Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier •...
Transcript of Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier •...
![Page 1: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/1.jpg)
The Innovation QuestionWhat, How & Why Now?
1
Lee Wetherington, AAPDirector of Strategic Insight
Jack Henry & Associates, Inc.®
@leewetherington
![Page 2: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/2.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Lee WetheringtonDirector of Strategic Insight
• Develops actionable insight and strategy
for the financial services industry at large
• Delivers keynotes nationwide
• Technology Faculty Chair for graduate
banking schools
• Authors articles for industry trades
• Degrees in Economics and English
from Duke University
• Accredited ACH Professional (AAP)
Presenter
@leewetherington
![Page 3: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/3.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Agenda
• The Innovation Question
• Why, What, How, Who?
• Here & Now
• Convergence & Big Change
• Innovating in Complex Ecosystems
• Lending; Mobile; Payments; Delivery Channels
• What Innovation Looks Like Today
• Gen Y; Impulse Control; Feedback Loops; Automation
• Best Practices; What to Do
![Page 4: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/4.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Why is innovation a big deal?
• Aggressive competition
• Banks, CUs and shadow banking ecosystem
• Disruptors
• Mobile, lending and payments
• Fast-evolving customer expectations
• Driven by pace of new tech adoption/diffusion
![Page 5: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/5.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Innovation Management Waves
Assembly-line Manufacturing
• 1920s
Information Systems
• 1950s
JIT inventories
TQM
• 1990s
![Page 6: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/6.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Innovation Evolution
Massive, vertical integration
• GE
• BASF
• IBM
External supply chain management
• Toyota
• Dell
• Nestlé
Ecosystem Orchestration
• Amazon
• Hasbro
• Roche
![Page 7: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/7.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Then and Now
Vertically Integrated Company
Collaborative Partnerships
![Page 8: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/8.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Then and Now
InnovationInnovation
Ecosystems
![Page 9: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/9.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Q1: What is “innovation”?
1. Improvements to product/service feature functions
2. New technology that fundamentally disrupts the existing
order and creates significant new value for the customer
3. Organizational changes that better align the bank’s
execution with its strategy
4. A buzz word that nobody understands but everybody likes
to talk about
![Page 10: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/10.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
What is “innovation” exactly?
• Confusing “big I” and “little I” innovation
• Big I: large scale, disruptive technology
• Little I: incremental feature/function improvements
• Ability to fail fast and cheap in the exploration of reasonable ideas and opportunities
• Only 25% of new product development efforts ever launch commercially
• Of those launched, 45% fail to meet profit goals
![Page 11: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/11.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
11
Who cares about innovation?
SOURCE: Celent’s “MAKING INNOVATION MATTER AND IDENTIFYING CUSTOMERS WHO CARE”; Mike Fitzgerald & Craig Weber; February 2015
![Page 12: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/12.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
12
Consumers identify “None” as most innovative
SOURCE: Celent’s “MAKING INNOVATION MATTER AND IDENTIFYING CUSTOMERS WHO CARE”; Mike Fitzgerald & Craig Weber; February 2015
![Page 13: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/13.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
13
Who cares? Digital Behaviors
SOURCE: Celent’s “MAKING INNOVATION MATTER AND IDENTIFYING
CUSTOMERS WHO CARE”; Mike Fitzgerald & Craig Weber; February 2015
![Page 14: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/14.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
14
One third of consumers are digital or active
SOURCE: Celent’s “MAKING INNOVATION MATTER AND IDENTIFYING
CUSTOMERS WHO CARE”; Mike Fitzgerald & Craig Weber; February 2015
![Page 15: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/15.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
15
Over HALF of consumers are digital or young
SOURCE: Celent’s “MAKING INNOVATION MATTER AND IDENTIFYING
CUSTOMERS WHO CARE”; Mike Fitzgerald & Craig Weber; February 2015
![Page 16: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/16.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Innovation in Financial Services
• As regulated, risk-averse entities, banks aren’t
usually comfortable failing, much less failing fast
and often
• General public perceives financial institutions as
“laggards in innovation” (Celent)
• The bar is low; modest advances heavily rewarded
• Many banks dedicate their most skilled talent to
regulatory response/compliance
SOURCE: Celent’s “Innovation in Financial Services: The Leadership Gap”; December 2013
![Page 17: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/17.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Q2: Why don’t banks “I”nnovate?
