David Jarvis & Susanne Hupfer
IBM Center for Applied Insights
There are four pivotal information technologies that are rapidly reshaping how enterprises operate: mobile technology, business analytics, cloud computing, and social business. All four of these technologies are potentially disruptive, and they also come with unique security concerns. Many people fear the security implications of employees bringing their own mobile devices to work, or storing mission critical databases in public cloud environments. Fear shouldn’t drive organizations away from these potentially transformative technologies. How are organizations overcoming their fears? How are they breaking though the “security wall”?
Recently IBM released the results of its 2012 Tech Trends Report, which looks at the adoption patterns of these four technologies. It is based on a survey of over 1,200 professionals who make technology decisions – the respondents came from 16 industries and 13 countries. As part of the analysis, three different types of organizations were identified:
- Pacesetters (20%) believe emerging technologies are critical to their business success and are using them to enable new operating/business models. They’re also adopting ahead of their competition.
- Followers (55%) agree that these technologies are important and can provide critical capabilities and differentiation, but they generally trail Pacesetters in adoption.
- Dabblers (25%) are generally behind or, at best, on par with competitors in terms of adoption. They’re less strategic in their use of emerging technologies, namely citing greater efficiency or new capabilities in selected areas.
One common thread across all three of the identified groups is that security is a significant area of importance and concern. In fact, 62% of respondents cite security as one of the three most important areas facing their organization over the next two years, with 27% rating it number one. One interesting aspect is that, the less mature an organization is with respect to the four strategic technology areas, the more security rates as an area of importance and focus. Seventy-seven percent of the Dabblers cited security as a top-three area of importance, versus only 49% of the more mature Pacesetters. Why is that? Perhaps the Dabblers don’t fully understand, or trust, that there are security technologies, policies and practices that can ensure a more secure approach overall. Or perhaps they lack the experience the Pacesetters have.
“Security and privacy are not always treated as first-order problems. Things are deployed and made widely available without regard for security and privacy. In a best-case scenario, security and privacy are thought of as add-ons. Worst case, they’re ignored completely.”
– Dr. Eugene Spafford, Professor and Executive Director of the Center for Education and Research in Information Assurance and Security, Purdue University
Besides being an area of significant importance, security is also seen as a significant barrier to technology adoption by the survey respondents. Information security is ranked as one of the top two barriers to adoption across the four technology areas – more than integration, inadequate skills or regulation and compliance. Overall, security is the biggest barrier for a majority of respondents for mobile (61%) and cloud (56%) adoption. Security is cited less often as the top adoption barrier in social (47%) and analytics (31%). As shown by the dark blue bars in the graph below, there isn’t a huge gap between the groups (9-11%) when it comes to security concerns, but, in general, less mature Dabblers see security as more of a barrier than the more mature Pacesetters. The exception is analytics, which has the lowest adoption barrier. Perhaps Pacesetters better understand the potential risks in implementing advanced analytic systems.
Another part of the security wall blocking the full realization of the benefits of the four technologies is that organizations’ current IT security policies aren’t sufficient. The figure above generally shows correlations between viewing security as a barrier to adoption (dark blue bars) and inadequate security policies (light blue bars). The Pacesetters are more confident across the board, with a majority saying that their security policies are adequate. The “adequate policies gap” between the Pacesetters and Dabblers ranges from 13% to 32%, a fairly wide margin. This tells us that organizations that have the right security policies in place are more confident, and less likely to see security as a barrier. For the others, there is a gap between their fears and taking the steps needed to address those fears.
Another tool organizations are using to attack the security wall is skills development. A majority of the respondents know that security is an issue and are working hard to boost their confidence. Overall, 70% of organizations are planning to develop or acquire skills in “mobile security and privacy” and “cloud security” – the two technology areas where security is seen as the biggest barrier.
Security is tightly intertwined with the four technology areas discussed. You shouldn’t pursue cloud, mobile, social or analytics endeavors without also focusing on needed security technologies, skills, policies and practices. The more you focus on policies and skills, the less likely you will see security as an impediment. Treat security as a business imperative and make it a priority. Design security in from the start of any project. Doing this will increase confidence and help to tear down the walls that are slowing the adoption of important, transformative technologies.
Modified by Ellen Cornillon firstname.lastname@example.org
Within the IBM Center for Applied Insights (CAI), I’ve begun an additional research path on enterprise mobile application development. To share and solidify my thinking, I’ll be posting some insights and early observations here.
According to the latest IBM Tech Trends study involving more than 1,200 technology decision makers, 69 percent of the respondents indicated that they increased their investments in mobility during the past year. Moreover, 63% of IT buyers say applications— with an internal or external use—are their highest priority mobility projects.
To start, I find it helpful to look at the challenges faced by those doing the work of defining the future of enterprise application development – the developers. Some of the significant challenges include managing a great user experience across devices and platforms, integrating with existing IT systems and ensuring data security. These challenges in turn are defining the capabilities and features for future mobile applications. Let’s have a closer look at just two of these challenges and new developments:
The diversity of platforms and devices poses a unique challenge to developers. Every device company wants to be distinct, yet user-friendly. Screen sizes vary widely. New interactions, like multi-finger swipes, are added over time. New inputs, from GPS to image information, mean that expected data may or may not be available to each user. And, users work "differently" on mobile devices than they do on PCs. Developers have a significant challenge addressing the variety and scope of changes in user experience.
