Afs Mobile Banking Final 2

7/29/2019 Afs Mobile Banking Final 2

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Mobile Banking:Will This New Banking Channel be

Evolution or Revolution?

Bob Landry, Vice President Banking Group

September 12-14, 2010

AFT 2010 Annual Meeting


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Agenda

How does mobile expand / improve

the multi-channel delivery capabilities

now offered by financial institutions.

How is the mobile channel evolving,and its impact on existing channel

volumes.

What are the unique opportunities

that mobility and always on availabilityoffer to banks to build relationships

and profits.

2 Mercator Advisory Group 2010
http://rds.yahoo.com/_ylt=A9G_bF.QzBhLCBsAsT2jzbkF/SIG=12hp4co1g/EXP=1260002832/**http:/img518.imageshack.us/img518/3797/decisionmakingwe7.jpg


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Bank Delivery Channels Are the Key toCustomer Satisfaction

CustomerBanker

CRM - Inside Out CEM - Outside In

Interaction

Customer Knowledge

Segmentation

Profitability

Demographics

Behavior

Life Style

Next Best Product

Customer Satisfaction

Loyalty

Advocacy

Brand Promise

Measurement:

Across Channels

Within Channels

By Process

Mercator Advisory Group 2010


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Companies With High Satisfaction ScoresAre Worth Significantly More

Average Market Value Added - High & Low ACSI Firms

Source: ACSI, MVA from Stern Stewart & Co

MVA = Market Value Added measures the difference between the market value of a firm (debt & equity) and the amount of Capital Invested



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BRANCH Office

71%

80%

75%

73%

69%

60%

46%

15%

45%

Availability of mobile (phone)

banking

Convenience of ATMs to

workplace

Convenience of branches to

workplace

Convenience of ATMs to

home

Ability to access account

online

Convenience of branches to

home

Interest rate/APY on the

account

The financial strength of the

bank

Other fees and terms

associated with the account

Convenient

To

Delivery Channels Are Important BankSelection Factors

Importance Of Factors In Selecting A Bank

For Checking Or Savings Account (all ages)

Source: Mercator Advisory Group Primary Research 2009

ONLINE

ATM

MOBILE

ATM

Home

Office

NA

NA

Channel


BRANCH Home


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New Channels Have NOT Reduced CostThey Have Increased Convenience

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Branch Teller Branch Sales Bank ATM & Cash Dispenser

Merchant Cash Dispenser Contact Center Agent Interactive Voice Response

Internet Banking Mobile Banking

Work Units

(000)

Source: FDIC, Mercator Advisory Group

ATM &

Cash

Dispenser

Telephone

Branch

Online

4.5% CAGR

1990 - 2000

3.1% CAGR

1980 - 1990

Delivery Channel Growth

1980 2009 3.8% CAGR

Delivery Channel Capacity Growth 1980 - 2009

3.8% CAGR

2000 - 2009



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Internet Channel of the Future BUT Overall Access toInternet Limits Access and Adoption

Source: Pew Internet & American Life Project, February 3, 2010http://www.pewinternet.org/Infographics/2010/Internet-acess-by-age-group-over-time.aspx

December

2009


Change in Internet Access By Age Group in US

2000-2009

74%


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Internet Adoption Has Slowed J ust LikeATM & Contact Center Growth Did

17%

30%34%

39%44%

49%53% 55%

57%

5%

9% 9%12%

15%18%

21% 19%24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2001 2002 2003 2004 2005 2006 2007 2008 2009

Have you ever done any banking online?

Did you do any banking online yesterday?

2001 2005

27% CAGR

2006 2009

6% CAGR

CAGR = Compound Annual Growth RateSource: Pew Internet & American Life Project, Usage Over Time, http://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspx, Mercator Advisory Group


Online Banking Adoption of Internet Users 2001 - 2009
http://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspx


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How is the Mobile Channel Evolving

Multi Channel Integration

Customer Centric

Multi Channel Experience

http://rds.yahoo.com/_ylt=A0WTbx4E9KZL7VMA.8GjzbkF/SIG=12kgnscbm/EXP=1269319044/**http:/www.call-center.net/images/MPj04092880000%5b1%5d1.jpg


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J ust Like Internet, Mobile Device OwnershipLimits Access & Adoption