1. Not capable of innovating
2. Don’t know how to innovate
3. Too risk averse to innovate
4. There’s been no need to innovate
![Page 18: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/18.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
“Until recently, there has been no need
for the industry to change.”Ron Shevlin
Author, Smarter Bank
![Page 19: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/19.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
![Page 20: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/20.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
![Page 21: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/21.jpg)
21
80% of online adults own a smartphone
![Page 22: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/22.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Smartphones have changed shopping:
• 47% of smartphone owners comparison shopped
with their phones while at a retail store
• 69% changed where they purchased as a result!!!
![Page 23: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/23.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
23
![Page 24: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/24.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Gen Y Income > Gen X Income by 2020
Personal income by demographic segment (2010-2025)
SOURCE: Javelin Strategy & Research; “The Three Costliest Myths About Gen Y”; May 2014
![Page 25: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/25.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
![Page 26: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/26.jpg)
26
Marketshare of Total Assets: Banks & CUs
![Page 27: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/27.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
How is “innovation” usually done?
1. Identify customer needs
2. Deliver great products
3. Beat the competition to market
PROBLEM: You can do all three and still fail.
![Page 28: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/28.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
The “Innovation Blindspot”
SOURCE: Ron Adner’s “The Wide Lens: A New Strategy for Innovation”
![Page 29: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/29.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Sony eBook
![Page 30: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/30.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Michelin Run-Flat Tires
![Page 31: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/31.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Nokia 6650 (First 3G Phone in 2002)
![Page 32: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/32.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
The “Wide Lens”
SOURCE: Ron Adner’s “The Wide Lens: A New Strategy for Innovation”
![Page 33: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/33.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Co-Innovation & Probability of Success
Partner A
Partner B
Partner C
Partner D
85% 85% 85% 85%
52%
SOURCE: Ron Adner’s “The Wide Lens: A New Strategy for Innovation”
![Page 34: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/34.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Co-Innovation & One Weak Link
Partner A
Partner B
Partner C
Partner D
85% 85% 85% 2%
1.2%
SOURCE: Ron Adner’s “The Wide Lens: A New Strategy for Innovation”
![Page 35: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/35.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
35
Weigh Probabilities: Disruption vs. Innovation
Probability of Your Success at Innovation
Pro
bab
ility
of
Dis
rup
tio
n f
rom
Ou
tsid
e
HIGH
HIGH
LOW
BlockchainAlt Lending
Mobile Payments
Faster Payments
Fintech Startups
![Page 36: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/36.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Innovation Strategy: The Wide Lens
SOURCE: Ron Adner’s “The Wide Lens: A New Strategy for Innovation”
![Page 37: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/37.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
How to Co-Innovate in 2015
1. Use the “Wide Lens”
2. Check the value proposition
• Great for customers? Or does it just make management happy?
3. Identify dependencies
• Does your innovation depend on other innovations/companies?
4. Map the ecosystem
• Suppliers; intermediaries; customers; competitors
5. Assess risks
• Dependencies; ecosystem; timing; blindspots and bugs
• Candid calculation of co-innovation probability of success
6. Timing, timing, timing (you have to get it right)
![Page 38: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/38.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
• The Bad News
• Innovation is more urgent due to scale and pace of change
• Big “I” innovation is more complex in tech ecosystems
• Complexity brings difficulty and diminishes probability of
success
• The Good News
• Little ”i” innovation is easy and cheap
• You don’t have to risk the whole bank to see what works
Innovation: Bad News, Good News
38
![Page 39: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/39.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Complex
Ecosystems
![Page 40: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/40.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
40
Complexity: The Unicorn Stampede
SOURCE: https://www.cbinsights.com/blog/increasingly-crowded-unicorn-club/
![Page 41: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/41.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
41 SOURCE: https://www.cbinsights.com/blog/increasingly-crowded-unicorn-club/
![Page 42: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/42.jpg)
@leewetherington
SO
UR
CE
:htt
p:/
/ww
w.a
mericanbanker.
