Retail Mobile Channel Market Assessment

1
Retail Mobile ChannelMarket Assessment Strategy

• Eskander Matta
• Senior Vice President
• Internet Services Group

2
Overview of Wells Fargo

• Wells Fargo Bank
• Powerful distribution approximately 6,000 stores,
  the Internet and other channels across North
  America and elsewhere internationally
• 549 billion in assets
• 167,500 team members across 80 businesses
• The United States 25th largest employer

• Wells Fargo Online
• 9.46 million active online consumer customers, up
  14.3 percent from prior year, serving 64 percent
  of consumer checking accounts
• 4.7 Online Money Movement customers, up 19.3
  percent from prior year
• 950,000 active online small business customers,
  up 19.4 percent from prior year
• The most heavily used channel by our customers
  with 70mm online sessions per month
• Accolades
• 1 in overall online retirement experience,
  Change Sciences Group (September 2007)
• Received 2007 Business Banking Award from
  Greenwich Associates for excellence in customer
  satisfaction with online banking services for
  small businesses (September 2007)
• Named a top 10 online innovator in Institutional
  Investors Online Finance 40 (August 2007
• Received Best Integrated Consumer Bank Site and
  Best Corporate/Institutional Web Site Design,
  regional sub-category awards, Global Finance
  (July 2007)

Deposit Footprint 23 States Mortgage
Footprint All 50 States
Note Wells Fargo Figures as of Q3 2007
3
Increasingly ubiquitous and always with you,
mobile devices are able to do more and more
Mobile Phone Penetration as of U.S. Population
2003 - 2011
Key Trends

• Mobile phones are ubiquitous with 80 mobile
  penetration
• Always with you, it takes only 6 min to realize a
  mobile phone is missing vs 18 hours for a credit
  card
• Competitors (BofA, Citibank, Wachovia, and Chase)
  have launched mobile banking services in 2007
• The mobile channel could extend our reach into
  certain customer segments
• Diversity
• Youth/Student
• Underbanked
• Mobile professional

Mobile Data Penetration is 60 of mobile
subscriber base
8 in 10 Americans have a mobile phone
Percent of the U.S. Population
Source Qualcomm / Celent 2007, Forrester,
Informa Telecoms
4
There are three primary ways customers are
accessing data using their mobile phone
Source Telephia, Celent 2007, Telephia /
ComScore, CTIA
5
Each has strengths and weaknesses which drives
differences in usage
High
Complexity of Task Security
Low
R e a c h
Low
High
6
In 2007, Wells Fargo moved quickly to attain
market leadership and gain learnings
Overall Approach
Deliver all three modalities that customers use
and expect
Text
Downloadable Application
Browser

• Enablers for rapid delivery
• Focus on limited but key functionality
• Dedicated team
• Rapid iterative development environment
• Simplified integration with 3rd party technology

9/07
10/07
12/07
06/07
12/06
7/07
Launches
7
Early Mobile Banking results are encouraging
Mobile Browser
Text Banking
Customer - July 24, 2007 Small Business Sep
17, 2007
October 22, 2007

• Active 66 Browser Users
• Average browser sessions/user/week 2.3

• 83 of all customers enrolling in mobile banking
  after the 10/19 launch included the Text Banking
  Service.

8
Customers find Mobile Banking very useful
Killing time I am waiting for the bus. This is
where some nice mobile budgeting tools mentioned
on the features list would come in handy so I
could kill the time efficiently.
Top of mind On the bus checking to see if direct
deposit went through yet.
When 24/7
Time Sensitive Checking account to see if I can
afford an expensive bottle of wine/also not
having to use the Citibank ATM and pay fee.
Location Sensitive I was at my spa when I
decided to check my account to see if I could
splurge on a 45 upgrade of my services that
morning.
9
This year there has been a lot of buzz, negative
positive, around mobile banking the truth is
somewhere in the middle
Future of Mobile Banking and Payments
Empty

• We hate to rain on this parade, but heres the
  reality Todays consumers still arent very
  interested in mobile banking. Forrester, Sept
  2007
• "Sit on the sidelines. Theres no rush to bring a
  mobile offering to market. Forrester, Sept 2007

Our Perspective

• Can deepen and extend reach in some segments
• Beginning to be expected by some segments for
  basic servicing
• Relevant to enhance existing channel
  relationships
• Customer preference convenience
• Like online, people dont see it as necessary
  until they start using it

