American Banker Mobile Banking & Commerce Summit presentation - Michael J. McEvoy and Matt Wilcox

1. Right Channeling
Matt Wilcox
Senior Vice President and Director,
Interactive Services and Marketing
Michael J. McEvoy
Managing Director
ath Power Consulting
Presented by:

2. • More interaction means more customer engagement, opportunity to steer
customer to best channel for them, for given activity (‘right channeling’)
• More choices for customer, better prospects for ‘right channeling’
• More interaction = improved customer loyalty and retention
How often do you use mobile banking?
48%
Source: The 2013 ath Power Mobile Banking Study™
Migration to Mobile Creates New Opportunities for ‘Right Channeling’
4%
14%
30%
21%
23%
8%
Multiple Times a Day
Daily
2-3 Times a Week
Once a Week
1-2 Times a Month
Less than Once a Month
2
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

3. 4%
14%
30%
10%
21%
32%
Multiple Times a Day
Daily
2-3 Times a Week
SBO
Consumer
SBOs 'Check-In' More Often Than Retail Customers:
Implications for ‘Right Channeling’?
How often do you use mobile banking?
Source: The 2013 ath Power Mobile Banking Study™
3
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

4. 79%
21% 17%
87%
33%
52%
Bill Pay Transfer Funds to Outside
Accounts
Remote Deposit Capture
Mobile Banking Transactions Available to Users
2012 2013
Additions to Mobile Offering Will Draw Customers,
Open Up New Avenues for ‘Right Channeling’
4Source: The 2013 ath Power Mobile Banking Study™
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

5. Most Desired Capability:
Remote Deposit Capture – Still Being Rolled Out
5
Source: The 2013 ath Power Mobile Banking Study™
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

6. Lots of ‘Mobile’ Enhancements Are Being Developed / Introduced –
More Choices for Customer, Opportunities for ‘Right Channeling’
• Remote Deposit Capture
• Photo Mobile Bill Pay
• Voice Recognition / Assistance
• Voice Authentication
• Service Tracker
6
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

7. Lots of ‘Mobile’ Enhancements Are Being Developed / Introduced –
More Choices for Customer, Opportunities for ‘Right Channeling’
• Remote Deposit Capture
• Photo Mobile Bill Pay
• Voice Recognition / Assistance
• Voice Authentication
• Service Tracker
7
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

8. Lots of ‘Mobile’ Enhancements Are Being Developed / Introduced –
More Choices for Customer, Opportunities for ‘Right Channeling’
• Remote Deposit Capture
• Photo Mobile Bill Pay
• Voice Recognition / Assistance
• Voice Authentication
• Service Tracker
Yes; 32%
No; 55%
I don't
know; 14%
Would voice assistance encourage you to use
more mobile banking services?
8Source: The 2013 ath Power Mobile Banking Study™
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

9. Lots of ‘Mobile’ Enhancements Are Being Developed / Introduced –
More Choices for Customer, Opportunities for ‘Right Channeling’
Source: The 2013 ath Power Mobile Banking Study™
• Remote Deposit Capture
• Photo Mobile Bill Pay
• Voice Recognition / Assistance
• Voice Authentication
• Service Tracker
45%
28%
55%
45%
27%
Do concerns over security
discourage you from using certain
mobile banking services?
Would voice authentication
encourage you to use more mobile
banking services?
Concerns Over Security Discourage Use of Mobile
Services
Yes No Maybe
9
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

10. Lots of ‘Mobile’ Enhancements Are Being Developed / Introduced –
More Choices for Customer, Opportunities for ‘Right Channeling’
• Remote Deposit Capture
• Photo Mobile Bill Pay
• Voice Recognition / Assistance
• Voice Authentication
• Service Tracker
10

11. Which of the following banking functions would you do on your
mobile device, were it a possibility?
‘Right Channeling’, ‘Mobile’ and Increased Self-Service Adoption:
Banks Can Cut Expenses, Improve C-Satisfaction at Same Time
28%
29%
33%
42%
44%
44%
44%
46%
55%
Access Consolidated View of Accounts
Reset UserId / Password
Create and Track a Budget
P2P Payments
Mobile Payment at Merchant
Stop Payment
Activate Credit / Debit Card
Receive, Store Rewards Points
Report Lost / Stolen CardX
X
X
Source: The 2013 ath Power Mobile Banking Study™ 11
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