com
/bankth
ink/t
he
-gre
at-
rebundlin
g-o
f-fin
ancia
l-serv
ices-1
077172-1
.htm
l
![Page 43: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/43.jpg)
@leewetherington
SOURCE: http://www.americanbanker.com/bankthink/the-great-rebundling-of-financial-services-1077172-1.html
![Page 44: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/44.jpg)
@leewetheringtonSOURCE: http://www.americanbanker.com/bankthink/the-great-rebundling-of-financial-services-1077172-1.html
![Page 45: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/45.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Lending
Ecosystem
![Page 46: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/46.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Alternative Funding Providers
![Page 47: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/47.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Harness the Alternative Lender Marketplace?
FI
![Page 48: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/48.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
• Alternative lending improved distribution & delivery
• It did NOT (and will not) disenfranchise FI lending
• “Alternate lending disruptors will be disrupted in 2016”
• Investor scrutiny of returns on their Alt-Lending investments
• FIs aggressively re-entering consumer lending as interest
rates rise
• What began as true friends-and-family P2P lending in the
2000s has evolved into B2C lending.
• U.S. Treasury Department will continue investigating
marketplace lenders, especially on heals of San Bernandino
terrorist attack
48
2016 Forecast: Alternative Lending Marketplace
SOURCE: Aite Group’s “Top 10 Trends in Retail Banking & Payments, 2016: The Quest to Reduce Friction”; January 2016
![Page 49: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/49.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Mobile
Ecosystem
![Page 50: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/50.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
50
![Page 51: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/51.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
51
Mobile Wallet Wars: Complexity & Fragmentation
![Page 52: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/52.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
52
![Page 53: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/53.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
53
“Chase Pay will allow Chase’s 94M credit, debit and
pre-paid card customers to make in-store, in-app
and online purchases, beginning in 2016.”
Sarah Perez
TechCrunch
SO
UR
CE
: “T
he P
roble
m W
ith C
hase P
ay,
Th
e B
ank’s
Fo
rthcom
ing A
pple
Pay C
om
petito
r”; T
echC
runch;
Oct
27,
2015
by S
ara
h P
ere
z;
htt
p:/
/techcru
nch.c
om
/2015/1
0/2
7/t
he
-pro
ble
m-w
ith-c
hase-p
ay-t
he-b
anks-f
ort
hcom
ing-a
pple
-pay-c
om
petito
r/
![Page 54: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/54.jpg)
54
“Banks can’t add
tap-to-pay features
to their iPhone
apps because
Apple doesn’t let
third parties use
the NFC tech in its
phones.”
Jason Del Rey
Senior Editor
Re/code
htt
p:/
/recode.n
et/
2015/1
0/1
6/t
he
-ne
xt-
big
-com
petito
rs-f
or-
andro
id-p
ay-a
nd-s
am
sung
-pay-b
anks/
![Page 55: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/55.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
• Though there is an Android Pay app, issuers can add
Android Pay to their own apps via the API.
55 Celent; “Tokenization Evolution: Rapid Developments”; Zilvinas Bareisis; October 2015
![Page 56: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/56.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
…Android Pay will
allow issuers to
integrate mobile
payments into their
mobile banking apps.
![Page 57: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/57.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
• Launched September 10, 2015
• Tokenized NFC mobile payments (like Apple Pay)
• Issuers must sign up and enable cards, but can leverage existing tokenization with MC and Visa
• Host Card Emulation (HCE) approach to NFC means tokens generated in the cloud (and limited number stored on phone)
• Works with all NFC-enabled Android devices (running KitKat or later) on any mobile carrier
• Pre-installed on new Android phones (Verizon, AT&T, T-Mobile)
• Google collects no fees from issuers and issuers pay no tokenization fees to Visa/MC
Android Pay: Fact Sheet
![Page 58: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/58.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
• NFC & MST mobile payments on…
• Galaxy S6, S6 Edge, S6 Edge+ and Note 5
• Does NOT support in-app purchases/payments
• Is NOT supported on Verizon at launch
• Tokenization
• Issuers must sign up and enable cards, but can leverage existing tokenization with MC and Visa
• Host Card Emulation (HCE) approach to NFC means tokens generated in the cloud (and 10 stored on phone)
• Leverages fingerprint identification
• Similar to Apple Pay
• Samsung collects no fees from issuers and issuers pay no tokenization fees to Visa/MC
Samsung Pay: Fact Sheet
![Page 59: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/59.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
59
1% of U.S. Shoppers Use Apple Pay
1% of U.S. shoppers use Apple Pay
![Page 60: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/60.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
New
Tokenization
Options
60
![Page 61: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/61.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
61
“Tokenization binds payments credentials
to any device connected to the Internet:
cars, wearables, appliances, clothing…”SOURCE: www.pymnts.com
![Page 62: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/62.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
• New token services enable issuers to deploy not only
to Apple Pay but to Android Pay and Samsung Pay.
Tokenization: Set Up Once, Deploy Everywhere
https://usa.visa.com/partner-with-us/payment-technology/visa-token-service.html62
![Page 63: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/63.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
VDEP is a framework—not a service or technology.
Participants commit to…
• Enable access to all issuers
• Refrain from charging issuers fees to participate
• Restrict transaction data usage
• Data can only be used to operate wallet
• Data cannot be used for marketing purposes!!!
63
Visa’s Digital Enablement Program (VDEP)
Celent; “Tokenization Evolution: Rapid Developments”; Zilvinas Bareisis; October 2015
NOTE: Issuers that sign VDEP agreement gain
access to Visa’s token services free of charge.
![Page 64: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/64.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Criteria for Choosing a Mobile Payment Play
SOURCE: Mobey Forum; “The Host Card Emulation in Payments: Options for Financial Institutions”; HCE Workgroup; December 201464
![Page 65: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/65.jpg)
65
Apple Pay Android Pay Samsung Pay Issuer HCE App
Issuer
Cost
Security
Cardholder
Usability
Issuer
Control
Ability to
Integrate into
Issuer App
POS
Acceptance
Data
Ownership
?
?
65
![Page 66: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/66.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Payments
Ecosystem
![Page 67: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/67.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Evolution of Payments
Mobile
Digital
Invisible
67
![Page 68: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/68.jpg)
@leewetheringtonSOURCE: hatoriz / Shutterstock.com
![Page 69: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/69.jpg)
![Page 70: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/70.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
What about
faster payments?
![Page 71: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/71.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
• Fragmented approaches will eventually converge
• Fed joins NACHA Same-Day ACH bandwagon rolling out September 2016
• Early Warning acquires clearXchange
• FIS PayNet partners with The Clearing House
• These approaches aren’t ubiquitous…yet
• NACHA’s ACH Same-Day Settlement; The Clearing House’s Real-Time Payments Initiative; MasterCard Send
• Immediate notification more important than immediate settlement.
• What about virtual currencies?
• Bitcoin, RippleLabs, etc.
71
Faster Payments?
![Page 72: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/72.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Blockchain could
change everything
…but probably not.
![Page 73: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/73.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
73
• Internet of Information
• Internet of Things
• Internet of Value
![Page 74: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/74.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Protocol Application
TCP/IP & SMTP Email
TCP/IP & HTTP Web browser
TCP/IP & VoIP Skype & FaceTime
Distributed Ledgers
(Blockchains)
Bitcoin, NASDAQ Pre-IPO
private stock exchange, etc.
74
Blockchain is a protocol, not an application
![Page 75: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/75.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
75
Blockchain
![Page 76: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/76.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
76
Blockchain is a distributed ledger
![Page 77: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/77.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
77
“…transfers facilitated by central authorities
such as FIs and clearinghouses has not
changed in the last 150 years. Distributed
ledger technology can eliminate the need
for that trusted middleman.”
