|Issue:||Europe I 2013|
|Topic:||Turkey: leading the transformation of payment services|
Sureyya Ciliv is the CEO of Turkcell. Previously Sureyya Ciliv worked for Microsoft in both Turkey and the USA.
Sureyya Ciliv received his MBA degree from Harvard University after graduating with honors in Industry & Operations Engineering and Computer Engineering from the University of Michigan.
Turkey spearheads the rapid adoption of mobile financial services. Wireless payment in particular has been enthusiastically embraced in Turkey thanks to the successful deployment of near field communication technologies by operators and banks. Such services have tremendous growth potential.
A recent World Economic Forum report by INSEAD, citing the World Bank’s ICT 4 Development Report 2012, underlines that the growth of mobile money systems is built on a complex ecosystem that includes the mobile, retail and financial sectors. The report comments that wireless payment was enthusiastically embraced in Turkey thanks to successful deployment of near field communication (NFC) technologies by operators and banks.
Today, with mobile communication technologies changing the way we do business, Turkey spearheads the rapid adoption of mobile financial services thanks to innovative products and services that give superior user experience. Payment services are increasingly moving from the physical to the mobile environment.
Looking back on world history, developments that removed physical barriers to communication and allowed people to interact freely have become the driving force of transformation. Ancient records arguably begin with the invention of writing. Later, the Industrial Revolution of the 18th century was significantly assisted by the invention of modern printing in the mid-15th century. And in contemporary history, the 21st century is marked by the advent of the Internet and again, the trading of information. The new era is widely known as the Information Age due to the expansion and acceleration of communications via mobile phones and the Internet. By 2011 there were nearly five billion mobile subscriptions amongst a world population of some seven billion, while around two billion people (about 28 per cent) used the Internet.
Mobile financial services
A recent study by The Economist indicates that: “About 280 billion non-cash payments were made in 2010 (the latest available data), 7% up on 2009, while electronic and mobile payments are expected to see annual growth of 20% and 53%, respectively, between 2009 and 2013.” Another study expects the total volume of mobile financial services (MFS) to reach US$1.6 trillion by 2016 with money transactions increasingly conducted by mobile services. With six billion mobile subscriptions worldwide, 2.5 billion of which are unbanked; MFS have increasingly become a part of our daily lives. The British Museum’s new money gallery, showcasing world history from coins to mobile phones, considers money as a communication medium passed on from one person to another.
On one hand, the growth of mobile phone usage, and on the other, the transformation of money as a commodity into a ‘social media’ tool leads us to conclude that conventional cash transactions will be replaced by mobile payments and wallets by mobile phones.
Mobile money was introduced in Haiti to distribute aid funds and compensate for the lack of a functioning financial infrastructure. Yet, uptake was slow as locals were suspicious of a virtual currency that they could not touch. Elsewhere, mobile money is doing well in sub-Saharan Africa. Notably, in Kenya where there are 74 mobile phones for every 100 Kenyans, well above the African average of 65, nearly 99 per cent of Internet subscriptions are on mobile phones. However, in the developed world, mobile payment uptake remains slow, with global operators focusing on related innovations.
Turkcell has been conducting studies into mobile payment systems since 2007, and our recently-launched, own-branded mobile wallet was rooted in three main functionalities. i) Our previous version NFC-based mobile wallet offered consumers added value by providing services supplementary to payment; these ranged from loyalty and ticketing to ID applications and physical access. ii) Our remote payment service, mobile money, enabled customers to realize 24/7 secure banking transactions via handset through its SIM banking platform. This card-based platform linked card number with mobile number for money transfer and air-time top-up via mobile. iii) Our co-branded prepaid card was launched for unbanked customers keen to use our remote payment service. This card let customers aged over 15 buy a co-branded prepaid card from any of our retail stores, complete their registration in minutes, load cash onto the card, and shop.
Superior customer experience
And so with a particular focus on innovation for superior customer experience, we have built on these three functions. Accordingly, we introduced Turkey to the first SMS-based Mobile Payment System in 2008, launched the first co-branded prepaid card, developed Turkey’s first money transfer system from handsets, and became Europe’s first vendor-approved Trust Service Management operator. Indeed, our innovations have earned Turkey the reputation of a country of global firsts, including development of the world’s first NFC solution supporting more than one bank’s payment application on a single SIM card, provision of the world’s first NFC-based mobile wallet solution for the BlackBerry, application of the world’s first contactless meal ticket pilot, and establishment of the world’s first NFC-based standard commercial toll-payment system.
Given the slow adoption of NFC-enabled handsets we have further invested in our MFS capabilities, recently launching the world’s most advanced mobile wallet solution with three unique features: i) The service is available to all our customers, whether or not they are banked, providing a simple and secure mobile transaction experience 24/7. Transactions are initiated through the SIM menu on all phones, smart or otherwise; or with a native application on smartphones, while contactless payment on NFC-enabled phones is supported. ii) Our customers can activate our Wallet by simply adding their cards with a single SMS, or by loading cash to their wallets through ATMs, or our Communication Centers. Once cards are activated, users wire cash to a mobile line number with ease, rather than a bank account, and any operator’s subscriber with a mobile line can withdraw it from an ATM. iii) With its triple Chip & PIN security system (one on the application, one on the SIM Card, and one secured in the SIM Card for banks only), our solution is the world’s most secure. People wishing to shop online simply click on our logo, currently available at 35 of the top 50 online shops, register their mobile numbers, and approve payments using their credit card PIN. This is doubly unique: the website requires no information besides the user’s mobile number, while in case of a problem the user keeps in touch with the credit card vendor. Last but not least, data gathered on subscribers’ usage patterns enables many companies to offer customized loyalty campaigns, which again enhance customer satisfaction in line with our core focus, while turning our wallet into a mobile commercial platform.
Currently, 14 banks in Turkey have joined this platform, which combines mobile payment, mobile banking, and mobile loyalty programs in a single service. Considering that 20 million out of Turkey’s population of 75 million are unbanked, there is a huge growth potential for the adoption of this service. Upon its launch we made our mobile wallet available to our 28 million customers, and it is expected to have attracted 500,000 users by the end of 2012, and two million by end-2013. This compares rather well with the 500,000 physical prepaid card users who signed up over 18 months.
Turkcell has elevated Turkey to the top rung through network supremacy recognized globally by independent institutions such as INSEAD and the World Economic Forum. We have expanded mobile Internet use in Turkey, ensuring equal opportunity in information access. We have increased smartphone penetration through our own branded, Android-type smartphones, delivering superior customer experience with our ground-breaking mobile applications. In this new techno-economic period finance and banking lead the rapid adoption of technology, while our cutting-edge applications have positioned Turkey as an innovator and leader. As such, Turkey is now seen as a model country for the technical implementation of mobile payment services, particularly for new technologies developed by our R&D and innovation base.
Indeed, Turkey, geographically and technologically at the crossroads, could well prove the perfect market for mobile wallet services. We are keen to spread it globally. Currently, mobile payment is one of the most attractive areas for venture capital, and we are in talks with many countries, differentiated by our related patents. We can either integrate other operators into our system in Istanbul, turning Turkey into a financial hub, or else sell a customized service to meet the needs of particular countries, and operators.
To paraphrase the well-known expression, the only thing that remains constant is the need for change. And technology is the driver. Those who fail to invest in it and innovate for the better, by definition, become followers. We will continue to invest for Turkey and lead the continued transformation of mobile payment services, building on the tremendous growth potential of this service in our region and beyond.