Visions of the Future Defining the Future of Banking Cleveland Council on World Affairs Jeff Carter

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Visions of the Future Defining the Future of
BankingCleveland Council on World AffairsJeff
Carter Center for Future Banking Executive

• November 21, 2008

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When it comes to the future, there are three
kinds of people those who let it happen, those
who make it happen, and those who wonder what
happened. (John M. Richardson, Jr.)
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Unparalleled Franchise
Differentiators
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Differentiators
Leader in Cornerstone Products

• 14 Retail deposit market share

Deposits
Credit Debit Card

• 8 Direct to consumer mortgage market share
• 11 Home equity market share

• 20 US credit card market share
• 17 UK credit card market share
• 17 debit card market share

Debit share as of 2006, all other share data as
of Q4 07
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Where Customers Want and Need Us to Be
How We Grow
1M Users Can reach 75 wireless subscribers
Customer
24M Active Online Users
2.6B Contacts
18,500 ATMs
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Innovative Products and Services
How We Grow
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The emergence of financial services as
innovators?
Emergent Innovators
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Financial Services Representation in Business
Weeks 50 Most Innovative Companies (2005 2008)
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15
25
35
45
50
2005
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The Outstanding Corporate Innovator (OCI) Award
2006 OCI Winner

• For the past nineteen years, PDMA has presented
  the OCI award to organizations that both
  exemplify the spirit of innovation and
  demonstrate the ability to consistently transfer
  their creative ideas into successful new products
  and services.
• The basic requirements for receiving this award
  are
• Sustained success in launching new products over
  a five-year time frame.
• Significant company growth from new product
  success.
• Well defined new product development practices
  and processes that can be described to others.
• Distinctive innovative characteristics and
  intangibles.

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There is no doubt we are experiencing
unprecedented change.
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How fast do things change?
Unprecedented Change

• Costs For Storing 2 File Cabinets Of Scanned
  Documents, Or 1 Gigabyte Of Data
• 1992 1,000
• 2002 2.53
• 2010 0.01 est
• Costs For Storing 2,000 File Cabinets,
• Or 1 Terabyte Of Data
• 1992 1,000,000
• 2002 2,500
• 2010 21 (est)
• Based On Storage Keeping Pace With Moores Law .
  . .
• The iPod of 2015 will come pre-loaded with every
  book, movie and song ever recorded

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Historic levels of growth
Unprecedented Change

• It took 100,000 years 300 generations . . .
• Domestication of animals
• Invention of money
• The craft system of mass production
• The rise of the city and modern state
• Invention of the steam engine, internal
  combustion engine, atomic power
• The telegraph, the telephone, motion pictures and
  television, flight
• The computer, the internet, wireless telephony
• The birth of representative democracy, common
  law, and market capitalization

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Historic levels of growth
Unprecedented Change

• . . . To arrive at in 2001
• An Integrated, Networked Market Of
• 1 Billion Human Beings

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Historic levels of growth
Unprecedented Scale

• 6 years later, in 2007, the 2nd Billion arrived
• 700,000 new people join every day
• Sometime in 2011 the 3 Billionth person will join
  the networked economy roughly 50 of the worlds
  population

• This massive growth in networked consumers will
  not be
• Homogenous
• Predictable
• Static

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And speed.time to 1mm users
Unprecedented Speed

• Quicken 70 months
• BAC Online Banking - 36 months
• eBay 30 months
• BAC Mobile Banking 12 months
• Facebook 10 months
• iLike 3 days

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Industry pool shifts
Unprecedented Disruption
Drivers for change

• Disruptive Technology
• Changing consumer behavior
• New entrant in marketplace
• Regulatory pressure

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Time for an industry shifting move
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First of its kind research center
Vision for the Future

• One year ago, Bank of America began working with
  MIT on a vision for creating a first of its kind
  Center to explore the future of the Banking
  industry.
• On April 1, 2008, Bank of America announced a
  joint venture with the MIT Media Lab to
  collaborate on the Center for Future Banking. The
  C enter will explore new ideas in banking by
  inventing technologies that reveal and leverage
  insights across a wide range of physical and
  social scales.
• The MIT Media Lab was chosen because it applies
  an unorthodox research approach to envision the
  impact of emerging technologies on everyday
  lifetechnologies that promise to fundamentally
  transform our most basic notions of human
  capabilities.

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First of its kind research center
Vision for the Future

• Media Lab unique in the world technologies that
  disrupt industries (publishing, music, mobile),
  transform societies and improve the quality of
  life everywhere
• 100 companies, 400 research activities, most
  have been here for 10 years, meaning we are very
  late to the game
• 8 themes 5-10 activities each 30 of the
  worlds premier research lab working on behalf of
  Bank of America and the Banking Industry

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Research Agenda
Vision for the Future
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With research can you predict the future?
Final Question

• Sometimes predictions do come true.
• A future device for individual use, which is a
  sort of mechanized private file and library. . .
• First (one) runs through an encyclopedia, finds
  an interesting but sketchy article. . .
• Next, (one) finds another pertinent item, and
  ties the two together. Thus (one) goes, building
  a trail of many items. . .
• Wholly new forms of encyclopedias will appear,
  ready made with a mesh of associative trails
  running through them, ready to be dropped into
  the (device) and there amplified

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Raising the bar
Closing

• Bank of America continues to invest in innovation
• Success in the future will require new levels of
  collaboration
• Customers will be a part of this collaboration
  and an integral part of a core transformation
  strategy
• The game has fundamentally changed

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