12. 74%
10%
16%
65%
14%
21%
Wanted to try it My bank suggested it Other
What prompted you to become a mobile banking
customer?
2012 2013
Consumers Are Driving Mobile Adoption, Expectations for Mobile
12
• ‘Right channeling’ means the customer is making the choices – not the bank
Source: The 2013 ath Power Mobile Banking Study™
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

13. Path to Loan Smartphone Tablet Desktop Call Center Banking Center
Check Rate
1
Research / Select Product
2
Apply for Loan
3
Get Help
4
Check Status (Tracker?)
5
Alerts
6
Sign Contract
7
13
‘Right Channeling’ Will Mean Something Different to Each Customer
• Mobile creates more choices but also means of interacting more intelligently
with customer (e.g. alerts, service trackers)
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

14. 38%
11%
27%
28%
40%
None
Credit line alerts
Payment due alerts
Fraud alerts
Low-balance alerts
What kinds of account alerts do you receive through your mobile
device from your bank?
Role for Alerts?
• Potentially instant, pro-active access to customer – timely interactions
— Potential undermined if push alerts, sent in batch mode, not real-time
— 2-way alerts, sent in real-time: More interaction, more trust in ‘mobile’
• Guide customers to optimal channel for them
14
Source: The 2013 ath Power Mobile Banking Study™
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

15. 13%
6%
81%
19%
13%
68%
$1-2 $3+ Not Willing to Pay
2012 2013
What is the most you would be willing to pay per month for the convenience of
mobile banking capabilities?
Added Bonus: Revenue Opportunity – Retail Customers Indicate
Greater Willingness to Pay for Mobile Since Last Year
Source: The 2013 ath Power Mobile Banking Study™
15

16. 19%
13%
68%
11%
52%
37%
$1-2 $3+ Not Willing to Pay
Majority of SBOs Are Willing to Pay for Mobile Banking
Retail Customer SBO
Almost 2 Out of 3 SBOs Are Willing to Pay for Mobile
16Source: The 2013 ath Power Mobile Banking Study™
© ath Power Consulting Corporation. All Rights Reserved. Not for Distribution.

17. Mobile Banking – Moving beyond basic
ROI
It’s no longer enough to simply save your
bank money. Today, you need to deliver top
line revenue from the mobile channel
 Where are we with mobile banking today?
 Why does mobile banking matter?
 How can your bank exploit the mobile opportunity today?

18. Mobile Banking Evolution - The Three Phases
Innovation Cost-Saving Revenue-Bearing

19. Mobile Banking – Why it matters
0
1
0
Internet
50
40
30
20
6
0
2007 2008
Source: ABA, Nielsen Research
2009 2010 2011 2012 2013 2014 2015
The Fastest Growing Channel In Bank History
Mobile
ATM
Call Center
Branch
19

20. Mobile Banking – Why it matters
Branch Call
Center
IVR ATM Online Mobile
$0.08$0.17
$1.25
$0.85
$4.00
$3.75
The Lowest Cost Channel In Bank History
20

21. Mobile Banking - New Channels Changing The Mix
The growth of interactions indicates increased involvement of the customer, giving the
Bank greater opportunity to:
 Steer the customer to the appropriate channel
 Empower the customer to interact through their channel of choice
 Cross-sell and improve customer loyalty
Current Bank Channel Mix Indstry Projections 2013
Source: Zions Bank
Branch,
25.9%
Contact
Center,
7.5%
ATM,
8.0%
Online
Bankin
g51.2%
Mobile
Bankin
g7.5%
Branch,
15%
Contact
Center,
10%
ATM,
15%Online
Banking
47.5%
Mobile
Banking
12.5%
21

