2015 Banking Trends

1. 2015 BANKING2015 BANKING TRENDSTRENDS STAYING TOP OF MIND DURING THE OMNICHANNEL BANKING REVOLUTION

2. WHAT WE WILLWHAT WE WILL COVER TODAYCOVER TODAY Statistics: Demographics, Banking has changed, Competitors Innovation: Devices, Mobile Payments, Biometrics, Wearables Being Top of Mind: How banks can stay relevant Data: Personalizing & Creating ROI From Digital

3. LETS LOOK ATLETS LOOK AT THE STATSTHE STATS Changing shift in demographics How banking has changed Your new competitors

4. DEMOGRAPHICS AREDEMOGRAPHICS ARE CHANGINGCHANGING "The portion of the population that is currently at least 65 years old—13 percent—is expected to reach about 20 percent by 2050" -THE SMITHSONIAN "$16 trillion in wealth is going to be exchanged between generations in the next 30 years" -WEALTH-X AND NFP FAMILY WEALTH TRANSFERS REPORT

5. FACTS ABOUTFACTS ABOUT BOOMERSBOOMERS 45% of Baby Boomers and Seniors actively use online/ mobile banking Biggest users of online and have the longest OLB sessions Biggest adopters of bill pay (The Financial Brand) iPads & tablets are their second most used device (Nielsen)

6. WELCOME TO THE NEWWELCOME TO THE NEW WORLD WHERE...WORLD WHERE... "53% of Millennials would rather lose their sense of smell than their technology" -NEWSCRED "The average person now has an attention span of 7 seconds vs. 8 seconds with a goldﬁsh" -NEWSCRED

7. THE "ME" GENERATION ISTHE "ME" GENERATION IS VERY DEMANDINGVERY DEMANDING 23% 2010 41% 2011 44% 2012 60% 2012 Users Demand Better Mobile Banking % who say mobile banking was important in switching banks

8. BANKING HAS CHANGEDBANKING HAS CHANGED

9. BANKING NEEDS TOBANKING NEEDS TO BE PERSONAL. FOR MOSTBE PERSONAL. FOR MOST CONSUMERS IT IS NOT...CONSUMERS IT IS NOT... "71% of consumers believe their relationship with their bank is only transactional" -ACCENTURE "An average company hears from less than 5% of its unhappy customers" -RUBY NEWLL-LEGNER

10. BANKING NEEDS TOBANKING NEEDS TO BE PERSONAL. FOR MOSTBE PERSONAL. FOR MOST CONSUMERS IT IS NOT...CONSUMERS IT IS NOT... "However, 81% of customers who switched brands say the company could have acted diﬀerently to retain their loyalty" -ACCENTURE

11. CONSUMERS ALSO NOWCONSUMERS ALSO NOW INTERACT WITH FI'S MOREINTERACT WITH FI'S MORE THAN EVERTHAN EVER "Consumers Now Interact With Banks 15-20 Times Per Month, Up From 3-4 Times In The Pre Digital Era" -NETFINANCE

12. DIGITAL JUST CANNOT BEDIGITAL JUST CANNOT BE COMMODITIZED....COMMODITIZED.... "Online and mobile banking will not yield the best results if they are not combined with customized services. Banks need to understand the speciﬁc needs and preferences of their clients, and be sensitive and open to client concerns. This is how banks will build an empathic relationship." -BBVA COMPASS 12/16/14 BANKING REPORT

13. YOUR NEWYOUR NEW COMPETITORSCOMPETITORS A 61% Decline In The Number Of Banks In The Last 30 Years, While Deposits Up 300%+

14. YOUR NEWYOUR NEW COMPETITORSCOMPETITORS "Up to half of the world's banks will disappear through the cracks opened up by digital disruption of the industry" -BBVA CHAIRMAN AND CEO FRANCISCO GONZALEZ "72% of millennials would be likely to bank with non-ﬁnancial services companies with which they do business [like Google or Amazon], compared to 27% for those over 55" -ACCENTURE

15. BRETT KING ON SANTANDERBRETT KING ON SANTANDER "Banks like Santander need to understand that the ECONOMICS of banking are fundamentally changing, and doubling down on branches is investing in indefensible modality. Listen to this sage advice from Alibaba's founder Jack Ma. The message is a simple one. If WalMart wants to get 10,000 new customers they have to build a new warehouse, a number of new storefronts, etc. What does Alibaba do? It adds two servers to its technology stack." -BRETT KING