A ‘mobile application development primer’ by IBM provides some useful pointers towards a great user experience:
Connection to legacy systems and data sources
While the enterprises are increasingly moving towards Enterprise Mobility, in most cases the transition has either just begun or been quite slow. Many times, developers are fraught with the challenge of connecting the applications wirelessly with legacy data systems, servers and other IT systems such as cloud services. Depending on the type of data and the nature of requirement, developers need to decide whether the data needs to be downloaded on the device, for how long, how and when to update the data etc.
One company that has been successful in integrating front and back-end systems through a mobile platform is Air Canada. It developed an app to help customers check their flight status and obtain electronic boarding passes in real time. The app has had over 1.5 million downloads and was ranked number two overall in the Apple App store in Canada a week after its release. As a result, Air Canada was able to reduce its per-check-in costs by 80 percent.
Mobile application developers can address these challenges, and others, if they view them as opportunities and try to find innovative solutions to these problems. These challenges can very well become the guides/pointers towards the future course of enterprise application development.
I look forward to hearing your comments and suggestions. I’ll also have more to say in the coming weeks, as our research progresses.
Consultant, IBM Center for Applied Insights
A couple of weeks ago I wrote a blog post discussing our
recent paper that links Leading Marketers with financial outperformance. In our study, these Leading Marketers had 40%
higher revenue growth and twice the
gross profit growth. Naturally, the next
question you’d ask is “how do I become a leading marketer?” And that’s exactly what I’m going to talk
about over my next few posts.
To kick things off, we found that Leading Marketers engage
with their customers across a variety of channels. These leading marketers are more likely to
have integrated inbound, outbound and offline marketing programs in some or all
channels. They are more likely to use
interaction optimization technology in all of their channels. And they are also more likely to adjust
offers in real-time across all channels.
In short, they create a “System of Engagement” that allows them to
engage each customer as an individual, across multiple channels.
So if leading marketers are creating a system of engagement
to deliver targeted messaging across channels, what specific tactics are they
using? To answer that, we looked closer
at mobile and social channels.
Essentially, a number of tactics within these channels can
be considered “table stakes.” Everybody
has a mobile version of their website and delivers mobile e-mails. Everybody has a social networking page on a
site like Facebook and most engage in micro-blogging (Twitter). But there are some specific, innovative
tactics where we saw differences between leading marketers and others.
When it comes to mobile, we found that leading marketers
were more likely to use mobile messaging campaigns, location based targeting,
and mobile-specific ads. For social,
leading marketers were more likely to develop apps for 3rd party
networking sites (Facebook), leverage social/local group buying (Groupon), and
participate in location-based games (Foursquare). All of this means that leading marketers are
faster to begin leveraging emerging/trending technologies to see if they can
enhance the system of engagement. Some
of these tactics may or may not prove to be effective in the long run, but the
leading marketers get there first… not unlike the adage “fail fast, fail
often”. By being at the forefront with
these tactics, they stand to benefit when they come across something that’s
It’s also interesting to note that location-based tactics
saw greater use by leading marketers in both mobile and social. When you think about a system of engagement
that strives to deliver targeted, personalized, relevant offers in real-time,
it makes perfect sense that location-data is a key component to enhancing that
There are a number of ideas you can take away from our data,
but there’s one over-riding principle that I think is worth taking to
heart: Innovation. Leading marketers aren’t afraid of trying out
new channel engagement technologies or tactics.
They get there first and they find out what works. They don’t worry about whether a channel is completely
mature… they jump in and get their hands dirty.
This enables them to be proactive with their customers, rather than
I’ll be back next time to talk about the barriers that
prevent many organizations from becoming Leading Marketers. As always, please feel free to reach out to
me with any questions. And, if you haven’t read it yet, take a look at our
executive report, How Leading Marketers Outperform: Effective Engagement and Intelligent Investment.
Today, I’m going to take a different approach to, hopefully, give you a glimpse into how mobile money can change users’ experiences. This is an imaginative piece (all characters are fictitious) where I’ll try to highlight the concerns, joys and satisfaction of a mobile money user from the hinterlands of India in the year 2015. It highlights the importance of an effective and trained agent network, importance of sufficient face-time for new customers, interoperability issues, and benefits of mobile money for a typical user.
Today, I woke up late at 5 am, startled to already be a half hour behind schedule. My mobile phone in hand, I kept checking the time and rushed to get ready. I can’t afford to lose half a day’s wage, US$6, if I report late to work even by half an hour.
At work, Sultan, one of my best friends, asked me for a loan of US$15 which he needed to pay the school fees of his daughter. I checked my Airtel mobile money wallet balance and instantly transferred the amount to his mobile money wallet. For a nominal fee of 10 cents, it was worthwhile to help a friend.
Thinking back, I remember the last time I loaned Sultan US$10. I had to walk down 2 Kms to the nearest branch of State Bank of India to transfer money to his account. That was when we met Harpreet, the sales agent of BharatiAirtel mobile money services at the bank. He introduced us to the new mobile money services. Until then, I had a basic feature phone and could not understand much of technology or features of mobile money in the first go. Harpreet was patient; he explained the service, its features, its tie up with banks, charges and benefits for us for about 30 minutes. I was particularly wary of the notion of holding money in mobile – how secure could it be? What if I lose my phone/SIM or someone else makes use of PIN delivered to me? Harpreet demonstrated everything and explained it in detail to clear our apprehensions. This convinced both of us, me and Sultan, to subscribe to the service on our Airtel SIMs. He even gave us the contact details of two local agents in our locality who can help us cash-in and cash-out, as required.
The first few days in using this service were difficult. I forgot some of the steps of using various services; user interface of the application was not so convenient, etc. I remember approaching the local agent and was so relieved to see that he could help. He was very well trained and he helped me from time to time in using the services more efficiently. One challenge I faced in the beginning was that the agent used to run out of cash. This was a major let down for me and I had to walk a Km to get cash from another agent. Over the last two months, though, I feel the service has improved a lot.
Since then, I have been using this service quite frequently. I have used it to make recharges on my cell phone, make and receive money transfers to/from my friends, send money to my family, check bank account balance, withdraw and deposit cash at the agent and even pay my electricity bill. The list keeps on getting longer! Here again, the agent is proactive enough to let me know of the new services and discounts offered by the service providers.
For me, it’s a hand to mouth situation, given my meagre salary. I work in New Delhi but my family lives in a distant village in Orissa, more than 1000Kms from my place. With this service, I can transfer money to them on a real time basis and with minimal charges. Earlier, I used to transfer money through post office or hand it over to someone who would be travelling to my place. It took a few days for the money to arrive and I was charged about thrice as much. I am quite happy that this service enables me to send money to my family as and when they need it.
One challenge I faced initially, while transferring money to my family, was that my family was using the mobile services of Vodafone and Airtel was not allowing money transfers to non-Airtel subscribers. Sending remittance to my family constitutes 80% of my transactions and this was a major handicap for me. Either, I had to take the services of Vodafone or my family had to take the services of Airtel. Due to this, I was not able to transfer money to them for a couple of weeks. I consulted some of my friends and they advised a workaround solution they had been using. However, I was not convinced and instead, asked my family to take Airtel connection.
I have genuinely recommended this service to my fellow workers at the construction site and taken four of them to Harpreet to sign up for the services. For this, Harpreet gave me bonus talktime on my cell phone. It is a nice incentive for sharing my experience.
I finally got free from my work at 7 pm this evening and received my daily salary. I transferred the entire amount to my family since the monthly rent was due on their house.
Though it is tough for me to survive in this salary and work condition, mobile money has surely made the journey a bit simpler and convenient.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Modified by Ellen Cornillon email@example.com
I've had the priviledge of working with IBM's Security Systems and Services teams over the past two years looking at the evolution of security leadership and what security leaders, like the CISO, are going to need to look like in the future. We’ve also looked at leading practices in cybersecurity education and we’ve identified essential security practices for CIOs based on our experiences at IBM.
Have a strategic vision… ensure global consistency in policy… engage in lots of communication with business leaders… speak business value and understand risk… minimize the impact of security to the business… be on the bleeding edge of enterprise and consumer technology...
A set of challenges also emerged from the interviews we conducted. Although we targeted more mature security leaders, they are still struggling in three areas.
How do I best manage a broad set of concerns from a diverse set of business stakeholders? Security leaders that are engaged with the business have to deal with a number of security fears from the C-Suite. The CEO might be most worried about losing customer trust because of a breach, the CFO might worry about the financial impact of recovery, COOs might focus on the impact of operational downtime. Good security leaders are able to balance, manage and allay all of these concerns.
How do I improve mobile security policy and management – not just deploy the latest technology? It’s no surprise that mobile security is top of mind. It was identified as a top technology concern in last year’s Assessment and continues to be at the forefront. Most are enabling secure mobile deployments in their organizations, but fewer have achieved comprehensive policies or strategies for personally owned devices.
How do I translate security metrics into the language of the business to help guide strategy? Technical and business metrics need to be used for more than just budget discussions and technology prioritization, they need to be deeply integrated into the decision making process of the business. To get to that point, security metrics must be translated into things the business will understand, like financial impact.
To learn more and download the full report and other materials visit the IBM Center for Applied Insights and join us in an open discussion about the future for information security leadership.
Modified by Ellen Cornillon firstname.lastname@example.org
Senior Consultant, IBM Center for Applied Insights
Growing up, there was a very specific sandwich-making rule laid down by my dad. When making peanut butter and jelly sandwiches, you had to use the peanut butter before the jelly. Was this because of some principle which determined that the resulting sandwich held together better when the ingredients were applied in this order? No. It was because he hated the cross-contamination of jelly into the peanut butter jar which was inevitable when it was on the spreading knife first. He preferred jelly-free sandwiches, you see.
This memory of a long held rule, which still govern my actions today, came to me as I was reviewing the Center's current research into security related topics. We're talking with Chief Information Security Officers (CISOs) about their evolution and leading practices in the enterprise. We're discussing how they successfully bring security topics into the business world. Most importantly, we're examining how business priorities impact security choices.
In the realm of mobile and BYOD, you can hardly have a conversation without discussing security. It is a key inhibitor to mobile adoption and one reason companies are looking for managed security solutions rather than simply hoping for the best. Some security leaders argue for keeping personally owned devices out of the enterprise, simply due to the risk potential. Others, accepting that mobile is here to stay, fight to make its use as secure and safe as possible. It's only going to get worse and more and more connected devices enter the enterprise (see this recent Forbes article: "The Next Big Thing In Enterprise IT: Bring Your Own Wearable Tech?")
IBM's prior CISO, and current head of Security Services, Kris Lovejoy wrote about best practices for mobile implementations last year as part of our Security Essentials series: "Enabling mobility: their device, your data". For many, doing business means being mobile. As a security leader, it becomes your job to manage the risk - not just avoid it. Caleb Barlow extended these thoughts with an article this summer, "Yes, It’s Possible to Be Confident About Mobile Security", which focuses on four key ways to mitigate the risk of adding mobile to your secure enterprise:
Risk analysis - Organizations must understand what enterprise data is on employee devices, how it could be compromised and the potential impact of the comprise (i.e. What does it cost? What happens if the device is lost? Is the data incidental or crucial to business?).
Securing the application - In the pre-mobile, personal computer era, simply securing the device and the user were sufficient. When it comes to mobile devices, we also need to think about securing the application itself. As a typical application is downloaded from a store, the end user really has no idea who built the application, what it actually does with your data or how secure it is. Corporate applications with sensitive data need to be secure in their own right.
Secure mobile access authentication - Since mobile devices are shared, it’s important to authenticate both the user and the device before granting access and to look at the context of the user requesting access based on factors like time, network, location, device characteristics, role, etc. If the context appears to be out of line with normal behavior, appropriate counter measures can be taken.
Encryption: Simply put, if the data is sensitive it needs to be encrypted both while at rest as well as while in motion on the network.
What stops you from fully adding mobile to your security strategy? Hopefully it is more than just a distaste for jelly in your peanut butter. This October we'll have more to share on mobile adoption challenges when we release this year's follow up to our 2012 CISO Assessment.
Consultant, IBM Center for Applied Insights
IBM Center for Applied Insights
(CAI) has recently started a new program on building fact-based, market-centric
thought leadership assets on various facets of mobile money.
As I dig deeper to understand the
current state and evolving trends of this segment, some facts are worth
Group to Assist the Poor. (CGAP) estimates that around 3.5 billion people
worldwide currently lack access to formal financial services. It estimates that
there will be 1.7 billion unbanked customers with mobile phones by 2012. There
are more than 165 pilots in the mobile money segment in emerging economies being
run by a diverse group of organizations.
However, very few mobile money
deployments have been able to achieve scale and gain significant customer
base. Some deployments which have been
able to achieve significant scale include M-Pesa in Kenya, GCASH and Smart
Money in Philippines, Vodacom in Tanzania, and MTN Uganda.
Hence, there is definitely a huge
potential to achieve scale in this segment, especially in the emerging markets,
and firms are investing hard to address this market. However, many of them are
still struggling to fully tap into this opportunity. Cracking the code for high
customer adoption and usage, in quantity and continuity, appears to be an
Achilles’ heel for the Mobile Network Operators (MNOs), financial institutions,
and other organizations trying to venture into this segment.
So, what insights can we learn
from those who have succeeded in this segment? I researched to determine some
common factors which seem to have made some deployments more successful than
others. It seems that there are two broad factors which can prove to be very
critical for an organization while trying to launch and subsequently scale: the
actual product and an effective agent network. Today, we’ll take a look at the
impact of the product.
Product – Building a strong, robust and compelling
product offering (and later a product portfolio) is a very important factor
which is sometimes overlooked as many companies try to emulate successful
offerings and solutions from other deployments.
Some of the key points to keep in mind are:
vision and long term strategy
– Most of the successful companies have a
well-defined long term vision and strategy with respect to offering mobile
money services. For instance, a company can aspire to be the leading low cost
provider for person-to-person transfer services or it can aspire to be a
leading service provider in the retail payments segment. A clear vision also
helps senior management develop a long term commitment to the service. This
often takes substantial initial funding towards mobile money deployments and at
years to become profitable.
needs of the market – A clear and articulated value proposition, in terms
of addressing the ‘market specific’ needs for mobile money, goes a long way
towards ensuring success of the deployment. There is no ‘One size fits all’
business model or offering which can cater to different markets in the emerging
or the developed economies. For example, M-Pesa has gained its popularity and
scale by uniquely positioning the product to address the remittance need of the
Kenyan population; its value proposition being: “send money home.” WIZZIT in South Africa focuses on “live life
anywhere” by addressing the mobile banking needs of their consumers. Other
avenues can be business-to-business payments, bill pay, salary payments, and so
on. In the planning phase, a thorough market research can help develop a deep
understanding of consumer’s pain points in the specific market which can be
addressed effectively by the mobile money deployment.
– The bulk of potential consumers in the emerging markets are
from the informal economy, people who are unbanked and use other formal and
informal means such as post offices, banks, or personal networks for money
transfer. This target segment is mostly unaware of the potential for and
features of newly launched mobile money offerings. They also have security
apprehensions associated with mobile money transfers and lack of initial
technology understanding. For example, some of my colleagues were initially worried
about security of their payments while using newly launched mobile payments
services by BharatiAirtel
Hence, a concerted and targeted marketing campaign goes a long way in
addressing the apprehensions of the target segment.
–This target customer base from the informal segment in emerging
economies wants the service to be Fast (Instant transfer of money over long
distance and without any queues), Inexpensive (in comparison to costlier
credit/debit cards or informal payment methods), Safe (Holding value and making
payments that is safer than holding and transacting cash) and Accessible (able
to cash out, make purchases, and receive money in remote areas). For example,
as per a white
paper by IBM
, cost of sending 1000 Ksh ($13.06) through M-Pesa is $0.38
which is cheaper than any other service available in Kenya such as PostaPay and
Partnerships – Research suggests that making the right partnerships at the
right time helps a) align the business and its new/existing products with the
overall vision on an ongoing basis, b) continuously learn and address the needs,
challenges and new demands of the market and c) expand and reach scale. The
partnerships can be with technology partners, banks and financial institutions,
MNOs, agent networks, retail chains and other corporate organizations.
For example, Bank Bradesco and the Post Office in
Brazil have partnered to create Banco Brazil. The partnership has been able to
effectively attract rural populations boosting the business of both companies. Another
interesting partnership is in Japan, a developed economy. Sony partnered with
DoCoMo, a MNO, to form a joint venture – FeliCa Networks. They produced both the mobile phone chip and card
reader which enable them to manage downloads and applications for consumers and
merchants and gain a strong foothold in the mobile payment market.
There is a lot to be learned and written on the effective management
of agent networks. The agent network is the effective face of the company for
consumers. I can try to explore this
factor in more detail in one of my subsequent posts.
Look forward to your comments and
Modified by Susanne Hupfer Susanne_Hupfer@us.ibm.com
Consultant, IBM Center for Applied Insights
Do you know which industry is adopting analytics fastest? Do you know which industry has the biggest problem with social skills? Now you can find out.
The latest IBM Tech Trends Study surveyed over 1200 IT and business decision-makers – IT managers, business professionals and IT practitioners from 16 different industries and 13 countries – to assess how and why enterprises are adopting four emerging technologies – Mobile, Analytics, Cloud and Social Business – that are dramatically transforming how enterprises operate.
The study showed that Business Analytics and Mobile Computing represent a large swell, with over half of respondents already adopting these technologies. Cloud Computing and Social Business form a coming wave, with 40% currently piloting or planning to adopt by 2014. Furthermore, enterprises’ projected investment in the four areas is surging: 55% or more plan to increase investment in Mobile, Cloud, and Business Analytics, and 43% project increased investment in Social Business.
Despite the momentum in these areas, the study also uncovered a critical shortage of IT skills: Across all four technology areas, only about 1 in 10 companies reports having all the skills needed to be successful, and a quarter of respondents report major skill gaps.
A Deeper Dive: the Tech Trends Industry Dashboard
Today we’re launching a new interactive dashboard that allows you to explore the study findings in a dynamic way, by industry and by tech area. You can investigate adoption, investment, and skills for a particular industry within each tech area and sort to see how that industry compares to others, or to the cross-industry average.
Here’s one example. I chose Analytics, then Adoption Levels, and sorted by “Deployment” (and also clicked to “show percentages”):
(If your browser doesn't display the infographic below, please visit the dashboard page directly.)
We see that Insurance, Media and Entertainment, and Banking are the top three front runner industries in terms of high adoption of Analytics. Where does your industry fall?
You can also click on a particular industry name to bring up a graph specific to that industry; here we see Analytics skill levels reported by Media and Entertainment organizations:
It appears that Media and Entertainment is doing better on Analytics skills than the average: 23% have all the skills they need for Analytics, versus just 13% across all industries.
Sharing your insights
Are you successfully surfing one of the big tech waves but getting knocked down by another? Regarding your enterprise itself, do you think you’re outpacing your industry, keeping up, or lagging?
If you have particular insights about your industry’s position, please share them. All the graphs you encounter in the exploration are shareable – use the social media buttons or the embed code located beneath each graph to embed the graph within a blog, web page, or social media site. The embedded graph retains all the interactive functionality of the full dashboard.
Happy exploring – and we hope you’ll join the conversation around these findings!
Client Insights, Consultant, IBM Center for Applied Insights
In this post, I will explore some interesting facets of the mobile money market in India such as market opportunity, regulatory environment, market participants, and the way ahead for the market.
Market Opportunity: The Indian economy has shown strong growth in the recent years, making it a USD 1.3 trillion economy. It is predominantly a cash economy with more than 65% of all retail transactions (total transactions are estimated as USD 410 billion per year) being conducted in cash. According to Reserve Bank of India(RBI), the central bank of India, more than 57% of the electronic transactions happen through credit and debit cards and the rest through Electronic Clearing Service (ECS) and Funds Transfer.
In India, 40% of the population remains unbanked. In contrast, it is estimated that more than 70% of the 1.17 billion people in India own a mobile phone. Moreover, this subscriber base has been increasing by 20 million customers per quarter. Hence, with a huge mobile subscriber base and a very small percentage of the transactions taking place over mobile, the potential for mobile money to take off and replace cash is immense.
