Tc Bank Technology Innovation Indiana

You can download today’s presentation at
http://www.plantemoran.com/Industries/FinancialInstitutions/Banks/

While crystal-ball gazing is never the best way to formulate
business strategy, an understanding of present trends and future
possibilities can help meet challenges. As banks change for the
future, they need to prepare for a competitive marketplace by
transforming processes and infrastructure, and most
importantly, their thinking. The bank of the future must have a
networked IT landscape, increased automation, niche products and
better understanding of customer needs to succeed.

plantemoran.com

TECHNOLOGY TRENDS IN BANKING • TECHNOLOGY TRENDS IN BANKING TECHNOLOGY TRENDS IN BANKING • TECHNOLOGY TRENDS IN BANKING

Gen Y / Millennium Generation
 Just beginning to enter the workplace, The Millennial Generation (or
Gen Y) was born between 1977 and 1998. The 75 million members of
this generation are being raised at the most child-centric time in our
history. Perhaps it's because of the showers of attention and high
expectations from parents that they display a great deal of self-
confidence to the point of appearing cocky. As you might expect, this
group is technically literate like no one else. Technology has always
been part of their lives, whether it's computers and the Internet or
cell phones
 They are typically team-oriented, banding together to date and
socialize rather than pairing off. They work well in groups, preferring
this to individual endeavors. They're good multitaskers, having juggled
sports, school, and social interests as children so expect them to work
hard.

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Gen Y / Millennium Generation
Banks’ most loyal customers are their oldest customers, while Gens Y and X are the retail banking customers of the future.
They’re also the least loyal and hardest to please, according to a recent Maritz® Poll.

 Generation Y-ers, the oldest of whom are just in their mid-20s, will soon become the banking
industry’s most sought-after customers. But attracting these customers is a marketing puzzle
since they combine a comfort with technology with a continued reliance on branches and in-
person interaction.

 As far as bankers are
concerned, Generation Y isn't
quite ready for prime time. But
they will be in another decade
or so, and therein lies the
dilemma: how to attract and
service a client base that has
lots of potential, but currently
does little to bolster the
institution's profitability.

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In 1998 Who Would Have . . .
 …predicted that in 10 years, Google would be the
fastest growing advertising media companies?
 In 2007, the year-over-year growth of revenue
on Google.com (US) — approximately $2 billion
— was more than twice as much the growth of
ad revenue in all of the next 5 offline media
companies (i.e., Time Warner (TWX), Disney
(DIS), Viacom (VIAB), CBS (CBS), and Clear
Channel)
 3rd Qtr 2008 - Google revenue up 18%: Google
has posted a revenue of $5.70 billion for the stretch your minds on
quarter ended December 31, 2008. In a time how current technology
when many forms of traditional media such as will evolve …
print are seeing a decline, Google is out
performing many of its competitors . These
results equate to an increase of 18% compared
to the fourth quarter of 2007.

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Technology Innovation
 We all know about mobile banking,
but the future holds much more than
Mobile Technology
just checking balances and paying bills
via mobile phones. Text Messaging
Social Networks
 How can we stretch our imagination
to predict technology trends beyond Millennium Generation
what we know now?
Google

 History shows us that the answer lies Apple
in today’s technology trends and the Second Life
users using it
Data Security & ID Theft
… or tracking your kids behaviors

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Innovation
 It doesn’t happen as a single event. It is a collection of events, issues, needs,
and opportunities.
 Cash -> Checks -> Credit Cards -> eMoney
 Mainframes -> PCs -> Servers -> Networks -> Internet -> Mobile
 Messengers -> Letters -> Phones -> e-Mail -> Text Messaging
 Increasing pace and rate of change
 Adoption times are shrinking
 Took 38 years for radio to reach 50million users, Intenet got there in 5 years, mySpace got
there in two,.
 Wild cards (i.e., Facebook)
 Need vs. Emotion
 Just meeting a need doesn’t guarantee success. Understanding a consumer’s passion,
frustration, ease, etc., can improve your adoption rates
 In the beginning, it might not have an economic value

