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Iraq- Retail Payments Initiative Kristopher Haag Director, Banking and Financial Networks Task Force for Business and Stability Operations U.S. Department of Defense September 29, 2010 Iraq Demographics Population 29,000,000 (July 2010 est.) Median Age 20.6 years (2007 est.) Literacy 74% (2000 est.) GDP (per capita) $3,800 (2009 est.) Unemployed/ underemployed 47% (Aug 2009 est.) 47% Unbanked/underbanked 95% Mobile network operators GSM subscribers 4 20 M (69%) The impact of nearly 3 decades of war and sanctions in Iraq… DoD- Economic Stabilization Task Force Mission: Revitalize the Iraqi economy and reduce the rampant unemployment of the Iraqi population — a significant factor that fuels the insurgency. Restore existing productive capacity to the Iraqi economy wherever possible, across all industrial sectors. Leverage monthly cost-of-operations to DoD of $10B, to stimulate economic growth by any means possible. Serve as a catalyst for private investment in Iraq, by linking the international business community to Iraqi business leaders and government officials. Move Iraq from the front page to the business page Integrated Solution An integrated, Multi-Bank – Multi-Telco infrastructure enables banks to cooperate on infrastructure and compete on costs & quality of customer service. Integrated Solution Past Central Bank of Iraq Central Bank of Iraq Telco 3PP 3PP ATM ATM Mobile Customers Customers - Banking Consortium POS Customers Third Party Processor (Outsourcing Vendor) ATM Continuation of this path will lead to further fragmentation and an infra-structure that is not interoperable. Costs for inefficiencies are passed to consumer and negatively impact uptake of banking services. POS Mobile Focus of Effort Payment Channel Trade-off Access Cost Factors Payment Channel Ranking ATM POS Mobile Banking Implementation Costs High Implementation High Costs Medium Low Device Costs High Medium None Maintenance & Licensing High Medium Low Physical Infrastructure Costs High Medium None Contingent on Retail Outlets Contingent on Mobile Penetration Equal to Feasible Retail Penetration Equal to Mobile Network Coverage Number of Access Point for Consumer Branch Contingent in High Density Urban Areas Distance Relative to Channel Equal to Branch Density Large,middle-class economy presents unique opportunity and characteristics for the introduction of mobile banking Introduction of mobile banking in Iraq must be a hybrid model that allows for coexistence with other developed retail payment channels (POS, ATM) Multi-Bank / Multi-Telco