Key Insights on the Branch of the FutureBranches will remain a relationship cornerstone for acquiring andretaining deposits and growing profitably.Fewer transactions in branches - focus shifts to advice, loans and smallbusiness services.The implementation of self-service technology in branches will free branchstaff to spend more time with members.Branches must be tightly integrated with other delivery channels, givingmembers channel choice that best meets their needs.Credit unions must focus on providing an outstanding experience in eachbranch, by phone and on-line (including mobile)
Business and Technology Trends Reshaping our Industry Digital Era Payments Social Change/ Demographic Shifts “Mobiliti”23
Social & Demographic Change
Age Demographic Shifts in the U.S.A.25
The U.S. is undergoing rapid population agingNumber of people (millions) 90 25% 80 20.46% 70 20% 16.53% 60 12.71% 15% 50 11.31% 40 9.24% 10% 30 6.81% 20 5% 10 9.0 16.7 25.7 35.0 53.7 77.2 0 0% 1940 1960 1980 2000 2020 2040 US Population 65+ (left axis) Percentage of US Population 65+ (right axis) Source: Government reports
We’re Living in the Age of Aging……..
By 2020, nearly half of the U.S. adult population will have been born after 1981………WW II Gen: Up to 1945 Baby Boom: 1946 to 1964 Gen X: 1965 to 1980 Gen Y: 1981 to 2001 Gen Z: After 2001 100% Gen Z 4% Gen Y 26% Gen Y 80% Gen Y 37% 43% 60% Gen X 34% Gen X 40% 33% Gen X 32% Baby Boom 20% Baby Boom 39% Baby Boom WW II Gen. 1% 30% 20% 0% 2010 2015 2020 Total: 197.4 MM 0.7% CAGR Total: 204.0 MM 0.5% CAGR Total: 208.8 MM Generational Cohort Share of Population 18 - 65 by Year Source: 2008 National Population Projections.
Generation Next: These Guys are Different!
TMI SIG2R N2M MTF 459 ATEOD34
Important Millennial Behavior• 39% Use debit card 15+ times/month• 60% Bank and pay bills online• 76% Use instant messaging• 97% Have a Facebook profile or other social profile
We Share.Post.Comment.Like.Download.IM.Text.Blog.eVite.Tweet.And re-Tweet.
U.S. Social Network Usage
Social Change 1 in 8 couples married last year met online39
The Business of Social Networking…..Blockbuster News Today! www.YouTwitFace.com
Meet Ray’s Virtual Watercooler! “With so much misinformation out there about where food comes from and how its produced, farmers have a responsibility to speak up and set the record straight. And with social media, they now have a tool to help them reach virtually anybody, anywhere. ”41
Meet Jeff Fowle, Cattle Rancher and Twitter Guru! “When I installed pivot sprinklers on my farm, I posted a tweet about it because I felt it was important to show how farmers and ranchers are continually trying to improve water efficiency.”42
Bank of America44
Wells Fargo: Sample of Customer Service1) Direct message (DM) sent from user to @Ask_WellsFargo. DM makes private message only seen by Wells.2) Wells Fargo rep responds directly to user within 20 minutes with a number (direct to live person) and case #.3) Wells Fargo rep follows up with user to ensure issue was addressed.
Payments Feature Prominently for Social Media Users Among all respondents using at least one social networking site.46
Business and Technology Trends Reshaping our Industry Digital Era Payments Social Change/ Demographic Shifts “Mobiliti”47
Mobile Has Impacted Consumers’ Daily Habits More Deeply and More Quickly Than Most Expected Voice Organizer SMS/Alerts Budgets Banking Payment Commerce Email/MMS Communicate Control Ticketing Transit IM/chat Social Maps Create Consume Search Blogs Mobile web Pictures Video Games News TV Music49
Mobile Warming U.S. Adults With Smart Phones 66% Smartphone adoption by 2014 Mobile Devices Enable Ubiquitous Access
Mobile Goes Mainstream – “Touch Banking”52
Evolution of Mobile Financial Services Mobile Banking Mobile Transactions Mobile Commerce Creates the foundation Gain consumer to expose transaction confidence and services build behavior patterns • Info services • Bill payments, ebills • Point of sale • Balances • Account transfers • Remote • Transaction history • Person to person • Offers and coupons • Alerts • Deposit capture • Loyalty and rewards • Small business • Stored-value cards User Adoption/Time53
Thought for the Day Within 10 years, service quality will be measured – to a large degree - by how much self-service you provide your members57
Business and Technology Trends Reshaping our Industry Digital Era Payments Social Change/ Demographic Shifts “Mobiliti”58
Digital Transformation Is Fueling Electronic Payments 11 Billion transactions shifting from paper to electronic in the next five years 39% 34% 46% 54% 61% 66% 2004 2009 2014 Cash and check Electronic Source: First Annapolis Consulting 2009.
The Durbin Affect61
The Durbin Affect• Bank of America: • Interchange revenue fell from $1.494Bn in 3Q11 to $1.052Bn in 4Q11• Wells Fargo: • Interchange revenue fell from $948M in 3Q11 to $611M in 4Q11.• JPMC: • Interchange revenue fell by $263M on a sequential basis in 4Q11• BB&T: • Interchange revenue fell from $208.4M in 3Q11 to $63.2M in 4Q11
Thought for the Day Within 10 years, the companies that comprise our competition will be radically different from those of today65
Non-Traditional Players are Proliferating
$865 billion in P2P payments
Consumer-to-consumercheck paymentsgrow by 3% a year
44 million U.S. children $5 Billion industry
Mobile and Website Payments = Revenue Opportunity Revenue Monetise gets $5 for an expedited Opportunity mobile phone payment in the UK
Paper or plastic?Thats only part of the question.
The Future of the Plastic Card?
The Future of the Plastic Card?
The Future of the Plastic Card?77
The Future of the Plastic Card?79
Mobile Payments Innovation81
Insight to action
Thought for the Day In the future, the information associated with a transaction could be more valuable than the transaction itself85
What are the critical challenges facing Credit Unions? Business Model Change Non-Traditional Capital Preservation Players/ New Entrants & CreationTechnological A New Economy Advances - Slower Growth Shifting Regulatory Demographics Change Payments Risk & Fraud Transformation Management Empowered Consumers
Twin Strategies in the Digital Era Develop & Optimize Win in Channels Electronic Payments91
What Does The Future Hold for Credit Unions?Mark SievewrightPresident, Credit Union SolutionsFiserv, Inc.June 9, 2012