Monitise: The Future of Mobile Money by Teddy Vallee
The recent sell-off in Monitise Plc (LON:MONI) (OTCMKTS:MONIF) provides longer-term investors an extremely attractive entry point, with asymmetrical risk reward. Recent open-market purchases from the company’s Co-CEO; strategic partnerships with Visa, Visa Europe, MasterCard, and IBM; and competitive positioning within the mobile money space are currently not being valued by the market to the degree they should. Over the ensuing year, it is likely this stock trades materially higher to its intrinsic value of $.79 (£51) per share.
Monitise Plc (LON:MONI) (OTCMKTS:MONIF) provides mobile money solutions to financial institutions. Its technology enables mobile users to manage accounts, credit cards, bills and mobile payments amongst others. The company works with eight of the top 20 North American financial institutions including U.S. Bancorp (NYSE:USB), Desjardins, and Webster Financial Corporation (NYSE:WBS). In Europe and the UK, its partners include HSBC Holdings plc (ADR) (NYSE:HSBC), RBC/Natwest, Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY), and Banco Santander, S.A. (ADR) (NYSE:SAN). Monitise’s technology is secure to bank grade standards and is accessible on iOS, Android, Blackberry and Microsoft operating systems, as well as on over 2,700 mobile handsets. The company is partnered with Visa Inc (NYSE:V), Visa Europe, Mastercard Inc (NYSE:MA), and International Business Machines Corp. (NYSE:IBM).
Up-and-Coming Small- and Mid-cap Portfolio Managers #MICUS (Morningstar Conference)
Monitise Plc (LON:MONI) (OTCMKTS:MONIF) is significantly ahead of the mobile money curve, competitively positioning itself for long-term growth. Implicitly, Monitise has acknowledged the key ingredient to banking is trust between the institution and its customer. Just as a no-named ATM draws suspicion, so too does an unbranded mobile application. By providing a customizable open interface platform to banks, Monitise can leverage its technology through the customer’s trust for their financial institution. This provides banks the most innovative mobile technology without the accompanying R&D expense. In-house development remains the only real competition, as Monitise’s first mover advantage provides a network effect.
Juniper research estimates that by 2019 there will be 1.75 billion mobile banking users globally, up from 590mm in 2013. This proliferation is likely a result of the applications functionality; individuals can buy goods, pay bills, receive alerts, transfer funds, view statements and manage their account from anywhere in the world with their mobile device. This is a significant opportunity and I believe that Monitise Plc (LON:MONI) (OTCMKTS:MONIF) has the technological foundation and strategic partnerships in place to capitalize on this trend.
Globally, m-commerce transactions via mobile handsets and tablets are expected to exceed $3.2 trillion (£2.08 trillion) by 2017, up from $1.5 trillion in 2013, according to Juniper research. Monitise Plc (LON:MONI) (OTCMKTS:MONIF)’s mobile point of sale (mPOS) service will materially benefit from this growth. MPOS allows the consumer to easily checkout in-store or online via their mobile device, eliminating the need and hassle of a credit card. Prior to its use, consumers go through a one-off registration process that safely stores credit and debit card numbers, as well as a preferred delivery address. When arriving at a checkout menu or counter, the customer is prompted to enter a pin code and the transaction is complete. This will materially increase conversion rates as the cumbersome checkout process becomes a three digit pin. This video further illustrates the technology.
The mobile phone is becoming an increasingly large part of the technological landscape, bridging the gap between the online and physical world. Vista Point’s mobile industry update (Figure 1) details this trend over the past five years. As you can see in the bottom right quadrant, mobile’s share of internet traffic has grown from 1% in 2009, to 25% in 2014, likely due to the increase in applications that require data. In a recent report on J C Penney Company Inc (NYSE:JCP), I outlined the importance of mobile for an omnichannel strategy. For physical retail locations to survive, they must offer a seamless browsing process between stores, online, and mobile devices. That said, it is imperative consumers have a simple, intuitive mobile based commerce application that facilitates the checkout process from anywhere at any time, which Monitise Plc (LON:MONI) (OTCMKTS:MONIF) provides.
See full PDF here.