SOURCE: World Economic Forum
via www.forbes.com
![Page 78: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/78.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
• “…faster, cheaper and more secure/transparent way to manipulate money electronically…”
• “…financial services face the most immediate threat.”
• But layers of infrastructure must be built first, and consumers and regulators must be persuaded to trust blockchain–two prerequisites that give incumbents an early edge.
• “…shortened settlement time also reduces the risk of fraud. Shared ledger technology could even curb the current epidemic of identity theft.”
• Applications: payments; title insurance; buying/selling a house; buying/selling stocks; corporate syndicated loans and trades; private stock and repurchase agreements
78
Blockchain: Why (and When) It Might Matter
SOURCE: “Bitcoin's Shared Ledger Technology: Money's New
Operating System”;Laura Shin, Sep 9, 2015; http://www.forbes.com
![Page 79: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/79.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
79
Blockchain as a Service
Private / hosted | Digital assets | Shared ledgers
![Page 80: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/80.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
80
![Page 81: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/81.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Delivery Channel
Ecosystem
![Page 82: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/82.jpg)
Tipping Point:The digital channel reached parity with the physical
branch in 2014, with 49% of applicants opening checking
accounts online, or on a smartphone or tablet.
SOURCE: Javelin Strategy & Research; “Digital Account Opening Reaches Tipping Point”; February 2015
![Page 83: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/83.jpg)
Branches are dying! Long live the branch!
![Page 84: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/84.jpg)
![Page 85: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/85.jpg)
Branches: The Long View (Looking Back)
SOURCE: FDIC: “Brick-and-Mortar Banking Remains Prevalent in an
Increasingly Virtual World”; FDIC Quarterly; 2015, Volume 9, No. 1
![Page 86: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/86.jpg)
SOURCE: FDIC: “Brick-and-Mortar Banking Remains Prevalent in an
Increasingly Virtual World”; FDIC Quarterly; 2015, Volume 9, No. 1
Recent Branch Cycles: 1989-2014
![Page 87: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/87.jpg)
Branch transaction activity declined 45% since 1992.
Check use declined 68% since 2003.
Top 50 U.S. banks have reduced branch networks.
…but branch density hasn’t changed significantly.
![Page 88: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/88.jpg)
Branch Density in Decline Since ‘89
SOURCE: FDIC: “Brick-and-Mortar Banking Remains Prevalent in an
Increasingly Virtual World”; FDIC Quarterly; 2015, Volume 9, No. 1
![Page 89: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/89.jpg)
CONCLUSION: Branch density hasn’t changed
significantly, so technology is not impacting branching.
![Page 90: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/90.jpg)
‘The FDIC is looking at lagging rather than
leading indicators of branch health.’ –Brett King
‘The FDIC doesn’t measure the average number of
visits to a branch per customer per year.’ –Brett King
![Page 91: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/91.jpg)
![Page 92: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/92.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
What Works………………….What Doesn’t
• “Divest to Invest”
• Channel-Centric
• Driving Revenue
• Knowing your market, your
strategy, and your
customers
• Choosing optimal channel
delivery
• Engagement
• Deliver everything to
everybody in all channels
• Absolute Cost Cutting
• Product-Centricity
• Migrating Transactions
• Generalizing from national
banks to local banks
![Page 93: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/93.jpg)
Divest to invest.
![Page 94: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/94.jpg)
94
“Delivery channels can’t just be
additive. Banks must make bold
and deliberate plans to redirect
their investments and capabilities.”
Terence Roche
Cornerstone Advisors
![Page 95: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/95.jpg)
Let Strategy Drive Optimal Channel Mix P
hysic
al
Dig
ital
Digital Focus
Digital Mainstream
Balanced
Trust Advisor
Physical Focus
![Page 96: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/96.jpg)
Assess Branches as Part of Delivery Strategy
![Page 97: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/97.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
97
Javelin Digital Banking Model: 10 Principles
SOURCE: Javelin Strategy & Research; “Turning Digital Banking
into a Financial Journey Starts with the First Paycheck”; May 2015
![Page 98: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/98.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
What innovation
looks like today.