16. WE HAVE ALL SEENWE HAVE ALL SEEN THIS BEFORETHIS BEFORE

17. KNOWING THIS, WHERE SHOULD FI'sKNOWING THIS, WHERE SHOULD FI's PUT THEPUT THE BIGGESTBIGGEST FOCUS?FOCUS?

18. FOCUS ON BEINGFOCUS ON BEING CONSUMER'SCONSUMER'S PRIMARY FIPRIMARY FI && CONSTANTLYCONSTANTLY TOP OF MINDTOP OF MIND

19. 3 FOCUS AREAS TO ENSURE3 FOCUS AREAS TO ENSURE YOU STAY TOP OF MINDYOU STAY TOP OF MIND Financial Empowerment: Empowering members or customers to lead better ﬁnancial lives. Customer Centric: Be customer/member focused and allow them to interact with you, how they want. Strategy Shift: Make the necessary technology and internal structure/mindset shifts to enable this.

20. BANKS NEED TOBANKS NEED TO BUILD BACK TRUSTBUILD BACK TRUST "1 in 2 Consumers Have Lost Trust In Their Banks Since The Financial Crisis." -INFOSYS

21. KPMG STUDY ON CHALLENGES FACING BANKING INDUSTRY IN THE NEXT 3-5 YEARS

22. DEVICES: WHAT DEVICES AREDEVICES: WHAT DEVICES ARE ESSENTIAL FOR FI'S NOW- WHATESSENTIAL FOR FI'S NOW- WHAT SHOULD BE ON THEIR ROADMAP?SHOULD BE ON THEIR ROADMAP?

23. INSTANT GRATIFICATIONINSTANT GRATIFICATION CAUSED BY DEVICESCAUSED BY DEVICES "An ever-increasing consumer demand for instant gratiﬁcation is seeping into every facet of our lives, including how we bank. Consumers want to do everything on every device that they own: laptop, smartphone, phablet or tablet." -BYL CAMERON, CG'S DIGITAL PRACTICE LEAD

24. WHAT CUSTOMERSWHAT CUSTOMERS CRAVE FROM DIGITALCRAVE FROM DIGITAL 1. Monitor all accounts in one place 2. Anywhere, anytime 3. Move money when and how they want 4. Security 5. Make it easy, make it work 6. Being able to view and do (action it) -JAVELIN STRATEGY & RESEARCH

25. WEARABLES-WEARABLES- WHAT IS THE USE CASE?WHAT IS THE USE CASE? WILL THEY TAKE OFF?WILL THEY TAKE OFF?

26. WEARABLES: IT'S ALL ABOUTWEARABLES: IT'S ALL ABOUT REAL-TIME FEEDREAL-TIME FEED "Wearable technology will deliver the key real-time financial feedback that is critical in making financially-savvy behavioral changes. Focusing on specific spending decisions rather than psychology. Through Moven we can create day-to-day gamification of financial wellness." -BRETT KING, FOUNDER AND CEO, MOVEN

27. "Wearable technology will deliver the key real-time financial feedback that is critical in making financially-savvy behavioral changes. Focusing on specific spending decisions rather than psychology. Through Moven we can create day-to-day gamification of financial wellness." -BRETT KING, FOUNDER AND CEO, MOVEN BIOMETRICS,BIOMETRICS, ARE PASSWORDS DYING?ARE PASSWORDS DYING?

28. USAA PUSHING THEUSAA PUSHING THE BOUNDARY WITH VOICE &BOUNDARY WITH VOICE & FACIAL RECOGNITIONFACIAL RECOGNITION "USAA’s facial recognition requires users to look at the screen and, when prompted, blink their eyes. For voice recognition, users must read a short phrase" -USAA'S PRESS RELEASE

29. MOBILE PAYMENTSMOBILE PAYMENTS How much longer until we reach a tipping point? Will the October 2015 EMV deadline result in mass merchant adoption?

