2015 BANKING2015 BANKINGTRENDSTRENDSSTAYING TOP OF MIND DURING THEOMNICHANNEL BANKING REVOLUTION

WHAT WE WILLWHAT WE WILLCOVER TODAYCOVER TODAYStatistics: Demographics, Banking haschanged, Competitors

Innovation: Devices, Mobile Payments,Biometrics, Wearables

Being Top of Mind: How banks canstay relevant

Data: Personalizing & Creating ROIFrom Digital

LETS LOOK ATLETS LOOK ATTHE STATSTHE STATSChanging shift in demographics

How banking has changed

Your new competitors

DEMOGRAPHICS AREDEMOGRAPHICS ARECHANGINGCHANGING"The portion of the population that is currently atleast 65 years old—13 percent—is expected toreach about 20 percent by 2050"

-THE SMITHSONIAN

"$16 trillion in wealth is going to beexchanged between generations in thenext 30 years"

-WEALTH-X AND NFP FAMILY WEALTH TRANSFERS REPORT

FACTS ABOUTFACTS ABOUTBOOMERSBOOMERS45% of Baby Boomers and Seniors activelyuse online/ mobile banking

Biggest users of online and have thelongest OLB sessions

Biggest adopters of bill pay (The Financial Brand)

iPads & tablets are their second mostused device (Nielsen)

WELCOME TO THE NEWWELCOME TO THE NEWWORLD WHERE...WORLD WHERE..."53% of Millennials would rather lose their senseof smell than their technology"

-NEWSCRED

"The average person now has anattention span of 7 seconds vs.8 seconds with a goldfish"

-NEWSCRED

THE "ME" GENERATION ISTHE "ME" GENERATION ISVERY DEMANDINGVERY DEMANDING

23%

2010

41%

2011

44%

2012

60%

2012

Users Demand Better Mobile Banking

% who say mobile banking was important in switching banks

BANKING HAS CHANGEDBANKING HAS CHANGED

BANKING NEEDS TOBANKING NEEDS TOBE PERSONAL. FOR MOSTBE PERSONAL. FOR MOSTCONSUMERS IT IS NOT...CONSUMERS IT IS NOT..."71% of consumers believe theirrelationship with their bank isonly transactional"

-ACCENTURE

"An average company hears from lessthan 5% of its unhappy customers"-RUBY NEWLL-LEGNER

BANKING NEEDS TOBANKING NEEDS TOBE PERSONAL. FOR MOSTBE PERSONAL. FOR MOSTCONSUMERS IT IS NOT...CONSUMERS IT IS NOT..."However, 81% of customers who switchedbrands say the company could have acteddifferently to retain their loyalty"

-ACCENTURE

CONSUMERS ALSO NOWCONSUMERS ALSO NOWINTERACT WITH FI'S MOREINTERACT WITH FI'S MORETHAN EVERTHAN EVER"Consumers Now Interact With Banks 15-20Times Per Month, Up From 3-4 Times In ThePre Digital Era"

-NETFINANCE

DIGITAL JUST CANNOT BEDIGITAL JUST CANNOT BECOMMODITIZED....COMMODITIZED...."Online and mobile banking will not yield the best results if theyare not combined with customized services. Banks need to understand the specific needs and preferences oftheir clients, and be sensitive and open to client concerns. This ishow banks will build an empathic relationship."

-BBVA COMPASS 12/16/14 BANKING REPORT

YOUR NEWYOUR NEWCOMPETITORSCOMPETITORS

A 61% Decline InThe Number OfBanks In The Last30 Years, WhileDeposits Up 300%+

YOUR NEWYOUR NEWCOMPETITORSCOMPETITORS"Up to half of the world's banks willdisappear through the cracks openedup by digital disruption of the industry"

-BBVA CHAIRMAN AND CEO FRANCISCO GONZALEZ

"72% of millennials would be likely to bank withnon-financial services companies with which theydo business [like Google or Amazon], comparedto 27% for those over 55"

-ACCENTURE

BRETT KING ON SANTANDERBRETT KING ON SANTANDER"Banks like Santander need to understand that the ECONOMICS ofbanking are fundamentally changing, and doubling down onbranches is investing in indefensible modality. Listen to this sageadvice from Alibaba's founder Jack Ma. The message is a simple one. If WalMart wants to get 10,000 newcustomers they have to build a new warehouse, a number of newstorefronts, etc. What does Alibaba do? It adds two servers to itstechnology stack."

-BRETT KING

WE HAVE ALL SEENWE HAVE ALL SEENTHIS BEFORETHIS BEFORE

KNOWING THIS, WHERE SHOULD FI'sKNOWING THIS, WHERE SHOULD FI's

PUT THEPUT THEBIGGESTBIGGESTFOCUS?FOCUS?