17%

47%

29%

12%

21%

43%

31%

12%

Smart Phone

Device

Voice & Text

Messaging Cell

Phone

Basic Voice Cell

Phone

Do Not Own a

Phone of Any

Type

2009 2010Source: Mercator Advisory Group CustomerMonitor Survey Series June 2010

Mobile Device Ownership By Device Type(Base = All Consumers - June 2010)



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Cant Ignore Non-Smart PhoneAlternatives In Near Term

Key segments indicate theyare likely to purchase smart

phone device In Next 12

Months

Smart phone adoption ratehyped unless carriers change

cost structure

Cost & acceptance will

impede further rapid growth

Early adopters saturated next

year

Data plan cost inhibits further

growth

27%

17%

12%14%

0%

5%

10%

15%

20%

25%

30%

35%

Age 18-34 Income $100k+ College degree Use text

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013 2014 2015 2016

Smart Phone Other Phones & No MobileSource: Mercator Advisory Group CustomerMonitor Survey Series June 2010

(base = own mobile phone, probably or definitely will purchase)

Key Segments Will Purchase

Smart Phone This Year

Overall Adoption of Adult Population

Will be Further out Than Many ProjectBase = All adults



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Telephone Delivery Channels Will Get A NewLife With Mobile IVR Mobile

0

100

200

300

400

500

600

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Contact Center Agent Interactive Voice Response Mobile Banking

Source: Mercator Advisory Group

Delivery Units

(000)

13.4% CAGR

1990 - 2000

3.5% CAGR

2000 - 2009

2.6% CAGR

2009 - 2015

46.8% CAGR

1980 - 1990



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What Are The Unique Opportunities ThatMobility Offers

Multi Channel Integration

Customer Centric

Multi Channel Experience

http://rds.yahoo.com/_ylt=A0WTbx4E9KZL7VMA.8GjzbkF/SIG=12kgnscbm/EXP=1269319044/**http:/www.call-center.net/images/MPj04092880000%5b1%5d1.jpg


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Adoption Quality Experience

Continuous Promotion & Education

Cross Sell Message Targeting

Preferred Channel Pricing

Usage and Relationship Value

EBPP

Expedited Payments & eBills eMail and Mobile Alerts

Personal Financial Management

Consumer Check image Deposits

Adoption

Number ofCustomers


High

Low

OLB Strategies to Increase Adoption,Access, Usage and Relationship Depth

High

Online BankingStrategies

Mobile Phone

AccessAlways On, Convenience,

Immediacy, Location Awareness



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Adoption Quality Experience

Continuous Promotion & Education

Cross Sell Message Targeting

Preferred Channel Pricing


EBPP

Expedited Payments & eBills eMail and Mobile Alerts

Personal Financial Management

Consumer Check image Deposits

Adoption

Number ofCustomers


High

Low

Mobile Is Necessary to Increase Online BankingAdoption, Access, Usage and Relationship Depth

High

Online BankingStrategies

AccessAlways On, Convenience,

Immediacy, Location Awareness

New CapabilitiesMerchant Discounts,

P2P



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Mobile Banking Offers By Type

21

13

19

12

9

6

98

5

3 4

1

4

6

3

7

0

5

10

15

20

25

Mobile

Banking

SMS Text Browser Smart Phone

App

TotalTop 10 Banks

Banks 11-20

Banks 21-30

Mobile Banking Installed Base by Solution Type(Top 30 Retail Bank Web Sites 7/2010)


Source: Mercator Advisory Group 7/2010


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Mobile Banking Alternatives Offered

6

2

1 11 1

3

5

1

4

2

3

0

1

2

3

4

5

6

7

Offers 3 Offers 2 Offers 1 No MobileBanking

Top 10 Banks

Banks 11-20

Banks 21-30

Number of Mobile Banking Alternatives Offered(Top 30 Retail Bank Web Sites 7/2010)




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Banks Are DeployingNew Online Banking Capabilities

2

7

17

21

0 5 10 15 20 25 30

Home Check Image

Deposit Capture

Personal FinancialManagement

Electronic BillPresentment - eBills

Mobile Banking

Alerts

Online Banking Capabilities(Top 30 Retail Bank Web Sites 7/2010)

