Why and When

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Why and When
The Past
The Future?
New Payment Technology Adoption
Don Cowley Senior Vice President Fiserv EFT
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• Google - isnt that a search engine?

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More than Meets the Eye?
If Google isnt selling search
And Starbucks isnt selling coffee

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and Wal-Mart (among others) is a Financial
Services Company

• ATMs
• POS (with cash back)
• Payroll check cashing
• Express bill payment
• Money orders
• Money transfers
• Gift cards

• Discover cards
• WalMart credit cards
• Credit reports
• Check printing

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. . . is Your Bank or Credit Union Still Just a
Financial Institution?
The Future?
The Past

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because it aint your daddys FI anymore
In The Future, Will That Be Good Enough?
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The Future of Payments

• The future of payments lies with those that can
  deliver content effectively
• Effective delivery Real-time individually
  tailored

FI equivalent so far?
?
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What Might the Future Look Like?

• Near-field technology
• RFID
• SMS

• Keys
• Wallet
• Phone

• Door locks
• Proximity payments
• Branding
• Access to accounts
• Content on demand

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Generation Plastic The Future
P

• Consumers aged 18 - 25
• 60 prefer card for purchases gt25
• 20 more likely than their parents to use cards
• Dont remember when ATMs debit cards didnt
  exist

American Banker, Cards in Brief, August 30, 2006
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What If Cash Wasnt Needed?

• If

ubiquity
Then

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Changes in Retail Financial Services
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EFT Evolution
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Network Evolution

• From many to few
• Branding deals
• National access

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ePayments Market

• Mobile Phone
• Contactless
• Credit
• MCommerce
• PINless debit

• Branches
• Internet
• Biometrics
• Near-field technology
• ACH

• ATM channel
• Cards
• PIN-debit
• Sig-debit
• Prepaid
• Rewards programs

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Channel Preferences
What banking channel do you use most often?
Telephone survey by Ipsos-Reid, 1,000 consumers,
results released by ABA Aug 30, 2006
Aged 18 to 34

• Total Respondents

Branch Online ATM Telephone Mail
32 26 26 5 5
35 33
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Banking - Online Onsite

• Open an account
• Pay receive bills
• Transfer funds
• P2P payments
• Mortgages
• Loans
• Credit cards
• Deposit-At-Home

Is an in-branch visit necessary anymore?
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Web Deposits New Players, New Brands

• At least 40 financial services companies have
  web-only units

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Marketing via Social Networks

• JPM Chase Facebook.com
• Bankers say collaborating with site operators
  is perfect marriage

American Banker, July 14, 2006
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ATM Channel

• Branding deals
• JPM Chase Walgreens, Duane Reade
• Non-surcharge agreements

PNC Joins Small But Growing Trend Toward Free
ATM Usage Digital Transactions, August 28, 2006
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New Debit Options

• Discover PULSE
• American Express to follow?
• Banks and CUs creating their own networks

Debit To Pass Credit Card Volume in 2006 ATM
Debit News, Volume 6, September 14, 2006
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Same Old Rewards?

• Will loyalty rewards become standard?
• Some pulling back on rewards?
• Are airline miles enough anymore?

Citigroup cuts size of cash-back carrot on
card. WSJ, August 22, 2006 New MasterCard Aims
for Rich targeting households with 250,000
annual income Wall Street Journal, September 8,
2006
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Contactless

• MasterCard PayPass
• RFID
• NFC
• JPM Chase Move Shows Progress for Contactless
• American Banker, September 7,2007

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Biometrics

• Trust vs. Intrusion
• 2FA fraud detection
• Authenticate transactions

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Interchange

• Merchant pressure forcing PIN signature rate
  convergence
• MasterCard IPO
• MasterCard publishes interchange rates to
  merchants

Note Interchange per transaction represents an
estimated weighted average of transactions in all
pricing tiers Sources First Annapolis
Consulting analysis and ATM Debit News
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Whats a Phone For?

• Debit
• Micro-debit
• ACH
• Stored value
• Wireless computing
• Music
• Social networks

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Phone Computer Is There a Difference Anymore?
http//www.mobilearth.com
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Every FI for Every Person?

• Checking
• Savings
• Credit
• Debit
• ATMs
• HSAs
• Business
• Wealth Management
• Web Presence
• Home Banking

What Makes Your FI Different?
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Roads? Where Were Going, We Dont Need Roads!

• Where do FIs fit in the future of payments
  equation?
• Is the solution in technology and/or business
  planning?
• Do cultural implications make FIs dinosaurs?
• 3 hot items
• More players - some new, some changing constantly
• New technology
• Evolving demands (real-time, on-demand, safe
  secure)

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Get Connected!

• FIs that connect i.e. understand their
  customers needs and wants . . .
• . . . while providing safe secure access anytime
  from anywhere (connection) . . .
• . . . win customers for life!

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Further Discussion
Don Cowley Senior Vice President Fiserv
EFT 425.653.6369 office Don.cowley_at_fiserv.com