Session VI: the Role of New Technologies In Enhancing Access to the Payments Infrastructure Global Remittances: New Initiatives in M-banking The Citigroup-Vodafone Partnership May 31, 2007 Nancy Todor, Director Global Payments Global Transaction Services

® 2007 Citibank, N.A. All Rights Reserved 2 May 31, 2007 Markets: Various Mechanisms for Remittances Some origination and distribution channels are more “consumer friendly” than others! Origination –Banks Branches Internet –Money Service Businesses Branded storefronts and agent locations Internet –Mobile telcos Mobile phones Stores Distribution –Banks Account credit, check Cash Credit or stored value card –Money Service Businesses Cash –Mobile telcos Virtual wallet

® 2007 Citibank, N.A. All Rights Reserved 3 May 31, 2007 Trends: New Mechanisms & Market Participants Retail channels expanding for origination, distribution of payments –Banks, non-banks, mobile telcos as financial interface to consumers Results –Increased access by consumers to financial services –“Take the service to the consumer” –Supports “General Principle 4”: Competitive Market Conditions* “foster competitive market conditions, including appropriate access to domestic payments infrastructures” Committee on Payment and Settlement Systems and World Bank: Task Force on International Remittance Services 5 General Principles

® 2007 Citibank, N.A. All Rights Reserved 4 May 31, 2007 Trends Support Customer Needs Emerging market Living at home with other family members Sender Receiver Developed country Away from home and family Needs nDependability / trust nConvenience nMinimal paperwork nLow cost nConfirmation payment has reached nCustomer service on transaction initiation and funding Needs nQuick funds availability nConvenience on receiving nNo hassles or paperwork nNo fees nCustomer service on funds arrival and access

® 2007 Citibank, N.A. All Rights Reserved 5 May 31, 2007 Mobile Telecoms, Banks & the Remittances Value Chain Play roles in registration/origination and disbursement Consumer Banking Services Environment Accounts, Local Payments, Financing and Credit Cards Information Service, Exception Handling, Process Tracking for Transparency Global Network Account credit Cash Check/demand draft Card Mobile account Core Processing Convert funds to destination currency Report foreign currency rate and amount (indicative or guaranteed) Transfer funds Traditional In person Call center Innovative Web IVR Mobile phone POS terminal ATM Traditional Manual withdrawal Cash over counter Innovative Debit / Credit Card Direct debit Stored value cards Mobile account Remittances Value Chain DISBURSEMENT for convenience FOREIGN EXCHANGE AND FUNDS TRANSFER FUNDING for convenience REGISTRATION AND ORIGINATION for ease END-TO-END CUSTOMER SERVICE

® 2007 Citibank, N.A. All Rights Reserved 6 May 31, 2007 Case Study: UK Remittances to Kenya Citi Sender’s bank 5.Debit sender account 4.Debit card clearing Citi Kenya cheque to receiver account credits cheque encashed at Post Bank 6.Convert and send funds to Kenya 7.Payment to receiver in local currency 8.Confirm to sender Card Settlement 1.Sender registers on a Web portal 2.Sender inputs transaction at Website, mobile phone* or in person 3.Instruction to Citi Citi / Vodafone Processing Hub Mobile account credit

® 2007 Citibank, N.A. All Rights Reserved 7 May 31, 2007 Steps for Cash Receipt by Receiver 1.receiver goes to registered airtime reseller at destination end 2.identifies himself with National ID 3.provides PIN received from M- PESA 4.reseller validates the PIN with M-PESA via mobile 5.after validation, reseller pays receiver 6.reseller is reimbursed with principal and commission

® 2007 Citibank, N.A. All Rights Reserved 8 May 31, 2007 Commitment to develop market leading flexible, convenient, secure & cost effective mobile delivered remittance services Vodafone Profile:  Leading brand name in mobile phone services  In 58 countries with 200 million subscribers  History of innovative mobile solutions Motivation:  Diversify into non-voice businesses  Leverage customer acquisition and service infrastructure for new revenue sources  New products to attract migrant communities, retain existing customers Motivation:  Greater access to remittance flows via new channels  Interface with recognized brand for customer acquisition to promote rapid volume growth  Invest once and deploy in multiple markets through global partner Citigroup Profile:  Leading capabilities in cross-border payments and FX  Global presence  History of innovative payment solutions Complementary Strengths Synergistic Objectives Benefits: Telcos, Banks Working Together Consumers gain increased access to financial services through convenient channels

® 2007 Citibank, N.A. All Rights Reserved 9 May 31, 2007 In Conclusion Opportunity space for remittances is large and continues to grow Trend toward taking services to the senders and receivers, seen across all regions Driving innovation is key to improving competition and overall service at reduced cost Banks and non-banks can play many integrated roles in the value chain –customer acquisition –relationship builder –core processor –sending or receiving agent Core competencies can be leveraged by banks and non-banks through a spirit of cooperation and competition: co-opetition –Benefits all parties by working together