WEBINAR Predictions: The Next Three Years In Digital Banking

3. WEBINARPredictions: The Next Three Years In Digital Banking Peter Wannemacher, Sr. Analyst • @p_wannemacher January 14, 2016. Call in at 12:55 p.m. Eastern time

4. Prediction one: Banks will either be reinvented or forgotten.

5. Banks are not Blockbuster… but the long-term threats will be no less real or powerful.

6. Banks face the dual disruptive threats of disintermediation and commoditization Source: Starbucks iPhone app

7. “We’ve been wrong about what our job is in medicine…. we think our job is to ensure health and survival. But really it is larger than that. It is to enable well-being” - Atul Gawande

8. Using a twist on this offers a (potential) vision for the future of banking To enable financial well being.

9. Digital money management will play a critical (and central) role

10. Digital money management will play a critical (and central) role Source: “Put Money Management At The Heart Of Digital Banking” Forrester report

11. Digital money management will play a critical (and central) role Source: “Put Money Management At The Heart Of Digital Banking” Forrester report

12. Digital money management will play a critical (and central) role Source: “Put Money Management At The Heart Of Digital Banking” Forrester report

13. Digital money management will play a critical (and central) role Source: “Put Money Management At The Heart Of Digital Banking” Forrester report

14. Digital money management will play a critical (and central) role Success will depend on the degree to which banking execs and teams weave digital money management into customers’ task flows and everyday experiences! Source: “Put Money Management At The Heart Of Digital Banking” Forrester report

15. Prediction two: The mobile mind shift will continue to reshape bank customers’ behavior and expectations – and act as a catalyst for wider shifts in the market

16. How we define the mobile mind shift The expectation that I can get what I want in my immediate context and moments of need.

17. Execs at leading banks will employ strategies that align with the IDEA cycle

18. Discover zeroed in on a critical mobile moment with its innovative “Freeze” tool

19. But customers will take a while to get over their fears about mobile Among US online adults, the percentage who agree* with the statement “I feel secure making purchases on a…” Base: 14,233 to 30,992 US online adults (18+) who use each type of device Source: Forrester’s North American Consumer Technographics Online Benchmark Survey (Part 2), 2015 *Note: Based on three separate statements, each using a seven-point scale from [1] “Do not agree at all” to [7] “Strongly Agree”

20. Prediction three: The number and impact of cross-touchpoint banking interactions will swell.

21. How we define cross-channel Any instance in which a customer or prospect moves from one touchpoint to another when completing an objective.

22. Cross-channel behavior is becoming prominent among product applicants Among US online adults: Among Canadian online adults: *Cross-channel shopping is defined as researching a financial product via one touchpoint (e.g., phone, mobile app, branch, website) and applying for that financial product via any other touchpoint Source: Forrester’s North American Consumer Technographics Online Benchmark Survey (Part 2), 2015

23. Cross-channel experiences will increase in frequency and impact

24. Cross-channel experiences will increase in frequency and impact

25. Cross-channel experiences will increase in frequency and impact

26. Prediction four: Smart digital execs will target the “shared finances” market. Coworkers, neighbors, acquaintances, etc.

27. How we define shared finances Any situation in which a person acts as an observer of, partner in, or proxy for another person’s finances.

28. Growth in this market is driven less by technology and more by other forces • Complex financial relationships, such as: • Elderly parents • Blended families • Dependent children • Multi-generation households • Pooled financial goals • Other situations Demographic shifts Economic forces

29. Bank customers’ expectations will rise due to their experiences with other firms

30. Bank customers’ expectations will rise due to their experiences with other firms

31. Bank customers’ expectations will rise due to their experiences with other firms

32. Prediction five: Leading digital teams will zero in on personalization to better win, serve, and retain customers .

33. Personalization in banking has generally been lacking

34. Personalization in banking has generally been lacking

35. USAA’s Savings Coach app personalizes based on info such as past behavior

36. USAA then makes specific spending recommendations and next-step actions

37. Prediction six: Digital execs at banks will build ecosystems - and include fintech.

38. Firms are learning from disruptors and building dynamic ecosystems of value R&D Supply Chain Sales Suppliers Customers Marketing Production Source: Forrester’s “Map Your Path To Digital Mastery” Forum

39. APIs enable integration with partners Source: Forrester’s “Map Your Path To Digital Mastery” Forum

40. Another example: Wealthfront’s ecosystem of value R&D Xignite for market data Supply Chain Sales Suppliers Customers Marketing Production Source: Forrester’s “Map Your Path To Digital Mastery” Forum

41. Another example: Wealthfront’s ecosystem of value R&D Xignite for market data Supply Chain Sales Vanguard for ETFs Suppliers Referral Marketing Customers Marketing Apex Clearingfor account opening, funding, trading Production Source: Forrester’s “Map Your Path To Digital Mastery” Forum

42. Wealthfront hit $1 billion faster than Schwab $1 billion Wealthfront Charles Schwab $0 0 6 Years since inception Source: Wealthfront Blog

43. Prediction seven: Real-time will go primetime

44. The transition from batch to real-time will have major implications

45. “Our first implementation of PFM was working on a batch process. We were uploading data at night. If you want to provide effective and accurate hints to customers, you need real-time data. You must be providing feedback in real time.” -Head of eBusiness Using Digital To Empower Employees Alyson Clarke | Principal Analyst November 13, 2014

46. BBVA Compass is partnering with Dwolla to enable real-time payments Source: Forbes.com

47. Five additional predictions • Leading firms will take an iterative, test-and-learn approach to digital strategy and execution • Digital teams will make a big push toward a better use of measurement and analytics • APIs and open platforms will take center stage • Digital execs will move resources to back-end integration and foundational initiatives • The device and digital touchpoint landscape will continue to splinter

48. Recommendations

49. Recommendations • Put in place an iterative approach to digital banking strategy and initiatives • Testing, measuring, and learning are far more important than any org structure or strategy

50. Recommendations • Put in place an iterative approach to digital banking strategy and initiatives • Testing, measuring, and learning are far more important than any org structure or strategy • Refocus on building dynamic ecosystems of value for bank customers • Include fintech and other disruptors