Regulatory Environment: Government and the Reserve Bank of India are the nodal agencies which formulate regulations pertaining to mobile money. The Indian regulatory system has been gradually allowing the expansion of new products and solutions aimed to take advantage of the vast opportunities in this space.
RBI recognizes that individual banks need to work in conjunction with operators, mobile devices and payment technologies. In 2009, it mandated that a bank account is needed to send money but in 2010, it allowed ‘Other Persons’ (non-banks/NBFCs) to issue m-based semi-closed instruments with certain conditions and caps on transfer amounts. As a result, banks started offering mobile banking services. Further in 2010, it allowed semi-closed instruments to be used for bill payments and ticketing services, also, and permitted issue of co-branded instruments.
In late 2010, an interbank system had been set up in India enabling instant money transfers between bank accounts via mobile phones. NPCI's Interbank Mobile Payment Services (IMPS) is India's first instant fund transfer facility in the retail payment sector. It provides an inter-operable infrastructure for the banks and facilitates real time money transfer facility to their customers through the mobile channel. The unique feature of this system is that banks can choose any mobile banking application of their choice. Interestingly, IMPS can be made available in all forms (SMS, USSD, thin client, thick client) and hence it can support the transactions directly from low end mobiles to high end mobiles.
Market Participants: As compared to mobile money deployments in other emerging economies like Kenya, Philippines and Uganda, the Indian market is at a very nascent stage in terms of market consolidation and volume of transactions. The Indian telecom market is quite fragmented with fifteen different mobile operators providing service to more than 900 million subscribers. Among them, BhartiAirtel, Reliance Communications and Vodafone together hold more than 50% of market share.
BhartiAirtel has recently launched its mobile money services across India, offering services like payment of utility bills, mobile recharges, purchase at retail outlets, person to person money transfer, etc. Only Airtel customers can use this service and transfer money to other customers on Airtel.
My Mobile Payments Ltd (MMPL), a mobile payment service provider, had recently announced the launch of ‘Money-on-Mobile’ (MOM). It is a M-Wallet service which permits a mobile phone subscriber to purchase a wide range of goods and services using the mobile phone instead of paying by cash, cheque, debit or credit cards. It offers services like mobile recharge, utility bill payments, purchase of bus and movie tickets, to name a few. It claims to be India's first operator and bank agnostic mobile payment system.
The way ahead: As outlined in my earlier post, though the opportunity is huge and growing, companies need to address security apprehensions associated with mobile payments and build the awareness of the technology and the product.
India’s unique demography is an important factor to consider while taking strategic and marketing decisions during the ‘launch’ and ‘scale’ phases of mobile money deployments. Some of the notable factors are:
- It is estimated that 60% of the 1.17 billion population lives in rural areas most of which suffer from a lack of basic infrastructure and education. Companies generally face significant challenges in building the infrastructure and consumer awareness in these areas.
- Also, more than 50% of the Indian population is below the age of 25 years. This segment of population embraces new technology more readily but at the same time, it is a lot more value conscious and has little loyalty to a brand.
Besides offering regular services like person to person transfer, utility bill payments, mobile recharge etc. other useful revenue streams can be explored too.
- The internal remittance market – The internal migrant population is estimated to be around 100 million people. This market for internal remittance is estimated to be around USD 8 billion to USD 12 billion.
- Government payments market – Government of India offers a number of subsidy and support programs like Mahatma Gandhi National Rural Employee Guarantee Act (MG-NREGA), fuel subsidy, fertilizer subsidy and public distribution system which is estimated to be around USD 40 billion. A lot of it is wasted due to leakages and fraud in the distribution system. To ensure that the intended recipients do get their payments,mobile payments can play a very crucial role. The Indian government’s ‘Aadhar’ program to provide a unique identification number to every citizen of India would further lend support to the rapid uptake of financial services and transactions over mobile.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Consultant, IBM Center for Applied Insights
Mobile money has progressed by leaps and bounds in the recent years and a lot of innovations are happening globally. The industry is undergoing a lot of changes and ecosystem participants are trying to learn from their successes and failures to innovate further. I have been an avid follower of the various developments happening in the industry. In this post, I will capture my thoughts on key segments of growth/developments which I would expect to happen this year. I believe these segments of growth/developments have the potential to bring further scale and innovation in this industry:
1. Development of ‘App Store’
– I expect that some of the major mobile money service providers may open up their platforms via an Application Programming Interface (APIs) that allows third parties to hook in and innovate. This development has the potential to replicate the success of the ‘Apple Appstore’ by providing an incentivized ecosystem to the developers. They would develop innovative and customized applications for specific markets which would address specific needs and in turn, attract more customers to the service. Thinking further, an ecosystem of these Apps stores from various service providers can provide further scale up and growth opportunities to them.
For example, a Kenyan MPesa customer on his visit to Ghana, can simply download an app to pay parking fees or make some quick purchases in a busy market in Ghana. Implementing platform level and customer level interoperability
would be the foundation to build this big ecosystem.
2. Transformation of traditional model of B2B payments
– Increasingly, mobile money is finding its application in the Retail industry for Point of Sale (PoS) transactions. Interestingly, I would expect more Business to Business (B2B) mobile money solutions to emerge for various industries. These solutions would focus on transforming the way payments are being made throughout the value chain. The aim would be to reduce risk of carrying cash, optimize liquidity, and provide delivery of goods and payments with security.
