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Investor Economics - "How should banks develop business with post-secondary students?"

The document discusses strategies for banks to acquire and retain post-secondary student customers. It recommends developing e-wallet/peer-to-peer payment solutions and remote check deposit features for smartphones to capitalize on the growing market. These solutions appeal to students' technology usage and address low disposable income and time constraints. Risks like slow adoption or technical issues can be mitigated with competitive analysis, customer research, and quality assurance testing.

Turning Post-secondary Students into a Business Opportunity Ryan Kam UNIVERSITY OF TORONTO ROTMAN COMMERCE
Entering the E-Wallet/P2P space ensures first-mover advantage in a $14b market growing at 62% annually •Develop business with university/college students Challenge •Retain customers post-graduation •Low disposable income and time Complication •High price sensitivity •High brand loyalty How can banks acquire and retain customers with low Question disposable income, low disposable time, and high price sensitivity? •Exploit growing smartphone segment •Develop and market E-Wallet/P2P and remote check deposit solutions Answer •Pursue NFC/Contactless POS with caution •Customer acquisition leading to services cross-sell RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
194,455 students will graduate from 45 post-secondary institutions in Ontario this year Universities Colleges Universities Colleges 0% 20% 40% 60% 80% 100% RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
Convenience, pricing, and scalability with smartphone technology are key considerations for successful strategy Technology junkies Own/use mobile phone Smartphone share All 83% 58% 18-29 86% 83% 30-44 89% 71% 45-64 79% 44% 65+ 78% 34% Source: Packaged Facts August 2012 proprietary consumer survey Convenience driven •Classes, commutes, homework, and studying monopolize disposable time Money minders •Low disposable income •High price elasticity of demand RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
A line extension is necessary to achieve substantial growth Market Technology Payment methods Other Growth penetration scaling •Debit •Mobile banking •Credit •Mobile bill •Visa payWave payment Existing •Wealth product management •Lending •Deposit taking •NFC (Near Field •Remote check Communication)/ deposit Contactless POS •Mobile financial & New •E-Wallet/P2P promotional product •E-commerce/ organization tools Online payments RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
P2P, remote check deposit, and financial & promotional tools show the greatest growth potential NFC/Contactless Remote check Mobile financial E-Wallet/P2P POS deposit & promotional Market adoption Growth Convenience Services cross- sell •Choice of products with low current market adoption, high growth potential, and high convenience factor RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
E-Wallet/P2P combines high growth and high projected uptake among post-secondary students By the numbers Cross-sell with existing products Applications Used mobile banking in $13.5b Mobile phone users All last 12 months 21% Total transaction value, 18-29 40% 2012 30-44 24% 45-64 15% +62% 65+ Mobile Bill Payment, 7% CAGR, 2012-2015 2012 2.5 42% Mobile payments made/month by mobile payers, 2012 Source: Packaged Facts Mobile and Alternative Payments in Canada, December 2012 RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
Pent up demand for remote check deposits limited by regulatory barriers Heavy adoption in 55% 57% the U.S. However, Percentage of Canadians who Percentage of 18-34s open to deposit at least one check per doing traditional banking Not legal in Canada… month functions with their smartphone yet. Source: Packaged Facts Mobile and Alternative Payments in Canada, December 2012 RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
Risks associated with these products can be mitigated with minimal effort Risk Severity Mitigation 1. Competitive analysis Strategic 2. Customer demand planning •Slow adoption among consumers 3. Focus groups/product testing •Competitors and substitutes (read: ING Direct Cheque-In) Financial 1. Software implementation best •Budget and schedule overruns practices •Scope creep 2. Work breakdown structure (WBS) Technological 1. Talent acquisition from industry •Software/hardware performance leaders issues 2. Software quality assurance (SQA) •Integration problems RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
Thank you! Questions? RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
APPENDIX Ontario universities - graduates Ontario universities - graduation rate Degrees Graduation Average Year Enrollment Year Enrollment awarded rate Graduation rate 2000-01 274696 2000-01 274696.00 67,690 24.64% 2001-02 289078 2001-02 289078.00 70,096 24.25% 2002-03 313220 2002-03 313220.00 75,531 24.11% 2003-04 348314 2003-04 348314.00 79,854 22.93% 2004-05 365292 2004-05 365292.00 82,147 22.49% 24.18% 2005-06 380326 2005-06 380326.00 88,930 23.38% 2006-07 390710 2006-07 390710.00 101,836 26.06% 2007-08 394595 2007-08 394595.00 99,653 25.25% 2008-09 401314 2008-09 401314.00 98,378 24.51% 2009-10 418565 2010-2011 434441 2011-2012* 454819 2012-2013* 476153 Source: Enrolment, Table 1: Summary of Enrolments in Ontario Universities, 2000-01 – * = projected 2010-11, Council of Ontario Universities 2012-2013 University graduates 115141 RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
APPENDIX Ontario colleges - graduates Year Graduates 2001-02 46820 * = projected 2002-03 49717 2003-04 52265 2004-05 56761 2005-06 59419 Source: Student and Graduate Profiles: Environmental Scan 2006-07 59029 2012, Colleges Ontario 2007-08 60406 2008-09 59012 2009-10 62842 2010-11 72066 2011-12* 75603 2012-13* 79314 RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION
APPENDIX RECOMMENDATION | ANALYSIS | IMPLEMENTATION | RISK | CONCLUSION