Half Full? Or Half Empty?
Full

• We consider that the active base of mobile
  banking users in the US will rise to nearly 35
  million users by the end of 2010. Aite Group,
  2007
• In 2010, the equivalent of 17 million households
  will use some form of mobile banking. Celent,
  Sept 2007

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Potential value proposition of Mobile Banking

• Customer Retention
• Providing convenience
• Competitive parity
• Reduced servicing costs by less use of the phone
  channel
• Check balance via mobile vs calling
• Reduced risk fraud loss
• One-time password (out-of-band)
• Strong downloadable auth
• Fraud Alerts

• Customer Acquisition
• Youth / Students
• Underbanked
• Others . . .
• Usage revenue
• P2P
• Quick Payment
• Mobile Contactless

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The strategic value of Mobile to Wells Fargo
Delivering on When, Where How
WHY

• Time sensitive activity
• Top of mind
• Killing time
• Location sensitive

• WHEN
• 24/7

Motivators for adopting

• On the commuter train
• In line at the retail store
• On break from work
• Between classes
• While traveling

WHERE Anywhere

• Based on a customers preference for Text,
  Browser or Application

HOW
Q Which are the 3 most important reasons that
explain why you are likely to set up and use this
service in the first 12 months?
Source Wells Fargo Research, March 2007.
12
Wells Fargo and external research shows that
there is adoption interest
Research Activities Adoption Interest

• Wells Fargo Survey 46 Very or somewhat
  interested
• External Survey 29 Definitely or probably use

External Adoption Survey
Wells Fargo Customer Adoption Survey
Source Wells Fargo Research, March 2007.
Source Compete, May 2007
13
Customers are most interested in doing basic
banking tasks via mobile
Wells Fargo Customer Survey Likely Adopters

• Top Ranked Activities
• Checking balances
• Monitoring recent account activity
• Funds Transfers

Q How interested or disinterested are you in
performing these banking tasks via your mobile
handheld device?
Source Wells Fargo Research, March 2007
Source Javelin, October 2007
Source Forrester, September 2007
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We believe that mobile banking could allow us to
deepen extend our reach into certain segments
Mobile Data Everything non voice SMS/MMS,
Mobile Web, IM, VoIP, Downloadable application,
etc.
Source Telephia, Q4 2006, Celent May 2007,
Javelin, Oct. 2007, Forrester, Feb 2007
15
Mobile is also attractive for the small business
segment

• Possible Small Business Customer Functionality
  Needs
• Multiple users with different access levels
• Expense tracking with CFO / controller log-in for
  approvals
• Workflow tracking
• Information retrieval (can be real-time)
• Currency exchange

Example Approve, edit and review payments on the
fly.
Source Barlow Research Associates
16
In the future, browser download will also be
ubiquitous and the three will be tightly
integrated

• Get text message click on it to launch
  application to address servicing need

• Download application for a specific task from
  mobile browser

• P2P via app triggers text message notification to
  the recipient

• Get text message click on it to launch
  application to address servicing need

• Receive text message with link to download
  application

• Signup for text alerts from a browser

• Receive actionable text with a link to browser to
  check real time status

Call me
V O I C E Push to talk
Voice to text
17
The Next Stage this is what our customers could
be doing in the future.

• Road Warrior
• Mr. Smith
• Wells Fargo Mobile for managing accounts and
  paying bills online.
• Mobile mySpending Report (big picture view of
  account activity by mobile phone).
• Pays for goods and services using Visa payWave.
• Receives electronic receipts from merchants while
  on the road.
• Mobile boarding pass.
• Allows entry into the offices he supports and
  hotel rooms.

• Youth -
• Jones Family
• Receive allowance via P2P.
• Pay friends via P2P.
• Spend using payWave functionality.
• Look forward to Merchant Specific offers for
  discounts.
• Holds phone to smart posters at the movie theater
  to download movie previews.

• Day to Day User -
• Mrs. Mahal
• Wells Fargo Mobile for managing accounts, global
  remittances back home and bill payments.
• Pays for goods and services using Visa payWave.
• Uses phone for access into her office.
• Holds phone to smart posters to obtain latest
  train schedules for commute and fare payment.