Banking Technology: Beyond the Hype Cycle

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Banking TechnologyBeyond the Hype Cycle

• Joe Trafton
• Senior Vice President
• Chief Strategies Officer
• COCC

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Hype Cycle for Banking and Investment Services
Customer Technologies, 2009

• On the Rise
• Pre approved SMS mobile loan technology
• Centralized customer preference profile for
  retail banks
• At the Peak
• Financial services MyPortals
• Financial social networks
• Sliding Into the Trough
• Mobile consumer banking (U.S.)
• Voice verification for call center customer
  authentication
• Customer communications management
• Social network analysis
• Climbing the Slope
• Mobile devices in bank branches
• Branch queue management
• Remote advice in bank branches
• Advanced ATMs and kiosks
• Entering the Plateau
• Remove deposit and payment capture

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• Innovation's Mantra Back to the Future

Now that exotic products are out of fashion, the
next wave of banking innovation may well come
from bread-and-butter staples. Bankers hoping to
distinguish themselves from their competitors
will not find much of a market for the quirky but
ultimately troubled offerings of the past few
years. The pressure to be creative will still be
there manifested through twists on traditional
products. "Right now the banking industry is
very focused on the fundamentals risk control,
trying to make sure customer service is good,"
said Charles Wendel, the president of Financial
Institutions Consulting inc. in New York. "But as
banks become more confident, they will refocus on
innovation, and it'll really come from what the
customer wants, more than anything
else. Experts say that banking companies will
look to develop reward programs to draw in
deposits, and that links between deposits and
other products will likely be enhanced. Bankers
will also become more inventive about how and
where to build branches, and features will be
added to automated teller machines to attract the
unbanked. Expect wealth management products to be
linked more to insurance offerings to offer
customers more guaranteed income streams.
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UN-HYPE
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Most Popular Solutions Sold in 2008

• Regulatory Compliance/Risk Management
• Remote Deposit/Branch Capture
• Document Imaging
• Disaster Recovery

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Remote Deposit Capture

• Sweeping Move to RDS the Story of 2008/2009
• C21 Stopped Check Conversion to ACH
• One Fed Paper Clearing Center
• Consumer Remote Capture

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• RE-HYPE Internet Banking
• MINI-HYPE Mobile Banking
• WHAT WE WANT TO HYPE Payments
• Social Networking
• Data Analytics

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RE-HYPE Internet Banking

• Online Account Opening
• PFM
• P-to-P

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Online Account Opening

• E-Account Opening for Low Cost Deposits
• Economic Pressures Making it a Must-Have
• Open Architecture and Outsourcing Options Make it
  Affordable
• Consumer Adoption Will Drive This Trend

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Personal Finance Management

• PFM Tools a Common Feature
• What it Offers
• Monitor account activity
• Track and categorize spending budgeting
• Community features
• Names to Know
• Mint
• Geezeo
• Wesabe
• FinanceWorks

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MINI-HYPE Mobile Banking
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Mobile Banking in 2009

• Early iterations will mostly include simple info
  service
• 121M households (88) to have mobile phones by
  2012 (Forrester)
• 35M mobile users in 2010 (Aite)
• 79M Gen Y (10-31) ready for mobile
• Predictions are that the adoption curve will look
  like 1995-2004 take-up of online banking
• Economics arent firm, but land grab logic is
  operating!

2009
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Mobile Banking
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Who Uses Mobile Banking
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IS THIS HYPE? Mobile Remote Deposit Capture
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What We Want to Hype

• Payments
• Social Networking
• Data Analytics

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Payments

• Mobile Payments
• Contactless Payments
• Alternative Payments

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Mobile Payments
The next couple of years will bring several
phases in mobile banking with the end game being
the use of the cell phone as a virtual wallet.

• Bill payments via the cell phone
• Peer to peer payments between mobile devices
  (with PayPal leading the charge)
• Non contact POS transactions where you receive a
  PIN on your phone and enter that into a terminals
  instead of swiping a card

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Mobile Payments

• The ultimate end game is a near field
  communication chip that can be waved over a
  device. But its a chicken before the egg
  question.

Will proliferation of enabled handsets require
retailers to invest in the equipment or will
retailers gain customers by being first movers in
accepting these payments?
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Alternative Payments

• NACHA Pilots
• EBIDS
• SVC
• DCT
• Competition from Third Parties
• PayPal
• Obobay
• Nokia
• Intuit
• Dairy Queen

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P2P Transfers

• People Pay Each Other Electronically
• Customer Acquisition and Retention
• Who Are the Players
• MasterCard and CashEdge
• Nokia Money and Obopay
• Obopay Family Account

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What We Want to HypeSocial Networking

• Definition
• Social Networks
• Social Networking for FIs

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What We Want to HypeSocial Networking

• Whether you call it Social Media, Social
  Networking, Web 2.0, Building Community, User
  Generated Content, Trusted Networks, Social Web,
  the Intelligence of the Masses, its all about
  the same thing, combining and utilizing old and
  new digital technologies to communicate better.
• Social Media is a convergence or coming together
  of all the computer, PDA, Internet and mobile
  technologies to form a larger cohesive,
  integrated technology for two way interaction,
  communication, and collaboration.
• Social Media content is created, utilized,
  distributed, and perpetuated by the users
  themselves through Instant Messaging (IM),
  discussion or message boards / chat rooms /
  forums, communities, bookmarks, wikis, web pages,
  blogs (textual weB LOGS), Podcasts (audio), Vlogs
  (Video web LOGS), music, video and photograph
  sharing web sites.

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Social Networking
A new convergence of improved web applications,
better development standards, and enhanced
interactions all supported by a critical mass of
people online.

• Gen Y plugged in with gt79M users
• Person-to-person lending
• Business model is still unclear, but we know it
  needs to facilitatelong-standing relationships
  withthe customers.

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Social Networking Networks

• MySpace, FaceBook, Linkedin, Twitter
• Virtual Environments SecondLife, Keneva, There
• Gaming Warcraft, Halo3, FlatOut 2
• Blog Blogging web sites (Blogger.com,
  GoingOn.com)
• Blogging Platforms (WordPress Joomia)
  BlogTalk Radio

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Social Networking

• Enhanced web services may slowly chip away at
  aspects of your business.
• Paypal Consumers and businesses can securely
  transfer funds between one another.
• Will DDAs always be needed and will banks forever
  be necessary middlemen for payment transactions?
• The web will always be a natural fit for
  financial services. If security and trust can be
  maintained, the detractors to the web are
  virtually nonexistent.

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Social Networking for FIs

• Blogs, Podcasts, Wikis
• Customer Listening
• Advocate Customers

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Social Networking

• Any Measurable Business Benefit?
• Money is Being Spent
• Opportunity

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Questions?
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Thank You