30. "Apple Has Now Signed Up 750 Banks & Credit Unions For Apple Pay" -TIM COOK, CEO, APPLE “2/3 of Contactless Payments Since October Have Been Through Apple Pay” -TIM COOK, CEO, APPLE

31. HOW DO YOU PERSONALIZEHOW DO YOU PERSONALIZE A DIGITAL BANKINGA DIGITAL BANKING EXPERIENCE?EXPERIENCE?

32. DATA IS THE NEW GOLDDATA IS THE NEW GOLD “More data has been created in just the last two years than in the entire previous history of the human race” -SCANDINAVIAN RESEARCH GROUP SINTEF "Wal-Mart collects more than 2.5 petabytes of data every hour from its customer transactions. One petabyte is equal to about 20 million ﬁling cabinets worth of text." -HARVARD BUSINESS REVIEW

33. DATA IS THE NEW GOLDDATA IS THE NEW GOLD “Banks have goldmines of data available to them. However, it is not just about the data you collect. It’s how you mine it, interpret it and draw insights to provide personal customer experiences, which can be quickly deployed across the organization” -NETFINANCE “Yet the vast majority of data never gets used. Only 0.5 percent of all data is ever analyzed.” -MIT TECHNOLOGY REVIEW

34. BANKING NEEDS TOBANKING NEEDS TO BE PERSONAL. FOR MOSTBE PERSONAL. FOR MOST CONSUMERS IT IS NOT...CONSUMERS IT IS NOT... "Very little in digital banking right now is personal, almost nothing about digital drives emotion. Data has to be used to drive that" -OMNI-CHANNEL EXECUTIVE, TOP 50 BANK

35. USING DATA TO HELP CUSTOMERSUSING DATA TO HELP CUSTOMERS MAKE BETTER DECISIONS:MAKE BETTER DECISIONS: WHEN WASWHEN WAS THE LAST TIME YOU OFFERED YOURTHE LAST TIME YOU OFFERED YOUR CUTOMERS PERSONALIZED ADVICE?CUTOMERS PERSONALIZED ADVICE? "67% of Millennials are interested in their bank providing tools and services which help them create and monitor a budget, compared to 31% for those over 55." -ACCENTURE

36. USING DATA TO BEAT COMPETITORS:USING DATA TO BEAT COMPETITORS: CUSTOMERS AREN'T JUST USING YOURCUSTOMERS AREN'T JUST USING YOUR PRODUCTS,PRODUCTS, THEY ARE USING YOURTHEY ARE USING YOUR COMPETITORS TOO...COMPETITORS TOO... “While the number of ﬁnancial products held by a typical household hovers around 10, most customers only hold 2-3 services at any one institution.” -JIM MAROUS, FINANCIAL BRAND

37. BEING TOP OF MIND: HOWBEING TOP OF MIND: HOW CAN BANKS/CREDIT UNIONSCAN BANKS/CREDIT UNIONS STAY REVELANTSTAY REVELANT What Role Does A Bank or Credit Union Play In This New Era? What Value Do They Bring To Customers?

38. 3 FOCUS AREAS TO ENSURE3 FOCUS AREAS TO ENSURE YOU STAY TOP OF MINDYOU STAY TOP OF MIND Financial Empowerment: Empowering members or customers to lead better ﬁnancial lives. Customer Centric: Be customer/member focused and allow them to interact with you, how they want Strategy Shift: Make the necessary technology and internal structure/mindset shifts to enable this

39. CISCO'S STRATEGY TOCISCO'S STRATEGY TO BE DIGITALLY FOCUSEDBE DIGITALLY FOCUSED "Invest in a future-proof, omnichannel-ready infrastructure that accommodates new interaction channels and is integrated into existing core banking apps. Restructure the organization around customers and channels rather than existing product-centric models." -CISCO (2012)

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

41. THE NO 1. ROI GOAL: SERVE AS YOURTHE NO 1. ROI GOAL: SERVE AS YOUR CUSTOMERS' PRIMARY BANKCUSTOMERS' PRIMARY BANK Win over MoneyHawksWin over MoneyHawks Increase Profitability of CustomersIncrease Profitability of Customers Targeted, cross-selling opportunitiesTargeted, cross-selling opportunities ACQUISITION Building Back TrustBuilding Back Trust Providing Personalized AdviceProviding Personalized Advice Greater UXGreater UX LOYALTY Win customers from competitorsWin customers from competitors Prime bank means top of mind whenPrime bank means top of mind when customers looking to buy.customers looking to buy. Develop fee based services for highDevelop fee based services for high end customersend customers REVENUE Cut costs through self service channelCut costs through self service channel COST

42. MX helps FIs become their account holders’ primary institution Learn more at MX.COM

43. IMAGE SOURCESIMAGE SOURCES • -Lendingmemo.com - Castor & Pollux (Noun Project) - Veronika Karenina (Noun Project) - Tonielle Krisanski (Noun Project) https://www.ﬂickr.com/creativecommons/ - Jason Grube (Noun Project) - EliRatus (Noun Project) - Irene Trautluft (Noun Project) - Takao Umehara (Noun Project)