.
  - It will take years to sort out. The ones that succeed will listen to consumers.
  - Merchants want a way to work with customers that's oblivious to what payment system shows up. Need to de-risk the decision.
  - There will not be one winner. that would be bad.
- Rounjdtable: Global Payment Incentives
  - Jason Oxman
    - Uber is a payments network.
    - Nobody buys standalone GPSes, cameras, CDs.
  - Bill Gajda
    - jason: what about tokenization? Does it matter to merchants and consumers? Yes, merchants are upgrading to EMV. But customers have been taught not to fear fraud.
    - Andy is right,. Start with the cusotmer and work back. Start with the experience.
    - You don't experience tokenization until things go bad.
    - From a merchant, PANs are used to track customers, until there is a breach, and then they have to redo their database.
    - What we're trying to do with tokens is not just ...
    - Customer knows that a token wallet is secure.
    - Jason: privacy, other virtues of a piece of plastic. Surveillance.
    - Every card scan generates a fraud score. All surveillance is about fraud.
    - Privacy will be a huge issue.
    - Not giving away cusomter data creates trust.
    - Multiple opt-ins. Levels of transparency. Google isn't in payments. They fired four sets of managers, because they got it wrong.
    - The ecosystem has to get it ribght.
  - Andy Shober
    - Jason: how does privacy fit in
    - Privacy and security is critical.
    - Customer needs control over what's happening. The customer experience is based on customer control. Trust won;t happen without it.
    - Battleground over privacy is the biggest part of what happens over the next few years.
  - Brett Kig, Moven, first mobile account
    - NEED THINGS WITHOUT THE constraints of a physical artifact. want to make the hassle disappar. Take banking .and make it...
    - The PAN is the weakest link in security. Key is understnanding that the most efficient form of payment is no friction at all.
    - Ultimate expression of banking is how much money you have and how you're using it.
    - We're payment agnostic. Most important interaction is immediate feedback. When Apple made the decisiion to go with NFC, that created the standard.
    - We don't want it all turn into a closed loops system like starbucks.
    - Ones who win will be easy and frictionless. Doesn't need to be a duplication of the way cards work today. Don't think QR vs. NFC.
    - Check out breakig banks
  - Mung Ki Won, Mastrerdcard, digital market executoin
    - Jason: Munk came from Orange, ... how are we doing telling the story? telling it to merchants and consumers?
    - the vision is clear. all the old and new stakeholders are all committed to making this happen. Have now built foundational elements for a seamless and safe thing . all very clear
    - How do we scale? Or use the scale already there. Still open question.
    - Jason: Is the consumer confused? Or is that a good thing?
    - IN the world of ? Having lots of ptinos aen a wide variety of ways fo paying makes it complex for everybody.
    - Contactless is a reality. Is stable and mature. In nearly all smartphones.
  - Stefan Happ, mobile and online North America for AMEX
    - Jason: You brought prepaid to AMEX. Philosophjically, what is AMEX's approach.
    - We want to be where our consumers want to be. and customers in the mrechant community.
    - tokenization is crucial to cracking ubiquity
    - Hve opportunity to saywhere the value truly is. Use cases:
      - mrore comprehensive and cheaper bankig services
      - mobile payents on mobile devices
    - Point of sale sis not the issue. was hell to book a ticket on his phone for a concert at the Met.
    - Jason: Amex is unique, with both acquring and issuing.
    - Nothing will delay migration. Opportujity to pfovide out consumers with more information in real time that help them make decisions.
  - Q&A:
    - David? We won;t have chips for ten years. Does point of sale matter?
      - Mung: Swipe works extremely well.
    - Niel McAvoy with consult hyperion: in a world where I might visit a grocery store, and use a card, and my fridge might order food, each with a token, how then can a retailer best serve me? Reward my loyalty, etc.
      - Bill: We know merchants use PANs to drive loyalty. Work to do on tokens. Theyre not getting the same level of data and transparency. Need to add data fields to the experience.
      - Andy: not expert on tokenization. Fuel is different from grocery. People drive all over town to get gas. The table stakes are set. If you can't give them what they've got today. Need to engage
      - Burts? From telecom. We're goingt to have the EMV transition this fall.
        
        Brett: 50% of the fraud, on 20% of the world's transactions. We write 2/3 of the world's checks.
        
        yoiu need the movement of someone like Apple to move payment. Kenya is more advanced.
        
        Stefan: great oint. a real pain to make the change. Europe took 10 years to do EMV.
      - Serena? How are you working with operating systems with digital wallets.
        
        Andy: People don't think operatijng systems, just phones. We want the same currentcy app to work with all of them.
      - ? How meaningful are services like Stripe and Braintree
        
        Bill: we have our own version of that. Driven by third party gateways. (?)
        
        understand how to optimize
      - Doc: Any hope for fully personal wallets?
        
        Mung: no.
      - ? What can the networks do to bring
        
        Bill: payents is unique in terms of mobile, because it's payments. It has to be right. Money moves. The stakes are so high.
      - ? In Malawi: challenge the panel on data security, privacy, protocol.
        
        Bill: talking about >billion who won't have a bank account, but are enabled on a mobile. An Orange debit card that can be used. Get people engaged in a scalable, robust and secure payments system. Big opportunity.
      - Travis: mobile apps are stacked. As we move away from this litter, and back to the Web, and beacon tech, seeing beacons at a bus stop, how does that help or hurt? Jason adds: IoT.
        
        Andy: ability to have your phone engage where you are with meaningful content.... cases of bluetooth working... locaiton aware will turn into greater adoption.
        
        Mung. Removing friction is key.
Investors, innovation & Entrepreneurs — opportunities and challenges
- ModeratorL Jem Pagán, JNK Securities
My own separate notes
- At the end of the day (literally), I saw a 2x2 in my head that looked like this:
  - Columns:
    - Developed world
    - Developing world
  - Rows:
    - Incumbent financial systems
    - New financial systems (notably currencies and payment methods)
- links
  - Wallets should be wallets.
  - Maybe wallets can't be apps