![Page 99: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/99.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
99
“Adults under 35 had a savings rate
of negative 2% in 2014.”SOURCE: Moody Analytics
![Page 100: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/100.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
100
50-60% of Generation Y
confess they have
impulse purchase
problems… and huge
holes in their ears.
![Page 101: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/101.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
So what’s the
answer to the
impulse problem?
![Page 102: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/102.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
102
Real-time
feedback
loops?
![Page 103: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/103.jpg)
![Page 104: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/104.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
…but there are
limitations
to real-time
feedback.
![Page 105: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/105.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
A third of US consumers
who have owned an
activity tracker stopped
using it within six months.Endeavour Partners, July 2014
![Page 106: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/106.jpg)
![Page 107: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/107.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
So how to help
those immune to
feedback loops?
(because their brains aren’t fully mature yet)
![Page 108: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/108.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
Opt-outs and automation.
![Page 109: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/109.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
109
Automated savings?
![Page 110: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/110.jpg)
![Page 111: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/111.jpg)
111
![Page 112: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/112.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
112
Impulse Savings
![Page 113: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/113.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
113
![Page 114: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/114.jpg)
© 2015 Jack Henry & Associates, Inc. All Rights Reserved
114
![Page 115: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/115.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
115
Likely Choice of Next FI (Potential Switchers)
SOURCE: Javelin’s “Bank Switching: Combating ‘Silent Churn’ to Maximize Primary FI Status”; November 2015
![Page 116: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/116.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
116
Next FI: Moneyhawks (Potential Switchers)
SOURCE: Javelin’s “Bank Switching: Combating ‘Silent Churn’ to Maximize Primary FI Status”; November 2015
![Page 117: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/117.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
117
Primary vs. Secondary Relationships (by FI Size)
SOURCE: Javelin’s “Bank Switching: Combating ‘Silent Churn’ to Maximize Primary FI Status”; November 2015
![Page 118: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/118.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
118
Checking Accounts & Credit Products (by FI Size)
SOURCE: Javelin’s “Bank Switching: Combating ‘Silent Churn’ to Maximize Primary FI Status”; November 2015
![Page 119: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/119.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
1. Target well-defined, sufficiently large, receptive
segments with your innovation efforts.
2. Segment by behavior.
• “Highly Digital” much different from “Analogs”
3. Use your own data (supplemented by 3rd party
data) to discover accurate, current understanding
of how your consumers are responding to
technology.
119
Innovation: Best Practices
SOURCE: Celent’s “MAKING INNOVATION MATTER AND IDENTIFYING
CUSTOMERS WHO CARE”; Mike Fitzgerald & Craig Weber; February 2015
![Page 120: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/120.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
• Define “innovation”
• Weigh probability of disruption against your
probability of success in innovation
• Align employee incentives with strategic innovation
• De-stigmatize failure and experimentation
• Develop communication plan around innovation
• Conspicuous senior-level commitment to innovation
• Clear link between strategy and innovation/transformation
• Beware killing innovation with project-management
overkill and/or CFO/Compliance Officer veto power
120
The Road Ahead: Transformation & Innovation
SOURCE: Celent’s “Innovation in Financial Services 2016:
Reaching the Next Level”; November 2015
![Page 121: Lee Wetherington, AAP Wetherington - The... · KitKat or later) on any mobile carrier • Pre-installed on new Android phones (Verizon, AT&T, T-Mobile) • Google collects no fees](https://reader034.fdocuments.net/reader034/viewer/2022042306/5ed24004929f3c0415787c5d/html5/thumbnails/121.jpg)
© 2014 Jack Henry & Associates, Inc. All Rights Reserved
Lee Wetherington, AAP
http://discover.profitstars.com/leewetherington
@leewetherington
http://www.linkedin.com/in/leewetherington