For example, Coca-Cola Sabco
is looking at the use of mobile money as a way to shift the supply chain of its Manual Distribution Centers away from cash. In Papua New Guinea, IFC is looking at piloting mobile money to reduce the use of cash in the coffee supply chain.
3. Development of new business models
– Traditionally a Mobile Network Operator (MNO) or a bank provides the mobile money services either individually or in collaboration. Of late, new business models are emerging as different industries are exploring mobile money based custom applications.
For example, Bharat Sanchar Nigam Limited (BSNL), a leading telecom service provider in India, has a mobile banking
platform which will help mobile subscribers to send money orders electronically. The unique thing is that this SMS based service is done in association with India Post. Receiver will be able to encash the SMS at all post offices in the country. Starbucks, a leading coffee chain is already among the most successful early adopters of mobile payments, claiming to have processed USD26
million in mobile transactions in the US just 12 months after launching the service. Recently, it has forged a partnership with Square
that will see the mobile payments company power in-store credit and debit card payments for Starbucks.
I expect that more of these innovative and interesting partnerships will emerge which would utilize mobile money to conduct business more efficiently and effectively.
I look forward to your comments and observations. Please click “Add a Comment
” below or “More Actions
” to share this with others.
Susanne Hupfer, Consultant, IBM Center for Applied Insights
Our director, Steve Rogers, recently interviewed Paul Brunet, IBM Vice President of ISVs, Start-ups, and Academic Programs, about his perspective on the 2012 Tech Trends study. Whether you're an IT or business decision-maker, an academic, or an IT practitioner, you may discover valuable insights and recommendations in their broad-ranging conversation.
IT and business leaders:
Why are CEOs regarding technology and skills as top concerns -- now outranking even market and economic forces? Why is it crucial to leverage emerging technologies for competitive advantage?
Paul discusses four technology areas -- mobile, cloud, social business, and business analytics -- and contrasts adoption and skill levels in mature and growth markets. He covers challenges to adoption -- such as security, skill gaps, and integration -- and explains why security is a business imperative. IT and business decision-makers may also be eager to learn more about the elite "pacesetter" group identified by the study, who are unlocking competitive advantage by being more market-driven, experimental, and analytical.
How can academia better monitor the needs of the enterprise and teach relevant skills their students will need upon graduation?
Paul also examines how using sandboxes and collaborative spaces can encourage experimentation, skills development, and collaboration across universities and practitioner areas.
Where should you be expanding your skills? What traits are IT leaders looking for today?
Paul and Steve talk about the importance of integrating business along with IT skills.
You can check out the full podcast here.
(24:16, 22.2 MB)
Consultant, IBM Center for Applied Insights
In this post, I shall try to have a closer look at some of the important questions pertaining to interoperability: what do we mean by mobile money interoperability, what are the arguments for and against interoperability, and what practical steps can be taken to achieve it?
The mobile money industry has witnessed a remarkable activity in the recent years. There are more than 165 pilots in the mobile money segment in emerging economies, mostly being run by MNOs, banks and other financial institutions. It is now possible to find two or more deployments in many Sub-Saharan African and South Asian countries. Yet, only a very few of these deployments have been able to achieve significant scale. In a recent survey of 52 mobile money service providers, the GSM (Groupe Spéciale Mobile) Association identified 11 service providers that have more than 1 million registered customers. This has led many to make a case for implementation of interoperability in mobile money ecosystems so that customers are more inclined to use mobile money and the deployments can achieve scale by increased customer adoption. Let’s try to explore this important concept further.
Defining mobile money interoperability: Interoperability occurs if different systems are technically able to work together. For mobile money, interoperability can happen between handsets, networks, financial processes and retail processes etc. The Consultative Group to Assist the Poor. (CGAP) has proposed a framework that categorizes interoperability in three levels: platform, customer, and agent levels.
- Platform level interoperability – It permits customers of provider A to make payments to customers of provider B. They may also transact via any mobile network operator channel and switch operators without having to switch banks. For example, M-PESA allows consumers to send money to any phone. In South Africa, MTN offers subscribers not only MTN Banking’s application but also access to their First National Bank, ABSA, Standard Bank and NedBank accounts. WIZZIT works across all mobile networks in South Africa.
- Agent level interoperability - It permits agents of one mobile money service to also serve customers of another service, in other words, agents having non-exclusive partnership with operators.
- Customer level interoperability - It permits the customers to access different mobile money operators from one SIM. Also, it permits the customers to access mobile money account from same handset, regardless of SIM
The debate around interoperability: Market participants and regulators have not reached a consensus about the need and benefits of interoperability. Some regulators believe that interoperability is the way to go as the market matures and operators try to scale up. For example, governments of Ghana and India have mandated interoperability in their countries. Some regulators have taken a neutral position and have allowed market forces to decide the course. The Bank of Zambia prefers, but has not mandated, that mobile money solutions be interoperable. It is encouraging interoperability through the development of a national switch. Others feel that interoperability will erode the competitive advantage of market leaders and its implementation may not result in sufficient addition in subscribers to justify the investment required. For example, a report by GSM (Groupe Spéciale Mobile) Association suggests that the business case for implementing interoperability is unlikely to justify the initial investments of implementing it.
