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Smart Cards in the Financial Services –From Chip Bank Cards to Mobile Payments?
Mario Fernandez, Research Analyst
Information and Communication TechnologiesInformation and Communication Technologies
2011 May 26
Functional Expertise
• Market research expertise, including:
- Primary and Secondary Research
- Smart Cards in the Payment, Mobile Communications industries
- Near Field Communication (NFC) technology
- Trusted Service Manager (TSM) solutions
Industry Expertise
� Experience base covering broad range of sectors, leveraging long-standing working relationships with vendors
and service providers:
- Telecommunications
- IT service providers
- Smart Card Vendors
What I bring to the Team
Today’s Presenter: Mario Fernandez
2
What I bring to the Team
• Results-oriented analyst
• Full responsibility and ownership of projects assigned
• Holistic industry analysis
Career Highlights
� Expertise in corporate finance, supply chain management and risk management.
� Worked before for:
- Procurence Sp. zo.o, Warsaw, Poland
- Continental AG, Hanover, Germany
- Sparkasse-Nurnberg, Nuremberg, Germany
Education
• Industrial Engineer from Universidad de los Andes, Bogota, Colombia
• Master in International Business at the Warsaw School of Economics, Warsaw, Poland
Mario FernandezResearch Analyst
Frost & Sullivan
Europe
Warsaw, Poland
Focus Points
• Worldwide status of EMV – special focus on the U.S.
• Benefits of contactless technologies
• Mobile Payments – opportunities for participants of the payment
industry
3
industry
More than 1 billion EMV active cards and 15 million POS terminals
EuropeEMV cards: 555 m.
EMV terminals: 9,4 m.
Russia, CIS countriesEMV cards: 22 m.
EMV terminals: 0,5 m.
4
Latin America and CanadaEMV cards: 182 m.
EMV terminals: 2 m.
Africa and the MEEMV cards: 17 m.
EMV terminals: 0,3 m.
Asia PacificEMV cards: 305 m.
EMV terminals: 3,2 m.
Source: EMVCo, MasterCard, Frost & Sullivan
Penetration of EMV cards, EMV POSand EMV ATMs is above 50%
One or more banks are migrating or have migrated to EMV
No preparation for EMV migration
The U.S. hasn’t started yet - When will the U.S. Migrate to EMV?
- Low payment card fraud rates
- Customer behavior
- “Investment is not justified”
Ag
ain
st
EM
V
5
- Isolation of the US in the payment industry
- US travelers’ negative experience in Europe
- Implications of the Dodd-Frank Act
Fo
r E
MV
What can be learned from the current payment contactless card deployments?
Possibility of targeting an specific
market
Reduced time at the POS terminals
Contactless payment cards have been deployed
6
Customers still do not fully trust
contactless cards
Foothold for further introduction of
mobile contactless payment services
Source: MasterCard, Visa Europe, Frost & Sullivan
Contactless payment cards have been deployed
No commercial offerings with contactless payment cards
We believe that a majority of challenges have been successfully addressed by NFC market participants
Business Model• Secure Element rental mode
• Trusted Service Managers• NFC Forum , EPC, GSMA, GP
Standardization
Trial phase Commercial phase
200
250
300
Nu
mb
er
of
tria
ls/r
ollo
uts
Smart Card Market: NFC Trials/ Commercial Rollouts (World), 2010
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•NFC handset availability• Customer experience (?)
•Hybrid POS terminals• Low cost contactless terminals
Customer
Merchant
0
50
100
150
Nu
mb
er
of
tria
ls/r
ollo
uts
Time
Number of commercial roll-outs (trials)
NFC – What is the opportunity for participants of the payment industry?
• Provisioning of UICC as Secure Element form factor
• Delivering trusted services to mobile operators and service providers
Smart Card Vendor
• Delivering trusted services to banks
Personalization Bureau
• Delivering TSM software for banks, MNOs and new trusted service managers
IT software
• Provisioning of NFC banking services
• m-payments
• m-banking
Bank
8
providers
Key Takeaways
Contactless cards Increasing awareness of the benefits of contactless cards.
EMV in the U.S.Fraud rates are likely to increase in the near future.
Market participants should reconsider their position towards EMV
9
NFC is a reality Mass-commercialization of NFC is expected by the end of 2012
Necessity to educate customers
Capitalize on the fun interaction and entertainment value of NFC
NFC: Customer
Experience is still
an issue
Next Steps
� Request a proposal for Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. ([email protected])
� Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com)
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� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news)
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Competitive Structure?
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11
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For Additional Information
Joanna Lewandowska
Corporate Communications
ICT Europe
(0048) 22 390 41 46
Gustavo Cury
Sales Manager
ICT Europe
(0044) 20 7343 8310
13
Jean-Noël Georges
Research Manager
Smart Card - Global
(0033) 4 93 00 61 87