Bertrand LavayssièRe Capgemini

30th Efma Convention: Leadership in retail finance 13 p.m. & 14 March 2008 - Paris Bertrand Lavayssière Managing Director, Global Financial Services Capgemini WRBR08_ CONVENTION_EFMA_ENGLISH 1

Press conference Amsterdam, March 12th 2008

Introducing… Patrick DESMARES, Secretary General, European Financial Management & Marketing Association (EFMA) Bertrand LAVAYSSIERE, Managing Director, Global Financial services, Capgemini Felix POTVLIEGE, Head Strategy & Business, Development of Retail Banking, ING Group WRBR08_ CONVENTION_EFMA_ENGLISH 3

Agenda Presentation of the World Retail Banking Report Pricing Indexes – Key Findings Organic Growth in Domestic Markets – Key Findings Questions & Answers WRBR08_ CONVENTION_EFMA_ENGLISH 4

The World Retail Banking Report (WRBR) aims to Highlight the Trends in the Retail Banking Industry on a Global Scale Figure 1.3 Average Local Profile Prices Annual prices of core banking services by geographic area and usage pattern, 2008 (€) Index of prices for product and 250 € Pricing 197 € 200 € Very Active User price Active User price Less Active User price services based on their 150 € 100 € 101 € 136 € 104 € 122 € indexes 79 € frequencies of use, and updated 75 € 74 € 70 € 52 € 50 € 45 € 49 € 31 € 35 € 22 € 0€ yearly Europe Eurozone Europe Non-eurozone North America Asia-Pacific Average Source: Capgemini analysis, 2008. FINALPRICE_FIGURES WRBR08 V1.12.PPT 4 Figure 2.3 Domestic Retail Banking: Growth of Revenue vs. Costs for “Organic Growth in Domestic Selected Banks, 2002-2006 (%) 0,2 Revenue growth CAGR 02-06 (1) 2008 Bank of America Markets” 0,15 0,1 La Caixa Sumitomo Mitsui KBC HBOS Wachovia The spotlight is based on case Banques Pop CBA CM-CIC RBS ANZ Caja Madrid Spotlight ING Wells Fargo Banca Intesa BBVA Dexia BNPP Santander 0,05 ABN AMRO HVB Citigroup SocGen Crédit Agricole Mizuho Barclays Nordea Caisse d'Epargne studies, quantitative analysis UniCredit Banca Sanpaolo Rabobank Fortis Westpac LCL 0 Dresdner Bank Deutsche Bank Resona Operating and interviews with 52 banks cost growth -0,05 CAGR 02-06(1) -0,15 -0,1 -0,05 0 0,05 0,1 0,15 Sources : Capgemini analysis, 2008 , and bank annual reports. Note: CIR before impairment losses. (1) CAGR calculation using 2007 currencies. FINALSPOTLIGHT_FIGURESV7. 5 2.PPT Overview based on Macro economic indicators (2006) Macro economic indicators (2006) •• GDP at current prices and PPP :: 229 billion Billion € 34 Billion GDP at current prices and PPP 229 billionHRK •• Banking staff: 24000 19 096 Croatia Dashboard WRBR2008 Retail banking environment Retail banking environment Regulatory Organisations supervisory institutions macroeconomic data and on € 34 HRK Banking staff: 24000 19 096 Croatian Agency f or Inhabitants :4.44 million •• Population ::: 4.44 million Population Inhabitants 4.41 million 4.41 million •• Number of branches: 1114 Number of branches: 1114 1 118 1 118 Croatian National Superv ision of Croatian Competi tion Financial Agency Croatian Chamber of Economy (HGK) - •• GDP per head ::51560 HRK GDP per head 51560 HRK € 7 638 € 7 638 •• Number of ATM: 2307 Number ofATMs: 2307 ATMs: ATM: 2 649 2 649 Bank (H NB) Financial Serv ices Agency ( AZ TN) (FINA) Financial Department (HA NF A) ) Economic growth rate :in GDP: n/a Importanceof Banking •• Importancegrowthrate :in GDP: n/a Economic of Banking 4.8% 4.8% •• Households savings ratio ::1.9% Households savings ratio 1.9% 2.0% 2.0% •• Economic growth rate :indicator :: Consumer