22

33

4

Wireless arm of KT, the dominant telecommunication company in Korea with 120-year history!

- Subscribers: 13.8M (2008.2), 3G/WCDMA Subscribers: 4M (2008.2)- Revenue: US$ 7.3B

One of the leading mobile companies and No.1 3G company in Korea

- World 1st to introduce m-commerce (K-merce)

Innovative convergence and infotainment service provider

Member of

The GSM Association (GSMA) is a global trade association representing more than 700 GSM mobile phone operators across 217 ter -ritories and countries of the world. In addition, more than 180 manufacturers and suppliers support the Association's initiatives as associate members.

4

- Leader of Pay-Buy-Mobile Project participated by 44 operators

Board Member of GSM Association (CEOs of 23 Operators Members)

5

NFC-based Mobile Payment with credit card embedded in SIM Card

Demonstration in Nov. 13th at Mobile Asia Congress in Macau as a part of Pay-Buy-Mobile project

Contactless M-Payment roaming made in five countries (Korea, USA, Malaysia, Taiwan, U.K.)

5

66

7

PC Banking (1987,1990~)

CD / ATM Network (1988.8 )

Tele Banking (1992.1)

Inter-Bank Network (1989.12)

Firm BankingBanking Network ( rural coverage)

(1996.5,97)

Common Network for e-Finance

(2000.7)

Network for e-Money (2000.7)

Internet Banking(1999.7)

Mobile Banking (1999.11)

E-Finance Chronology in Korea Source : Current e Finance Development & Main Issues ( Korea Finance Research Center 2006)

’87 ’88 ‘92 ’96~97 ‘99 ’00.07 '01.04‘89

7

8

Foreign workers Low income family

Post Office Bank

- Social security & welfare

- Funding for government driven community development

- Rural and remote area54.55%

45.45%94.94%

6.6%

Source : “Post Office Finance Vision and Business Plan”, MIC Division of Financial Business ( 2007.7)

Rural AreasUrban

9

Banking Anywhere

9

101010

1111

Int’l P2P transfer provider market (2003)

Other55%

WesternUnion25%

Eurogiro11%

MoneyGram6%Vigo 3%

A matter of cost Money transfer facilitated by few players Customers pay 10-15% of amount sent, Need for physical presence keeps prices high

Debit card vs. Mobile penetration

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Indi

aC

hina

Mex

ico

Fran

cePh

ilipp

ines

Indo

nesi

aB

razi

lPa

kist

anM

oroc

coB

angl

ades

hPo

rtug

alR

ussi

aEg

ypt

Turk

eyN

iger

iaSe

rbia

Col

umbi

aD

omin

ican

Rep

.El

Sal

vado

rJo

rdan

Sri L

anka

Mal

aysi

aU

krai

neN

icar

agua

% P

enet

ratio

n

Mobile Penetration Debit Card Penetration

Sources: World Bank, BCG, CGAP, Market Intelligence

A matter of access Banks: 0.5M branches, 1M ATMs, 1.4M deposits worldwide

MNOs: 3 bn customers worldwide

12 Source : Goldfinger, Charles(96.8)

Source : Current e Finance Development & Main Issues ( Korea Finance Research Center 2006)

1.5

Cost by channel

0 0.5 1

Cost per Transaction

Money transfer fee comparison (’05.06)( Bank fee for transfer of $100)

30 1 2

Average Fee

Internet Banking

PC Banking

ATM

Phone Banking

Full Service Branch

Full Service Branch

CD/ ATM

Internet Banking

Phone Banking

12

13

Mobile Commerce Transaction Market

0 20 40 8060

North American EuropeAsia Pacific Rest of the world

M-banking Implications

Sources: Frost & Sullivan

2009

2008

2007

2006

2005

2004

9.7 27.13 34.6 3.0

7.2 22.99 28.4 2.0

5.5 18.69 21.7 1.7

4.3 15.07 16.4 1.4

3.2 11.78 12.1 1.1

9.2

2.5 9.2 9.0 0.8

13

14

Providing network coverage and access to large base of customers

Mobile handset to deliver secure and convenient banking services

Agent shops for extending bank branch functions

Embrace mobile network as a mean to extend banking service - reaching the un-banked