Number of Banks



Mobile

Enhanced

MobileFocused

Mobile

Focused


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Deeper Relationship

Increased Usage

Bill Payment

& Presentment

Personal

FinancialManagement

Basic

Online

Banking

Control

YourFinances

Manage Your

Net Worth

New Capabilities Are KeyTo Expanding Usage & Relationships

Electronic

Bill Payment

Bill Presentment

eBills

P2P &

Bank Transfers

Home Check

Deposit Image

CaptureTransfers

Account

AlertsBalance

Inquiries

1

2

3


Achieve

YourGoals


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Mobile Applications For Routine FinancialTasks Are More Openly Received

24%22%

19%

14%

Receive electronic

coupons on my phone

from merchants I select

that I could redeem

Check my bank

account balances using

my mobile phone

Receive bill payment

reminders through text

alerts on my mobile

phone

Transfer money

between my bank

accounts using my

mobile phone

Openness To Mobile-Based Financial Applications(base = own mobile device, top 2 box agreement ,excludes current app users)



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Alert Usage Remains Stable; More CommonWith Smart Device Users

92% 90%

8% 10%

2009 2010

Do Not Use Alerts Use Alerts

12%

21%

11%12%

16%

23%

13% 13%

Age 18-33 Use Smart

Phone

Use Text $100k+

Income

2009 201 0

Use Text Alerts From Banking Or

Credit Card Providers(base = own mobile phone, excludes dont know)

Segment Percentages Using Alerts(base = own mobile phone, excludes dont know)

Source: Mercator Advisory Group CustomerMonitor Survey Series June 2010



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Mobile Security Confidence Increases WithExperience, But Remains Low Overall

39%

15%

49%

39%

12%

46%

Not Confident

(bottom 3 box)

Mid-Range Confident (top 3

box)**

2010 2009

25%

15%

35%

26%24%

18%

31%

22%

Age 18-34* Use smart

device

Use text** Use text

alerts**

2009 2010

Confidence In Mobile Phone Security

For Use In Payments(base = own mobile phone, 10 point scale)

Segments That Were Most Confident

Percentage Indicating Top 3 Box Confidence(base = own mobile phone)

SecurityMost Important ConsiderationWhen Selecting Payment Type

Source: Mercator Advisory Group CustomerMonitor Survey Series June 2010



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WhoP

ays

What is the P2P Opportunity?

Consumers Businesses Government

Consumers C2C C2B C2G

Businesses B2C B2B B2G

Government G2C G2B G2G

Who ReceivesPayment Types

Paper Instruments Cash

Check

Payment Cards

Debit Credit

PrepaidOther

Online Bill Payment Bank account Debit

Source: Federal Reserve Survey of Consumer Payment Choice 2008

Cash Monthly Usage - 28.3 TX: 17 Retail Goods, 5.2 Other Services

Convert a portion of other services to electronic


C h i C


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Most Cash Transaction are Consumer toBusiness P2P Opportunity Small

131.4144.9

166.5

13.4 14.8 170 0 1.50

20406080

100120140160180

2002 2007 2012(E)Consumer 2 Business Consumer 2 Consumer Cash

Consumer 2 Consumer Electronic (P2P)

US Consumer 2 Consumer Payment Transaction VolumeBillions Tx



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Payment Acceptance Based On Attributes

Solution Attribute Solution Attribute DescriptionAcceptance Is the recipient willing to take it? How easy is it for the

recipient to receive funds?

Convenience

(Accessibility)

Are both sender and recipient able to connect to the

process?

Speed ToSpendability

How soon is the recipient likely to have irrevocable useof the funds?

Cost What are the fees to the sender, the recipient, or both?

Risk How reliable is the transmission mechanism? What is

chance of non-delivery?

Security What is chance of theft or misdirection of the payment?

Bi-directional Can payments be sent in reverse?

Currency

Capability

Can value be delivered in different currency? How many

currencies?

Solution Attribute Solution attribute description Mercator Advisory Group 2010

C h O t f P2P Alt ti O ll


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Cash Outperforms P2P Alternatives Overalland For Top 4 Criteria

0102030405060708090

Cash Check A B C D EAll Attributes Top 4 Attributes


USAA Pi iPh APP f


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USAA Pioneers iPhone APP forConsumer Check Image Deposits


Ch Off iPh B d


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Chase Offers iPhone BasedConsumer Check Image Deposits



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Thank you!

Questions

Afs Mobile Banking Final 2

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