confidence :indicator Economic growth rate 4.3% Consumer confidence 4.3% -22 -22 •• Inflation rate :: 3.3% Inflation rate 3.3% 3.2% 3.2% • Central bank, • Supervi si on of banks, • Respon sibl e for respon sible for overall pension and • Supervi si on of • Advisory body on poli cy •• Unemployment rate :: indicator ::-26 Consumer confidence indicator -26 Unemployment rate Consumer confidence 12.0% 12.0% •• Interest rate for consumer credit: 12% 9.5% Interest rate for consumer credit: 12% 9.5% competition control domestic payments and developments within stabi lity of financi al investment funds, •• Unemployment rate :: 12.7% Consumer Price rate 12.7% Consumer PriceIndex: Unemployment Index: 3.2% 3.2% •• Interest rate for residential mortgage: 5%5.5% Interest rate for residential mortgage: 5%5.5% system insurance companies, system (cleari ng and the banking industry RT GS) • Data selecti on and •• Interest rate on long term bonds: Interest rate on long term bonds: 4.1% 4.1% • Control of all banking brokerage house s • Respon si bl e for Central processing from card activities Account Register management fi eld Taxation of xx on Taxation of xx on capital gains capital gains Dashboards RETAIL BANKING MARKET analyses of local evolutions in Type and size of Players Type and size of Players Products Products Trends Trends Regulatory Changes Regulatory Changes Regul atory In December 2006, HNB announced further tightening of regulation s. In December 2006, HNB announced further ti ghteni ng of regulation s. In December announced tightening of regul ati ons. Effective from January 2007, the growth of the banks’ loan portfolios iss ’ Effecti ve from January 2007, the growth of the banks l oan portfolios i from January banks’ restricted to 12 percent per annum. Any excess of the growth rat e must be rest ricted to12 percent per annum.Any excess of the growth rat mustbe rest ri cted 12 percent per Any the rate be followed by mandatory purchase of llow-yielding HNB billls innthe amount of followed by mandatory purchase of ow-yielding HNB bil s i the amount of foll owed low-yi elding HNB bills the amount of 50% of the excess placement . 50% of the excess pl acement 50% of the excess placement. Competition envi ronment Competition environment environment • •Major Banks inn private foreign ownershipp have retained their dominant MajorBanks i pri vate foreign ownership have retai ned their dominant Banks forei gn ownershi have retai ned their dominant positi ons in all business segments posi tions i n all businesssegments positions in all segments • Increase of capi tal carried out, sharp competition and slowing ddownof the •Increaseof capital carried out, sharp competititionand sl owing down of the of capital carried out, sharp competi on and slowing own of the net income growth showed the effects, Banks´ ROAE decrea sed to 12% net i ncome growth showed the effects, Banks´ ROAE decrea sed to 12% net showed effects, Banks´ ROAE to 12% or 9%. or9%. 9%. • •Banks conti nue to compete with new products and services showinng Banks continue to compete with new products and servi ces showi g Banks continue to compete with products and services g raise in fee income and income from other servi ces such a sscredi t tcards, rai se in fee i incomeand income from other services such a credi cards, raise in fee ncome and income from other services such cards, investment banki ng. i nvestment banking. investment banking. In meanwhile, two main sourcesof fundsfor Banks´ growth were more • •In meanwhil e, two mai n sources of funds for Banks´ growth were more In meanwhile, main of for Banks´ more barely avail abl e: forei gn funds become more expensive due to HNB barel y available: foreign funds become more expensi ve due to HNB barely available: foreign funds become more expensive to the retail banking sector restricti ons and domestic funds (cliient deposi ts) were channeled into rest rictions and domestic funds (cl ent deposits) were channel ed into rest ri ctions domestic funds (client deposits) channeled i nto investment funds and stock mar ket. i nvestment funds and stockmarket. investment funds mar ket. • •Latest acquisitions: Hungarian OT P Group (Nova Banka ) end of 2005; Latest acqui si tions: Hungarian OT P Group (Nova Banka end of 2005; Hungari an Group (Nova Banka) end of 2005; Soci éétéGé né rale (Spli tska Banka) iin 2006; Bayri sche Landesbank (Hypo Soci té Générale (Splitska Banka) n 2006; Bayrische Landesbank (Hypo é rale Splitska ) in 2006; Bayrische Landesbank Alpe Adria Bank Group) iin 2007. Al pe Adria Bank Group) n 2007. Alpe Adria Bank Group) in 2007. Customerss Customer s Customer • •Customerssare becoming more demandi ng in terms of product offerings . . Customer s are becoming more demanding in termsof productoffer ngs Customer are becoming more demanding of i offerings • •At the end of 2006 IPO of INA iintroduced the signifi cant number of small Atthe end of 2006 IPO of INA ntroduced the significant number of small the end 2006 IPO of introduced the si gnificant number of individual investors at the money market. T his moved the small private i ndi vidual investors at the money market. T his moved the small pri vate individual i nvestors market. hi s moved the small rivate investors into different dimensi on, from non ririsky savings to taking certain sky savi ngs i nvestors i nto di fferentdi mension, from nonrisky savings to ta ki ng certain investors into dimension, taking certain ririsk for investments such aas securities (followed by IPO of HT iin Sep risk for i nvestments such ass securiti es (foll owed by IPO of HT in Sep sk for investments such (fol lowed by IPO Sep Credit activities: In 2006 Banks granted credits to a total amount of EUR 25.6bn (both in HRK and in foreign 2007) 2007) 2007) currency); 23.6% increase compared with the previous year. • •Loans to retail customers remain a key business, but most Banks have Loans to retail customers remain a key business, but most Banks have Loans to retail remain key business, but Banks started to target SME busi nesse ssassan untapped revenue segment. started totarget SMEbusinesse s aas an untapped revenue segment. target businesse an untapped revenue segment. Deposits: Ban ks we re very active in deposi ts collection. T otal deposi ts increased to EUR 27.5bn or 18.2%. Product T rends Product T rends Product rends New technologies, credit and debit card transactions: Croati an banks continue to invest in technology • •Most Banks offer cc redi tsin domestic HRK and EUR/CHF (value claause); Most Banks offer credits in domesti c HRK and EUR/CH F (val ue cl use); Most Banks offer redits in domestic and EUR/CHF Consumer loans have become hi ghl y popular among the customers. Consumer l oans havebecome highly popular among the customers. become highly popular among customers. development i n order to increase the number and quality of financial products and services. • •Payments servi ce sssti ll l represent the highest revenues for core banking

World Retail Banking Report – Price Index Key Messages Summarized Prices vary significantly across the globe while consumers pay an average of €70 a year for banking services Influencing consumers seems to have been the main driver of banks’ pricing strategies from 2006 to 2008 Banks cut the price of sales influencers Banks acted on prices of behaviour influencers according to their costs Banks kept prices unchanged for unseen services Prices were stable in Europe European prices remained stable with a small 0.8% price increase across both the eurozone and non eurozone With the advent of SEPA, prices of pan-European payments have stabilised in the eurozone, and (excluding Ireland) even decreased faster in Europe eurozone than in the rest of the world Prices rose in North America (+5.7%) and dropped in Asia-Pacific (-11.1%) North America’s price rose the most—averaging 5.7%—resulting primarily from higher prices for payments and cash utilisation; its price had declined during the three previous years due to fierce competition on account management fees. Asia-Pacific’s price fell by 11.1% this year, essentially because of intensified competition in Australia and India, particularly in payments and account management. WRBR08_ CONVENTION_EFMA_ENGLISH 7

While consumers pay an average of €70 a year for banking services, prices vary significantly across the regions of the globe Average Local Profile Price (€) Source: Capgemini analysis, 2008. WRBR08_ CONVENTION_EFMA_ENGLISH 8

While consumers pay an average of €70 a year for banking services, prices vary significantly across the 26 studied countries 450 400 350 278 Very Active User Price 300 243 215 Active User Price 210 Less Active User Price 250 167 185 159 132 200 105 116 119 112 98 122 113 114 95 150 117 124 85 99 72 123 90 60 95 85 84 59 74 95 100 86 82 70 72 70 68 54 30 72 34 45 64 66 61 52 34 35 50 58 47 54 43 54 33 17 42 41 39 42 59 12 32 33 36 8 17 24 19 1 18 13 5 0 A B C D E F G H I J K L M N O P Q R S T U V W X WRBR08_ CONVENTION_EFMA_ENGLISH 9

Influencing consumers seems to have been the main driver of banks’ pricing strategies from 2006 to 2008 BEHAVIOUR INFLUENCERS, more costly ( -0,9%) 1,9% 2% BEHAVIOUR INFLUENCERS, Less costly ( -0,2%) UNSEEN SERVICES ( 0%) 1,1% -1,2% 0,9% SALES INFLUENCERS ( -0,8%) 0,3% 0,4% 0,2% 0% -1,3% -1% -2,3% -0,6% 0% -0,5% -0,3%-0,4% 0,1% -1,6% Internal Transfer Direct Debit External Transfer Document Search Cash Deposit at ATM banks’ ATM network Withdrawal at other Banker’s draft Current Account Cheque Cheque Stop Withdrawal at desk Standing Order Cash deposit at desk banks’ ATM Withdrawal at Online Banking Debit Card Credit Card Debit Card Stop Call Centre WRBR08_ CONVENTION_EFMA_ENGLISH 10

Prices were Stable in Europe Eurozone with a 0.8% (€0.6) rise only for local active users Sources of Fees for Core Banking in Europe Eurozone (%) Product and Service Price Variations vs. Last Year for the Local Active User in Europe Eurozone (€) Source: Capgemini analysis, 2008. Source: Capgemini analysis, 2008. WRBR08_ CONVENTION_EFMA_ENGLISH 11

With the advent of SEPA, prices of pan-European payments have stabilised in the eurozone Price of Pan-European Payments Means for the Local Active Profile (€) Average Eurozone* €38 vs. €41 in 2007 Average Rest of the World €33 vs. €34 in 2007 A B C D E F G H I J K L M N O P Q R S T U V W X Y Source: Capgemini analysis, 2008. *Note: For methodological reason one country has been taken off WRBR08_ CONVENTION_EFMA_ENGLISH 12

Prices were Stable in Europe Non-eurozone with a 0.8% rise (€0.6) only for local active users Sources of Fees for Core Banking Services in Europe Non-eurozone (%) Product and Service Price Variations vs. Last Year for the Local Active User in Europe Non-Eurozone (€) Source: Capgemini analysis, 2008. Source: Capgemini analysis, 2008. WRBR08_ CONVENTION_EFMA_ENGLISH 13

Prices evolutions over the last three years do not show resilient policies at work Country A Country C 18% 13% 12% 15% 5 6 2 3 4 5 7 9 5% 4% 4% 1% 1% 3% 3% 0% -1% 0% 0% -4% -4% -8% 0,2% -1% -0% -1% -1% -2% -3% -2% -1% -1% -3% -4% -3% -4% -3% -4% 1 2 3 4 -7% -5% -8% -10% 1 6 8 -13% -14% -17% -22% -25% -25% 29% Country B -44% Country D 1 37% 16% 16% 27% 2 3 4 25% 16% 11% 14% 12% 13% 14%12% 7% 9 10 7% 5% 3% 4% 0% -2% 0% 0% 1% 0% -5% -2% 0,2% 0% 0% 0,2% 0% 0% 0% 0% 0% 13% 0% -2% 0% -5% -5% -2% -11% -10% -11% 13 -18% -17% -26% 11 1 2 3 4 5 5 6 7 -28% -38% 8 -53% -57% -60% 12 Var. 06/05 -83% Var. 07/06 Var. 08/07 WRBR08_ CONVENTION_EFMA_ENGLISH 14

World Retail Banking Report – Price Index Key Messages Summarized Prices vary significantly across the globe while consumers pay an average of €70 a year for banking services Influencing consumers seems to have been the main driver of banks’ pricing strategies from 2006 to 2008 Banks cut the price of sales influencers Banks acted on prices of behaviour influencers according to their costs Banks kept prices unchanged for unseen services Prices were stable in Europe European prices remained stable with a small 0.8% price increase across both the eurozone and non eurozone With the advent of SEPA, prices of pan-European payments have stabilised in the eurozone, and (excluding Ireland) even decreased faster in Europe eurozone than in the rest of the world Prices rose in North America (+5.7%) and dropped in Asia-Pacific (-11.1%) North America’s price rose the most—averaging 5.7%—resulting primarily from higher prices for payments and cash utilization; its price had declined during the three previous years due to fierce competition on account management fees. Asia-Pacific’s price fell by 11.1% this year, essentially because of intensified competition in Australia and India, particularly in payments and account management. WRBR08_ CONVENTION_EFMA_ENGLISH 15

WRBR 2008 spotlight theme 2004 2005 2006 2007 Pricing in a Increasing Share of Wallet The Rise of Remote Transforming Operating Global Market from High-Potential Clients Channels: Building a New Models in Retail Banking in Mature Markets Client Relationship Model The sub-prime crisis and forecast economic slow down has highlighted the importance of growth in mature countries. We decided therefore to focus our 2008 analysis on : Organic Growth in Domestic Markets WRBR08_ CONVENTION_EFMA_ENGLISH 17

World Retail Banking Report – Spotlight Key Messages Summarized Leading banks have well performed on their retail domestic operations over the last 5 years, steadily growing their revenue faster than their costs Four pillars have supported their efforts to achieve profitable organic growth in their domestic markets 1. Combining fast time to market, innovation, and local client intimacy 2. Full multi-channel integration and optimisation 3. Increasing sales productivity through dynamic branch management 4. Leveraging a multi-brand portfolio to create attractive value propositions for each market segment. Most banks however rely on these pillars to support very similar strategies: namely to build trust relationship with their clients in order to sell them a large number of financial products. We believe that tougher regulations, more flexible technology, more demanding clients and new competitors will radically change retail banking We simulated the effect of these structural changes on retail banking in 8 major European markets Banks could lose 36% of their projected net income (and more than 50% in certain markets) within 10 years To cope with this new environment, successful banks can use three distribution strategies to grow beyond the traditional retail banking business models “Better sell”, to better fit diverse clients’ needs “Larger offer”, extending the offering to non-financial products and services “Indirect business”, selling through other distributors WRBR08_ CONVENTION_EFMA_ENGLISH 18

Leading banks have well performed on their retail domestic operations over the last 5 years 20% 15% Revenue Growth CAGR 02-06 10% 5% 0% - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 19

Leading banks have well performed on their retail domestic operations over the last 5 years 20% 15% Revenue Growth CAGR 02-06 10% 5% 0% - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 20

Leading banks have well performed on their retail domestic operations over the last 5 years 20% USA Bank Of America + Japan 15% Wachovia Revenue Growth CAGR 02-06 Sumitomo Mitsui 10% Wells Fargo 5% Citigroup Mizuho 0% Resona - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 21

Leading banks have well performed on their retail domestic operations over the last 5 years 20% + Italy Bank Of America + Spain La Caixa 15% Wachovia Revenue Growth CAGR 02-06 Sumitomo Mitsui 10% Caja Madrid Banca BBVA Wells Fargo Intesa Santander 5% Citigroup Sanpaolo Mizuho Unicredit 0% Deutsche Resona Dresdner Bank Bank - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 22

Leading banks have well performed on their retail domestic operations over the last 5 years 20% + Germany Bank Of America + France La Caixa 15% Wachovia Revenue Growth CAGR 02-06 Sumitomo Mitsui Banques Populaires 10% CM-CIC Caja Madrid Banca BBVA BNPP Wells Fargo Intesa Santander 5% HVB Citigroup SocGen Crédit Caisses Sanpaolo Agricole d’Epargne Mizuho Unicredit LCL 0% Deutsche Resona Dresdner Bank Bank - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 23

Leading banks have well performed on their retail domestic operations over the last 5 years 20% + Netherlands Bank Of America + UK La Caixa 15% Wachovia Revenue Growth CAGR 02-06 HBOS Sumitomo Mitsui Banques Populaires 10% CM-CIC RBS Caja Madrid ING Banca Wells Fargo ABN BBVA BNPP Intesa AMRO Santander 5% HVB Dexia Citigroup SocGen Crédit Caisses Barclays Sanpaolo Agricole d’Epargne Mizuho Unicredit Rabobank LCL 0% Deutsche Resona Dresdner Bank Bank - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 24

Leading banks have well performed on their retail domestic operations over the last 5 years 20% + Belgium Bank Of America + Australia La Caixa 15% KBC Wachovia Revenue Growth CAGR 02-06 HBOS Sumitomo Mitsui Banques Populaires 10% CBA CM-CIC ANZ RBS Caja Madrid ING Banca Wells Fargo ABN BBVA BNPP Intesa AMRO Santander 5% HVB Dexia Citigroup SocGen Crédit Caisses Barclays Sanpaolo Agricole d’Epargne Mizuho Unicredit Rabobank LCL Fortis Westpac 0% Deutsche Resona Dresdner Bank Bank - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 25

4 best performers on their domestic markets have been identified 20% Bank Of America La Caixa 15% KBC Wachovia Revenue Growth CAGR 02-06 HBOS Sumitomo Mitsui Banques Populaires 10% CBA CM-CIC ANZ RBS Caja Madrid ING Banca Wells Fargo ABN BBVA BNPP Intesa AMRO Santander 5% HVB Dexia Citigroup SocGen Crédit Caisses Barclays Nordea Sanpaolo Agricole d’Epargne Mizuho Unicredit Rabobank LCL Fortis Westpac 0% Deutsche Resona Dresdner Bank Bank - 5% -15% -10% - 5% 0% 5% 10% 15% Operating Costs Growth CAGR 02-06 WRBR08_ CONVENTION_EFMA_ENGLISH 26

Pillar 1: Fast time to market, innovation and local client intimacy Crédit Mutuel - CIC in France Source: Capgemini analysis, 2008. WRBR08_ CONVENTION_EFMA_ENGLISH 27

Pillar 2: Ensuring full multi-channel integration and optimisation: ING in the Netherlands Source: CBS (Dutch market) and company data (Postbank). WRBR08_ CONVENTION_EFMA_ENGLISH 28

Pillar 3: Increasing sales productivity through dynamic branch management La Caixa in Spain Source: La Caixa annual report, 2006. WRBR08_ CONVENTION_EFMA_ENGLISH 29

Pillar 4: Leveraging a multi-brand portfolio to create attractive value propositions for each market segment HBOS in UK Source: Presentation at HBOS Retail Investors' Seminar, 2003. WRBR08_ CONVENTION_EFMA_ENGLISH 30

Conjectural and structural changes in the market are putting banks revenue at risk and compelling them to adapt their strategies Conjectural changes: No longer financial market bubble No longer real estate bubble More competitive markets Slow economic growth in mature countries Harmonised national Structural changes: environments Down pressures on More constraining regulations prices High leverage technologies Market saturation to traditional value New customers’ behavior propositions (risk averse, delegators…) New entrants WRBR08_ CONVENTION_EFMA_ENGLISH 31

Simulation of the effect of this competitive pressure : Banks could loose 36% of NBI before 2017 90 000 - 30% 80 000 + 32% 70 000 - 50% 60 000 - 57% - 54% 50 000 A 40 000 global - 55% - 17% 36% 30 000 drop 20 000 - 55% 10 000 NBI 2017F Prices harmonization impact 0 Interest rate Belgium France Germany Italy Netherlands Nordic Spain UK margin impact Source: Capgemini analysis, 2008. WRBR08_ CONVENTION_EFMA_ENGLISH 32

Identification of three distribution strategies to go beyond the most rewarding traditional model BETTER SELL LARGER OFFER BUSINESS INDIRECT WRBR08_ CONVENTION_EFMA_ENGLISH 33

Identification of three distribution strategies to go beyond the most rewarding traditional model Financial Advisor for Taking care of the customer’s HSBC Premier Mass Affluent Customer financial life as a financial advisor BETTER SELL Specialised service provider to a USAA Community Bank specific community The most economic without Société Générale Discount Bank minimising security or quality Boursorama LARGER OFFER BUSINESS INDIRECT WRBR08_ CONVENTION_EFMA_ENGLISH 34

Identification of three distribution strategies to go beyond the most rewarding traditional model Financial Advisor for Taking care of the customer’s HSBC Premier Mass Affluent Customer financial life as a financial advisor BETTER SELL Specialised service provider to a USAA Community Bank specific community The most economic without Société Générale Discount Bank minimising security or quality Boursorama LARGER OFFER One-stop shopping for Deutsche Bank Trust Operator customers, including all kinds Q110 branches of personal or family services BUSINESS INDIRECT WRBR08_ CONVENTION_EFMA_ENGLISH 35

Identification of three distribution strategies to go beyond the most rewarding traditional model Financial Advisor for Taking care of the customer’s HSBC Premier Mass Affluent Customer financial life as a financial advisor BETTER SELL Specialised service provider to a USAA Community Bank specific community The most economic without Société Générale Discount Bank minimising security or quality Boursorama LARGER OFFER One-stop shopping for Deutsche Bank Trust Operator customers, including all kinds Q110 branches of personal or family services Easy access and time saving BUSINESS of highly automated operations INDIRECT Open Source Bank through the Internet, Zopa The best products on the market, General Broker and independent advisory Virgin Money Services to fit clients’ needs WRBR08_ CONVENTION_EFMA_ENGLISH 36

Banker rated models according to their perceived likeliness and impact Most likely to appear Most impacting before 2010 for the retail banking industry Trust Discount Operator Bank Open Discount General Bank General Source Broker 1 Broker 1 2 2 3 3 The future will be likely a combination of several models WRBR08_ CONVENTION_EFMA_ENGLISH 37

The next challenge for retail bankers: re-assembling the building blocks to support a new retail banking business model of their own Lar g er O New s nship rif ffer Relatio ta e Model t iv olu Ev ne l Low an n C Stru osts ich o ctur ult grati M te e Flexi In Prod ble uctio n New Branc New Banking Innov ds h ation ran gy B te Model a Str ic lt u r e We om l Job Cu b2 on e SO .0 et Ec Mod A Clients & Co communitie mp s ete nc ies WRBR08_ CONVENTION_EFMA_ENGLISH 38

World Retail Banking Report – Spotlight Key Messages Summarized Leading banks have well performed on their retail domestic operations over the last 5 years, steadily growing their revenue faster than their costs Four pillars have supported their efforts to achieve profitable organic growth in their domestic markets 1. Combining fast time to market, innovation, and local client intimacy 2. Full multi-channel integration and optimisation 3. Increasing sales productivity through dynamic branch management 4. Leveraging a multi-brand portfolio to create attractive value propositions for each market segment. Most banks however rely on these pillars to support very similar strategies: namely to build trust relationship with their clients in order to sell them a large number of financial products. We believe that tougher regulations, more flexible technology, more demanding clients and new competitors will radically change retail banking We simulated the effect of these structural changes on retail banking in 8 major European markets Banks could lose 36% of their projected net income (and more than 50% in certain markets) within 10 years To cope with this new environment, successful banks can use three distribution strategies to grow beyond the traditional retail banking business models “Better sell”, to better fit diverse clients’ needs “Larger offer”, extending the offering to non-financial products and services “Indirect business”, selling through other distributors WRBR08_ CONVENTION_EFMA_ENGLISH 39

Bertrand LavayssièRe Capgemini

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