Use mobile phone number as bank accounts

Development of platform to extend secure services over mobile handset

BanksMobile Network Operators

Mobile NetworkOperators BanksFinancial service for

reaching the unbanked

GreaterReach

BankingService

Mobile Banking

Mobile Money Transfer

Mobile Bank Branch

15

Basic banking functions: Balance check, bank transfers, debit cards

Extended banking functions : International remittance, bill payment, loan, credit cards, etc.

Users get accounts from banks: Deposit and cash withdrawal at bank branches, CD/ATMs, Phone bill

Browser ApplicationDownloading IC Chip / USIMSMS NFC

15

Simple Text Graphic Multimedia Secure Elements Contact-lessInteractions

16

WAP G/WTele -Communication

Systems

Online Trans-action

OfflineTransaction

CD/ATMDongleRF

Internet BankingServer

Host Server

MobileServers

MobileOperators

Bank Systems

BankChannels

MobileHandset

(IC chip / USIM embed-ded )

16

17

Click “Bank Service” from menu Balance check Money transfer Transfer completed

Use of CD/ATM serviceInput PIN

1818

1919

202020

2121

Mobile Banking Usage Growth( unit : 1,000)

Source: Bank of Korea 1) usage rate includes account check and bank transfer

2) account check takes up to 80% of the usage

2005 2006

140

446

218.5%

Usage Rate by Channel( unit : %)

Source : Bank of Korea , KTF Analy-sis

02.6 03.3 04.3 05.3 06.3 12

7

2123

32

Internet Banking

TeleBanking

Bank Channel

CD/ATM

Mobile Banking

18

22

Usage Rate (Average Daily)

(1000)

0

100

200

300

400

500

600

(USD M)

0

200

400

600

800

1000

usage ARPU Source: Center for Finance & Payment

3,406,000 Subscribers (2007.03), 571,000 Average Daily Usage

USD 929M transaction amounts

(1000)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2003 2004 2005 2006 2007(1/4Q)

No of Subscribers

189

894

1,861

2,979

3,406

2004 2005 2006 2007(1/4Q)

140

287

446

571

272

567

735

929

22

23

Estimated K-merce finance revenue (2009)

Source: BCG, KTF Analysis

New Revenue Generation

Revenue from customer retention

50%

Mobile finance revenue

~20%

Value added service revenue

~20-25%

Total sum

USD200 M

Intention to use K-bank

Source: Korean MNO s collaborated market research, 2004.4 N=660

Customer Value Creation

Before using K-bank

Intention to use

After using K-bank

Intention for continuous usage

Intention to recommend to others

95.7%

76.5%

37%

24

Physically Isolated Regions

Mobile Banking

8%

Young Generation

Micro Payments

37%

Company to employees

Gift Certificates

30%

Low Income

Welfare Price Plan

7%

25

Importance of building trust between Bank and Operator

Development of “win-win” business model

Lowering entry barriers

Communication tariff, banking service fees, transaction fees

Making service easy, safe and accessible

Simple user interface, hacking-free security control

Development of common service platform to promote inter-operability across all banks

Hardware and software

Regulatory assistance for “Universal Mobile Banking”

- Extension of ‘Universal Telecomm service” concept to “Universal mobile banking service”

- Amendment of related regulations to allow MNOs to provide banking service in collaboration with banks - Security guidance: “Electronic Financial Transaction Act”

Importance of building trust between Bank and Operator

Development of “win-win” business model

Lowering entry barriers

Communication tariff, banking service fees, transaction fees

Making service easy, safe and accessible

Simple user interface, hacking-free security control

Development of common service platform to promote inter-operability across all banks

Hardware and software

2626