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Trend 1: Mobile Banking
 Mobile Phone Technology
 By 2010, 35 percent of online banking
households will be using mobile banking, up
from less than 1 percent in 2007
 40 percent of Generation Y indicates that
mobile financial services will be a factor in
their choice of bank.
(source: Celnet)

 Text Messaging
 76% of tweens use instant messaging as their
main method of staying in touch with friends
online

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Mobile Technology – What’s Next

 Coming Soon:
 Payments / eWallet
 Confirmation
 Location marketing
 Text Alerts
 Text your account for balance,
transaction history, due dates, etc.

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 Stretch your mind:
 Google Maps ATM / Branch
locator

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 Stretch your mind:  Patent 7,040,533 enables mobile devices to interact directly
with an ATM and a bank system to allow a customer to order
cash withdrawals from a mobile device.
 Call your ATM  Patent 7,207,477 enables mobile devices to be used in a
checkout or bank environment to make payments using
secure electronic checks.

 Patent 7,201,313 enables a bank network to receive wireless
communications from a mobile device, including a customer's
bank account number and account cash value. This patent
defines how a wireless device can quot;communicatequot; with a bank
network to dispense cash and assess a customer's account for
the value of the cash dispensed.

 Patent 7,150,393 enables bank ATMs to communicate with
mobile devices through a cellular network or other wireless
methods. This application could also allow two or more
customers to simultaneously conduct transactions with an
ATM.

 Patent 7,025,256 enables a user of a wireless device to
interact with an ATM by using the wireless device's display
and keypad instead of the display and keypad on the ATM.

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 iPhone Apps going beyond
mobile banking

SplashMoney ($9.99)
SplashData
SplashMoney is another mobile checkbook that allows you to track
different account types: checking, savings, credit
card, cash, asset, liability, money market and line of credit. You can create
a budget and track and analyze your spending with customizable reports
and charts.

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Trend 2: Social Networking
 Facebook / MySpace
 Three times more credit unions have a
Facebook site than banks

 LinkedIn, Tagged, Plaxo
 In October, MasterCard and Citizens Bank had
293,000 and 960,000 unique visitors
respectively and received 3,700 and 4,300
referrals directly from LinkedIn respectively.

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Social Networks — What’s Next

 Coming Soon:
 Encourage employees to use
LinkedIn & Facebook /
mySpace
 LinkedIn Bank profile
 Start a Facebook account for
your institution
 Actively participate in your
local community Facebook
site

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 Facebook Banking
 MyMoney is an innovative banking application
built on Facebook for Credit Unions. Fiserv
developed MyMoney to enable Facebook users
When a member adds MyMoney™ to their
to search for and join a credit union and Facebook page, their friends will be notified
manage their funds via the familiar Facebook and given the opportunity to also join your
interface.Using MyMoney, they can view credit union right then and there, giving you
yet another way to reach this growing
account balances, history and transfer funds audience.
right from their Facebook profile, with
multiple layers of security protecting their
data and accounts. Developed to reach
younger members and potential members
where they spend time online.

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 Blogging
 Verity Credit Union started
blogging in late 2004
 Wells Fargo Blogs

Staci Schiller, Wells Fargo Education Financial
Services: quot;Our goal is to serve customers
when, where and how they want to be served.
People get their information in many different
ways, and social media offers us a new opportunity
to have a dialogue with our customers, learn from
them, and provide information and advice on topics
that are important to them. We're reaching new
audiences in a personal way when our team
members share their thoughts and experiences on
blogs.quot;

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 Twitter
 Follow the bank / or key
employees

Twitter is a free social networking and micro-
blogging service that enables its users to send
and read other users' updates known as tweets.
Tweets are text-based posts of up to 140
characters in length which are displayed on the
user's profile page and delivered to other users
who have subscribed to them (known as
followers). Senders can restrict delivery to those
in their circle of friends or, by default, allow
anybody to access them.

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 Social lending
 Social lending sites connect individual lenders and
borrowers through a peer-to-peer network that is
streamlined, efficient, legally formatted, profitable, and
most importantly - helpful. Social lending sites provide
an opportunity to reduce loan rates and loan costs for
borrowers and provide a rate of return for lenders which
may beat investment alternatives.

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Trend 3: Virtual Worlds

 Second Life (abbreviated as SL) is a Virtual World developed by Linden Lab that launched on
June 23, 2003 and is accessible via the Internet. A free client program called the Second Life
Viewer enables its users, called Residents, to interact with each other through avatars. Residents
can explore, meet other residents, socialize, participate in individual and group activities, and
create and trade virtual property and services with one another, or travel throughout the world,
which residents refer to as the grid.

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Virtual World— What’s Next

 Wells Fargo’s Stage Coach Island
 Wells Fargo launched Stagecoach Island in 2006, originally within Second Life, and then spun it off on its
own. It's a chance for Wells to give users a truly interactive experience with their brand and increase their
relevance to Millenials, who may feel that banks don't understand them.

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Trend 4: Branch of the Future

As customers take to online banking and banks opt for
technology solutions, one might be forgiven for thinking
that the branch is an endangered entity. Nothing could be
farther from the truth. The branch will remain, albeit
changed beyond recognition. The branch of the future
will become a retail outlet, a ‘store’ as it were, offering a
range of financial products and advisory services. While
customers will increasingly bank online, the reassurance
of face-to-face transactions is essential for certain
customers and certain transactions.

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Umpqua Bank’s Approach
Certainly the message you would get if you
were to visit the Umpqua branch in
Portland’s trendy Pearl District neighborhood
seems only vaguely related to the mundane
business of certificates of deposit, checking
accounts and loans. With free wi-fi access,
Umpqua brand coffee, a spacious seating
area and flat-screen television monitors, the
place has been designed to suggest a stylish
hotel lobby where you’re tempted to hang
out (and, perhaps, read a tastefully printed
brochure about certificates of deposit,
checking accounts and loans). This and other
Umpqua branches also serve as the setting
for things like sewing groups, yoga classes
and movie nights. Actually, the word
“branch” is not used in Umpqua’s official
internal terminology: the bank operates 127
“stores” in Oregon, California and
Washington.

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Umpqua Bank – In the neighborhood

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Umpqua Bank – Online Experience

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Umpqua Bank

When Umpqua’s President and CEO first announced this program to
his Board of Directors, there was resistance, so he guaranteed them
fifteen million dollars in new deposits the first year. As he began to
see the program evolve, he raised his guarantee to thirty million
dollars. The first week the store was open, it generated a record one
million dollars in deposits.

Nine months into the first year, Umpqua’s new store had a record
fifty million dollars in deposits.

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Generation X / Y / Millenniums
 Connecting with them:
 Rates / Fees  Communication Methods
 Rewards Program  Facebook / LinkedIn

 Referral Fees – Facebook referral program  Text Messaging
 Blogging
 Location / Convenience
 Internet Banking
 Mobile Banking
 Physical Location
 Banking Counselor
 Person they can call upon
 Explain the various banking products
 Education vs. Marketing
 Branch Experience

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What else . . .

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BillMyParents….

The service is primarily
designed for kids to shop
online. They select what they
want, then at
checkout, redirect the bill to
their parents via an email
alert to PC or mobile phone.
Parents login and complete
the payment process at their
convenience using
MasterCard, Visa, or
Discover Card

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Thank You!
Raj Patel, Partner
Plante & Moran, PLLC
Raj Patel, Partner
248.223.3428
raj.patel@plantemoran.com

You can download today’s presentation at
http://www.plantemoran.com/Industries/FinancialInstitutions/Banks/

Tc Bank Technology Innovation Indiana

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