FOCUS ON BEINGFOCUS ON BEINGCONSUMER'SCONSUMER'SPRIMARY FIPRIMARY FI & &CONSTANTLY CONSTANTLY TOP OF MINDTOP OF MIND

3 FOCUS AREAS TO ENSURE3 FOCUS AREAS TO ENSUREYOU STAY TOP OF MINDYOU STAY TOP OF MINDFinancial Empowerment: Empowering members orcustomers to lead better financial lives.

Customer Centric: Be customer/member focused and allowthem to interact with you, how they want.

Strategy Shift: Make the necessary technology and internalstructure/mindset shifts to enable this.

BANKS NEED TOBANKS NEED TOBUILD BACK TRUSTBUILD BACK TRUST"1 in 2 Consumers Have Lost Trust InTheir Banks Since The Financial Crisis."

-INFOSYS

KPMG STUDY ONCHALLENGES FACINGBANKING INDUSTRYIN THE NEXT 3-5 YEARS

DEVICES: WHAT DEVICES AREDEVICES: WHAT DEVICES AREESSENTIAL FOR FI'S NOW- WHATESSENTIAL FOR FI'S NOW- WHATSHOULD BE ON THEIR ROADMAP?SHOULD BE ON THEIR ROADMAP?

INSTANT GRATIFICATIONINSTANT GRATIFICATIONCAUSED BY DEVICESCAUSED BY DEVICES"An ever-increasing consumer demand for instant gratification isseeping into every facet of our lives, including how we bank.Consumers want to do everything on every device that they own:laptop, smartphone, phablet or tablet."

-BYL CAMERON, CG'S DIGITAL PRACTICE LEAD

WHAT CUSTOMERSWHAT CUSTOMERSCRAVE FROM DIGITALCRAVE FROM DIGITAL1. Monitor all accounts in one place

2. Anywhere, anytime

3. Move money when and how they want

4. Security

5. Make it easy, make it work

6. Being able to view and do (action it)

-JAVELIN STRATEGY & RESEARCH

WEARABLES-WEARABLES-

WHAT IS THE USE CASE?WHAT IS THE USE CASE?

WILL THEY TAKE OFF?WILL THEY TAKE OFF?

WEARABLES: IT'S ALL ABOUTWEARABLES: IT'S ALL ABOUTREAL-TIME FEEDREAL-TIME FEED "Wearable technology will deliver the key real-time financialfeedback that is critical in making financially-savvy behavioral changes.Focusing on specific spending decisions rather than psychology.Through Moven we can create day-to-day gamification offinancial wellness."

-BRETT KING, FOUNDER AND CEO, MOVEN

"Wearable technology will deliver the key real-time financialfeedback that is critical in making financially-savvy behavioral changes.Focusing on specific spending decisions rather than psychology.Through Moven we can create day-to-day gamification of financialwellness."

-BRETT KING, FOUNDER AND CEO, MOVEN

BIOMETRICS,BIOMETRICS,ARE PASSWORDS DYING?ARE PASSWORDS DYING?

USAA PUSHING THEUSAA PUSHING THEBOUNDARY WITH VOICE &BOUNDARY WITH VOICE &FACIAL RECOGNITIONFACIAL RECOGNITION"USAA’s facialrecognition requiresusers to look at thescreen and, whenprompted, blink theireyes. For voicerecognition, users mustread a short phrase"-USAA'S PRESS RELEASE

MOBILE PAYMENTSMOBILE PAYMENTSHow much longer until we reach a tipping point? Will the October 2015 EMV deadline result inmass merchant adoption?

"Apple Has Now Signed Up 750 Banks &Credit Unions For Apple Pay" -TIM COOK, CEO, APPLE

“2/3 of Contactless Payments Since OctoberHave Been Through Apple Pay”

-TIM COOK, CEO, APPLE

HOW DO YOU PERSONALIZEHOW DO YOU PERSONALIZEA DIGITAL BANKINGA DIGITAL BANKINGEXPERIENCE?EXPERIENCE?

DATA IS THE NEW GOLDDATA IS THE NEW GOLD“More data has been created in just the lasttwo years than in the entire previous history ofthe human race” -SCANDINAVIAN RESEARCH GROUP SINTEF

"Wal-Mart collects more than 2.5 petabytes ofdata every hour from its customer transactions.One petabyte is equal to about 20 million filingcabinets worth of text." -HARVARD BUSINESS REVIEW

DATA IS THE NEW GOLDDATA IS THE NEW GOLD

“Banks have goldmines of data available to them.However, it is not just about the data you collect. It’show you mine it, interpret it and draw insights toprovide personal customer experiences, which canbe quickly deployed across the organization” -NETFINANCE

“Yet the vast majority of data never gets used.Only 0.5 percent of all data is ever analyzed.” -MIT TECHNOLOGY REVIEW

BANKING NEEDS TOBANKING NEEDS TOBE PERSONAL. FOR MOSTBE PERSONAL. FOR MOSTCONSUMERS IT IS NOT...CONSUMERS IT IS NOT..."Very little in digital banking right now ispersonal, almost nothing about digital drivesemotion. Data has to be used to drive that"

-OMNI-CHANNEL EXECUTIVE, TOP 50 BANK

USING DATA TO HELP CUSTOMERSUSING DATA TO HELP CUSTOMERSMAKE BETTER DECISIONS: MAKE BETTER DECISIONS: WHEN WASWHEN WASTHE LAST TIME YOU OFFERED YOURTHE LAST TIME YOU OFFERED YOURCUTOMERS PERSONALIZED ADVICE?CUTOMERS PERSONALIZED ADVICE?

"67% of Millennials are interested in their bank providing toolsand services which help them create and monitor a budget,compared to 31% for those over 55."

-ACCENTURE

USING DATA TO BEAT COMPETITORS:USING DATA TO BEAT COMPETITORS:CUSTOMERS AREN'T JUST USING YOURCUSTOMERS AREN'T JUST USING YOURPRODUCTS, PRODUCTS, THEY ARE USING YOURTHEY ARE USING YOURCOMPETITORS TOO...COMPETITORS TOO...

“While the number of financial products held by atypical household hovers around 10, most customersonly hold 2-3 services at any one institution.”

-JIM MAROUS, FINANCIAL BRAND

BEING TOP OF MIND: HOWBEING TOP OF MIND: HOWCAN BANKS/CREDIT UNIONSCAN BANKS/CREDIT UNIONSSTAY REVELANTSTAY REVELANTWhat Role Does A Bank or Credit UnionPlay In This New Era? What Value Do They Bring To Customers?

3 FOCUS AREAS TO ENSURE3 FOCUS AREAS TO ENSUREYOU STAY TOP OF MINDYOU STAY TOP OF MIND

Financial Empowerment: Empowering members orcustomers to lead better financial lives.

Customer Centric: Be customer/member focused andallow them to interact with you, how they want

Strategy Shift: Make the necessary technology andinternal structure/mindset shifts to enable this

CISCO'S STRATEGY TOCISCO'S STRATEGY TOBE DIGITALLY FOCUSEDBE DIGITALLY FOCUSED

"Invest in a future-proof, omnichannel-readyinfrastructure that accommodates new interaction channelsand is integrated into existing core banking apps.Restructure the organization around customers andchannels rather than existing product-centric models."

-CISCO (2012)

HOW DO YOU WORK WITHHOW DO YOU WORK WITHFINANCIAL DISRUPTORS?FINANCIAL DISRUPTORS?“Millennials fully expect innovation in banking to come fromoutside of the industry. Offering digital banking won’t beenough to build a long-lasting relationship … Instead, banks & credit unions should create a strategy for this segment. FI’s should advise young people on how to manage theirfinances, seek millennials’ feedback, hire young employees,and partner with financial disruptors."-BBVA COMPASS

THE NO 1. ROI GOAL: SERVE AS YOURTHE NO 1. ROI GOAL: SERVE AS YOURCUSTOMERS' PRIMARY BANKCUSTOMERS' PRIMARY BANK

Win over MoneyHawksWin over MoneyHawks

Increase Profitability of CustomersIncrease Profitability of Customers

Targeted, cross-selling opportunitiesTargeted, cross-selling opportunities

ACQUISITIONBuilding Back TrustBuilding Back Trust

Providing Personalized AdviceProviding Personalized Advice

Greater UXGreater UX

LOYALTY

Win customers from competitors Win customers from competitors

Prime bank means top of mind whenPrime bank means top of mind whencustomers looking to buy.customers looking to buy.

Develop fee based services for highDevelop fee based services for highend customersend customers

REVENUECut costs through self service channelCut costs through self service channel

COST

MX helps FIs become their accountholders’ primary institution

Learn more at MX.COM

IMAGE SOURCESIMAGE SOURCES

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-Lendingmemo.com

- Castor & Pollux (Noun Project)

- Veronika Karenina (Noun Project)

- Tonielle Krisanski (Noun Project)

https://www.flickr.com/creativecommons/ - Jason Grube (Noun Project)

- EliRatus (Noun Project)

- Irene Trautluft (Noun Project)

- Takao Umehara (Noun Project)