How to achieve interoperability: Though industry leaders seem to agree that interoperability is a key issue, they have different views on how it can be achieved. There are two broad approaches to achieving interoperability:
- Standards – In global mobile telecommunications industry, Global System for Mobile Communications (GSM) has played a key role in setting up the standards and allowing the users to roam freely across various markets. Another example of common standards aiding the development of industry relates to SMS, where standard development in Europe led to a huge growth in SMS usage. Mobile money industry is still in its early stages and has not agreed to a set of common standards across all the elements described above. I believe it is unrealistic to take an entirely standards-based approach to interoperability. Standards are consensus based and take a long time to develop. Since a number of standards exist, it is unclear whether common standards can also impede the fast growth of mobile money industry; some of the players would have to wait before launching their services and many might have to migrate to common standards with significant costs and time. As the industry develops, a flexible approach based on experimentation would be needed. It will take time but governments & industry players should do what they can to monitor & promote standards,without holding back growth.
- Bilateral Agreements – Bilateral agreements, both commercial and technical, have become quite common. To develop compelling product offerings and to scale up, the market participants are experimenting with various business models and forging partnerships with other MNOs and financial institutions. For example, MasterCard and Telefonica announced a joint venture using the MasterCard Mobile Payments Gateway to lead the development of mobile financial solutions in 12 countries within Latin America where Telefonica’s Movistar® brand is present.
With respect to the timing and extent of interoperability, maybe the real answer lies somewhere in between. The timing and extent of interoperability needs to be specific to the state of market and needs to be continuously assessed. A report by Mobile Money for the Unbanked (MMU), suggests some valuable recommendations:
- Regulators should carefully consider the costs and benefits of implementing interoperability at an early stage of market development.
- Even when the enabling regulatory framework is in place, market should be monitored on a continuous basis to assess the need of further intervention.
- In the absence of interoperability regulations, monopolies and competition should be assessed periodically.
- Regulations should focus on ensuring that interoperability remains feasible at low cost to provide appropriate incentive to service providers and benefit users.
Have you ever been blocked by interoperability issues? What steps are your companies taking? I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Consultant, IBM Center for Applied Insights
IBM just released the results of its 2012 Tech Trends study, revealing a number of interesting insights.
The study explores how enterprises are responding to the opportunities and risks introduced by new technologies. This year, we surveyed over 1,200 IT and business decision makers to determine why, when, and how their organizations adopt four pivotal emerging technologies – mobile, analytics, cloud and social business technologies – that are rapidly reshaping how enterprises operate.
Are you in the lead, or is your organization falling behind? You can use the adoption and investment statistics we discovered to help you assess where your organization stands:
Business Analytics and Mobile Computing are already quite mainstream, with over 50% of respondents deploying. Cloud Computing and Social Business represent a coming wave, with 40% either already piloting the technologies, or planning to adopt them within two years. Moreover, planned investment levels in the four technologies over the next two years indicate that all are moving full steam ahead: 55% or more of respondents plan to increase investment in Mobile, Cloud, and Business Analytics, and 43% plan to increase their investment in Social Business. You can click on the following infographic to take a deeper dive:
Despite the foothold of these technologies and the enthusiastic investment landscape, the report cites critical IT skill gaps that threaten to slam on the brakes just as organizations are hoping to leverage these technologies for their strategic advantage:
- Across all four technology areas, only roughly 1 in 10 companies report having all the skills they need to be successful, and one-quarter of respondents report major skill gaps.
We also surveyed about 700 educators and students about these technology areas, and according to their responses, the skill gap is poised to get even worse:
- About one-half of academic respondents report major gaps in their institution’s ability to meet the needs of the IT workforce.
Security also continues to be a major concern. In fact, Security is rated as the #1 barrier to adoption for mobile, cloud and social business, and the #2 barrier to adoption for business analytics.
What can you learn from those making the most progress applying these technologies for strategic advantage?
We asked respondents to rate the four emerging technologies’ importance to their businesses and also to rate their enterprises’ pace of adoption relative to competitors. We identified an elite group of Pacesetters who are forging ahead faster than others – despite the adoption hurdles – and who are using emerging technologies in more strategic ways.
If you want to get your organization onto the technology fast track (or keep it there), there are a number of interesting lessons you can take from the Pacesetters. We found that Pacesetters are more likely to exhibit three distinguishing traits that help them capitalize on the potential of mobile, analytics, cloud and social technologies. They are:
- More market-driven
- More analytical
- More experimental
So, how are Pacesetters managing to stay ahead of the competition? As it turns out, they’re very experimental in their approach to developing IT skills. Rather than wait until there’s clear business demand for new skills, Pacesetters start building skills ahead of time: they are nine times more likely to experiment with technologies that don’t yet have a clear business application, and twice as likely to proactively develop skills to meet anticipated needs.
To learn more about the study results and how you can follow the pacesetters’ lead in technology adoption, you can check out the complete IBM 2012 Tech Trends report
and a variety of other resources.
Don't miss the paper's list of concrete recommendations for becoming Pacesetters. We invite you to join in the discussion and let us know what you think about the study and its recommendations!