22. Mobile Banking - Balance Checking Across Channels
IVR
Transfer
5%
Deposit Conf.
5%
Balance
90%
OLB
TransferOnline App
13.1% .2%
Bill Pay
15.1%
Balance
71.7%
Open Acc’t
1%
Cash Check
16%
Deposit
81%
Branch
ATM
Transfer
Deposit .53%
6.08%
Balance
14.3%
W/D
78.8%
Transfers
10.3%
Bill Pay
0.7%
Branch
1.5%
Balance
91%
Mobile Contact
Center
Replace Card
3%
Transfer
9%
PW Reset
19%
Deposit
9%
History
25%
Balance
36%
22

23. Mobile Remote Deposit Capture: Another
‘right channel’ opportunity
23
• Ask and answer 3 questions
• How many total checks were deposited by clients last year in a branch (small
business and consumer)?
• How many of those clients have mobile banking?
• How many of these clients have mobile banking, but not actively using it? (No
transactions in the last 30 or more days)
• Previous slide showed 81% of our branch interactions were deposit related
• 14% of those interactions were done by active mobile banking users
• Provides an instant opportunity to move deposit interactions to the mobile
channel
• Reduce operating cost
• Possible fee revenue

24. Mobile Banking – Why it matters
The Most Valuable Customers At Your Bank
Source: Zions Bank
OLB
Only
OLB +
Mobile
$450
$350
Annual Profit Per Customer
+29%
OLB
Only
OLB +
Mobile
1.5%
4.0%
Customer Attrition Rate
(63%)
24

25. Mobile Banking – New Areas of Revenue
25

26. Mobile Banking – Select Potential Annual Revenue Per User
$20 $15 $15 $6
$8 $12 $15 $7
$98
26

27. Mobile Banking - Real Revenue....Today
• Increase Customer
Satisfaction
• Improve Cost
Savings
• Drive Top Line
Revenue
Mobile Banking is transforming the way your customers interact
with your bank.

28. Is Mobile Payments The Big Play? Is it another channel?
Given the conflicting interests of issuers, networks,
carriers, OEMs, and merchants, Mobile Payments is an
exercise in ocean boiling.
Phil Schiller
Apple SVP
Marketing
“It’s not clear that NFC
is the solution to any
current problem.”

29. Mobile Payments Industry
• Mobile Payments are expected to grow at a 52% rate over the next four
years, up to over $600 Billion by 2016. Banks need to position themselves
as a mobile payments player.
29

30. • According to Aite Group, the entire payments ecosystem is at risk of
disintermediation or being replaced. This will not happen overnight, but
banks do need to respond:
1. The threat of disintermediation – especially of payment networks
2. Banking services being offered by other players – such as merchants
and mCommerce providers
3. Increasing competition fueling the growth of mobile money from a
complementary channel to a strategic keystone
4. Erosion of the consumer relationship as consumers adopt 3rd party
mobile wallets and come to associate banking with the app rather
then their bank
Disruption and its potential
outcomes
30

31. • Leverage the trusted advantage we have with existing client relationships
making mobile money a seamless part of daily life
• Extend the marketing loyalty strategy to enhance the client’s shopping
experience so that they recognize value and appreciate it
• “Play the field” and develop strategies to collaborate with merchants,
mCommerce players and new intermediaries
The proactive opportunity for
Banks
31

32. Takeaways / Recommendations
32
• Untapped opportunity to leverage ‘always-on’ attribute of mobile
— potential for ‘alerts’, 2-way real-time interaction
— potential for mobile to educate, steer customer to ‘right channel’
• SBOs are more engaged with mobile than retail customers, more willing to pay for it,
but have higher expectations
• Adding new capabilities to ‘mobile’ opens opportunities for ‘right channeling’
• Customers are driving migration to mobile & expectations for it – implications for
‘right channeling’
• Understand your data and identify short and long term opportunities
• Continue to update executives on emerging channel opportunities
• Identify key executive sponsor to help promote ‘right channeling’ opportunities

33. Right Channeling
Matt Wilcox
Senior Vice President and Director,
Interactive Services and Marketing
Michael J. McEvoy
Managing Director
mmcevoy@athpower.com
617-243-9500
Presented by: