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[Interview] Monitise: Doubling in Revenue and Growing in Asia

Interview with Darren Sugden, Asia-Pacific CEO of Monitise, GSMA –Asia Expo 2012—Gurpreet Singh

Monitise, a the world leader in mobile banking technology and payment services, recently issued a trading update via the London Stock Exchange, highlighting the expected announcement that revenues for the company will more than double for the third successive year when it publishes its full-year results on September 4th.  We spoke at length with their Asia-Pacific CEO Darren Sugden last month in Shanghai at GSMA. He had a lot to say about their operations and how they plan to expand in the future.

Q: What is Monitise? Can you describe Monitise in your own words?

The company is about 10 years old.  We started in the UK, and we are listed on the junior stock market in the UK, so we are a public company.  Our largest shareholder is Visa, the big international payment giant.  Visa invested in Monitise, because obviously they see mobile as very important to their future.  For example, the CEO of Visa in Europe has predicted that by 2020 fifty percent of all the transactions on Visa will be through the mobile phone.  And if you consider the tens of millions of transactions per year on Visa accounts, that’s a massive volume by 2020.

We’re global.  Today we’re live in the UK, in the US, and in India. In Africa we have a deployment in Nigeria, where people who don’t have bank accounts want to be able to move money around, so our deployment in Nigeria is very much about the mobile wallet and helping the banks manage their money through the mobile bank.

Q: Who are your competitors? Who is your direct competition with and how are you better than them?

You know that’s interesting.  I always get asked about competitors. We’re really about enabling banks to pay their services to markets through mobile channels.  Our biggest competitor is normally the internal IT department of the banks because they say to the business colleagues “we can do all this for you,” and of course then they realize it’s a very complex and difficult area.  Particularly, if you’re going to be able to do this, the bank grade security must make the best use of the mobile channel for the customer experience. It’s a very different channel to the traditional bank channel. Most banks are still stuck in the old world. Even internet these days is a little bit “old world” right? It’s all done through mobile. It’s a very different plan.

Q: Do you think Google Wallet is your direct competitor?

We are an enabling technology company, we are not a consumer-facing brand.  What Google is trying to do with their G-Wallet is fundamentally to take their online business into the mobile world.  They’re not really interested in payment. They’re not looking to make a cut of the payments revenue. There is a battle for consumer engagement going on with not just Google but many players who have different roles to play in the mobile money space.

We specialize in connecting the bank and the payments industry to the consumer through the mobile channel in a bank-grade way.  We sit in the middle and join it all up.

Q: How do Monitise services vary market-to-market wise?

Only in a kind of “powered-by” way. Think of us as a kind of Intel-inside of mobile banking and payments.  We’re an infrastructure company. If you’re going to take anything to do with money, payments and banking, the consumer needs to feel comfortable and secure. They need to feel they are dealing with a brand they know and they trust. And even after everything the banks have been through over the last 5 years, at the end of the day, most consumers still trust the banks to hold their money and look after their money.

For a company like Monitise, to try and build a mass-market trusted brand it is very difficult. There are many technology companies that have tried buying the mobile money space and found it very difficult, even those that have been successful.

Q: What is market strategy? Does it vary market wise?

You definitely have to vary your strategy by market. The interesting thing is, in the developed markets, what is most popular with the banks and their customers is still just being able to check the balance. The second is being able to move money between accounts.

When we came to Asia, and started looking at markets like China, Hong Kong, and India, we found out that actually, most of the banks and service providers were taking a leap frog from banking. They’ve already done simple banking, and they’re now into true commerce. So the service that we have live in India works for them. They can book a plane ticket, check out the local cinema, choose a seat, and then pay for it.

A lot of the markets are what we call “hybrid markets,” so they’ve developed market components and features, and then they’ve got undeveloped, rural communities, or the “unbanking empire,” and you need different propositions and different solutions. China is a perfect example.

Q: Your thoughts on the mobile eco-system?

As I was saying, probably the main difference is that it is much more advanced out here in Asia in terms of leveraging mobile commerce. There are much more sophisticated services and more lifestyle type services enabling people to pay for cinema tickets, choose their seat, pay for airline tickets.  Social media is also big, for instance Indonesia is a very interesting place for social media.  What you may not realize is that Indonesia is among the top three Twitter and Facebook users in the world . It is also one of Blackberry’s biggest markets. People there love BB Messenger. Why? Because it’s free.

Q: What do you think about mobile securities?

One thing that’s fairly unique about this part of the world I think is how the man in the street, if you like, is very much into trading shares and FX. Some people call it investing, other people might call it gambling. So what is critical these days is being in constant contact, whether it is with share prices or foreign exchange rates.  We are right now working with a very big bank in the region to enable and to take FX services to customers, so that they can constantly monitor FX prices through an alert system and strike when it hits certain rates.

Q: How is Monitise doing in India?

In India we’re partnered with Visa.  What we decided to focus on in India is remote payments.  The challenge for the banks in India, as you might be aware, is moving people from cash to plastic.  And in India it is a bit similar to China. Particularly on the debit card side, what most Indian consumers do is go to an ATM and draw out all their salary in cash.  Visa and the banks need them to leave the money in the bank account and pay by card, and increasingly, hopefully, pay by mobile phone.  So what we’re doing is enabling people to pay by mobile phone securely and simply, so that they are encouraged to leave the money in the account.  We think its 5-10 years away still.

Q: Do you think with China Union Pay that the Chinese market is easy?

It’s easy in a way, but it’s not as unified as you might think when you get under the surface.  You look at China Union Pay and you think – great, one company, one scheme connected to all the banks.  You dig below the surface and you find that it’s a different business province by province. And you’ve got all the local politics involved in getting to those different businesses.

Q:  The consumer experience with mobile payments has not picked up in speed. Consumers still hesitate. Your thoughts?

Not if they work with a company like Monitise because we’ve done all the “heavy lifting” in investment and infrastructure.  We’ve built a platform that goes right from the interface to traditional banking and payments.  We bridge that gap, that final mile, from there to the consumer and we take care of all the complexity of handling different handsets, making sure that the consumer experience is consistent and optimal.

Q: Are you scared of getting cloned or local partner trust issues that are special in Asian markets?

I wouldn’t say scared.  We’re conscious of it, and we’re aware of it.  I think for us that’s why local partnerships are so important.  If you try and go alone, I think in certain markets including China you do absolutely run the risk of somebody copying what you’re doing.  If you’re with the right partner and you’re just positioning yourself as an extension of what they already do, you’re the trusted partner that helps mobilize what they’ve already got.

Q: How do you make money?

Fundamentally, we only make money if our partners make money.  So we’re not a company that looks for massive up-front setup fees or massive license fees. We work very hard to lower the barrier to entry for our partners whether they be banks, payment schemes, mobile operators, or service providers.

Q: What is the Monitise approach to the Japanese and Korean markets?

In Korea or Japan you’ve probably picked the two most advanced and sophisticated markets for mobile payments.  DoCoMo in Japan was doing mobile payments in the 1990s with imode, and it’s a very tough market to break into.  Korea, similarly, is very advanced on NFC.  They are also difficult to break into culturally.  So, are they on our radar? Yes of course, hard to ignore.  Are they top priorities? No, because they’re harder to break into.

Q: What is the future of Mobile commerce?

I think what’s going to happen, and this is almost a critical success factor to mobile commerce, is we’re going to see increasing collaboration.  You’ll get companies like Google and Apple acting as trusted intermediaries. You’ve seen Apple announce their Passbook recently, that enables you to hold programs, collect offers, through the mobile phone.  We’ll see those start to converge with traditional banking and payments so that the customer has a unified experience through the mobile phone.

Edited by Matt Johnson

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