Digital Scale and Active Use: Uncovering New Customer Insights to Improve Marketing

1. Digital Scale and Active Use:Uncovering New Customer Insights to Improve Marketing 2nd November 2017

2. Background Massive gains in Digital Scale and Digital Active Use are essential to achieving 2020 goals We want to get here FTF 3.0 Path to $400M+ ‘20 goal We are here FTF 2.0 Path to $200M ‘18 goal 100% digital front book Wicked Smart Onboarding Drive Digital Scale Predictive Customer Experiences FTF 1.0 Path to $100M ‘17 goal Design great products that minimize the need for servicing All customers actively enrolled in digital Seamless, Real-Time Data Integration Powered by Machine Learning Increase Digital Active Use Every customer job starts digital Predict and help customers avoid servicing need Phone Channel Exceptional, Personalized Service Experiences Increase Digital Job Completion Effortless, Confidence Building Experiences Deliver drop-dead, easy digital experiences 2018 YE goals Current State Phone Channel Exceptional, Personalized Service Experiences • 30M digital • 20M mobile • 1M chatbot • 26.2M Paperless • 23.8M • 12.3M • 0M • 22M Provide safety net for customers • 300M digital tasks • 217M

3. Background Major strides have been made in assessing /sizing a range of servicing behaviors to fuel development of new customer engagement strategies 3 key segments have been identified for this study Customers who have never enrolled Customers who enrolled but never engaged (June 2016 to present) Enrolledbut are no longer engaged (based on inactivity in last 90 days)

4. Project objectives – what we need to learn Uncover conscious and nonconscious drivers of current servicing behaviors • Financial services vs. non-financial services • Banking vs. credit cards • Similarities and differences across channels • Tasks associated with each channel Context: How unenrolled/unengaged customers relate to digital channels Uncovering Conscious Drivers Goals, Motivations, & Mental Biases of non-digital behavior • What are the underlying motives driving non-digital behavior? • What mental models are influencing non-digital behavior: status quo bias, risk aversion, etc.? Knowledge/Beliefs Regarding COF Digital Servicing Options • Intentionality of servicing options • Level of unaided awareness and understanding • Rationale for current servicing choices Uncovering Nonconscious Drivers Sentiments About Enrolling/Engaging with Digital Servicing • Risky vs. safe • Frustrating vs. liberating • Relaxing vs. stressful • Straightforward vs. confusing • For others vs. people like me • For complex vs. simple needs

5. Why The Behavioural Architects?

6. Why The Behavioural Architects? An award winning agency focused on CHALLENGING ourselves to find NEW WAYS TO UNLOCK INSIGHT to drive strategy The judges said: “We were impressed by The Behavioural Architects’ ability to communicate a difficult subject in such an engaging and compelling way. It has built a strong business model centred on a specialist area that it is passionate about, and its client testimonials show it has made behavioral economics accessible and actionable.With its strong financials and focus on challenging the norm, The Behavioural Architects stood out as a clear winner.” The judges said: “This award has been one of the hardest to judge as the strength of the entries has been exceptional. The agency which managed to clinch it demonstrated outstanding staff retention rates, super flexible working and a commitment to widening the skills and knowledge base of its people – well done The Behavioural Architects!”

7. Why The Behavioural Architects? We specialize in applying Behavioral Science and research knowledge to a range of behavioral challenges Experts in understanding customer behavior We bring a specialist and unique understanding of customer behavior, informed by learning from the behavioral sciences. As well as conducting primary research, we build Behavioral Economics Tool Kits and Training Programs for our clients. Context is King The behavioralsciences show us that people are influenced by a host of contextual and subconscious factors. Defining the consumer comparative context and the influences operating within, and fully interrogating the role of subconscious emotional cues, will be critical to identifying how to drive digital engagement. The importance of surfacing subconscious behaviours – looking beyond the rational Up to 95% of consumer decision making and behavior is subconscious, so often consumers are not even aware of what they are doing or what they think of something. Behavioral Economics highlights where we should look for evidence and how best to frame questions in order to get a true understanding of what is driving behavior and appeal. Actionable insights We have proven experience of being able to transform consumer insight into actionable outputs.

8. Relevant Experience: a unique blend of category experience and behavioral science application We have extensive relevant experience of conducting foundational research developing archetypes and exploring deep subconscious drivers of behavior relating to credit cards and digital engagement • Much of our foundational work involves detailed customer journey mapping, exploring decision making and behaviors to identify potential triggers and barriers to desired outcomes and how biases might be influencing behavior • Outputs include identification of where best to influence behavior, as well as specific activation ideas and solutions • Other relevant work includes: • Customer journey mapping to identify potential triggers and barriers within the purchase funnel for an online retailer where interventions were proven to have increased conversion • Foundational work into the psychology of rewards collection to inform the development of a new proposition to drive scheme take up • Foundational behavioral understandingto identify specific triggers/barriers to credit card spending and payment behavior and the role of behavioral biases throughout the decision making process • Bringing to life consumer decision making and behavioral biases in financial decision making to highlight potential risks to customers • Deep dive into insurance renewal decision making to identify potential communications hooks across three customer archetypes • Segmentation work and archetype development

9. Principles of our approach

10. 3 central pillars of the TBA approach 2. UNLOCKING DEEPER INSIGHT – BEYOND THE RATIONAL 3. BE-INSPIRED ACTIVATION RECOMMENDATIONS 1. BEHAVIORAL ANALYSIS& HYPOTHESES We will work collaboratively with you to develop behavioral hypotheses about triggers & barriers to digital engagement and adoption TBA’s behavioral science expertise combined with Capital One’s data analytics will create a powerful foundation for the project. We will use a range of regressive psychological techniques to surface subconscious triggers and barriers. This will include exploring memories & pain points associated with digital enrollment & engagement. Our knowledge of psychology and behavioral science puts us in a unique position to frame questions to decode the different motivations. We will use our behavioral science expertise to develop actionable communications principles to drive digital enrolment and engagement across different customer mindsets.

11. Examples of biases acting as behavioral triggers and barriers to digital engagement (i) What principles might we be able to leverage? Framing Heuristics Status Quo Bias We have an inbuilt bias to avoid change and can get stuck in certain familiar routines or habits. The same information framed(presented or ordered) in different ways can lead to totally different behavioral outcomes. Heuristics are mental shortcutsor rules of thumbthat help us to make quicker, cognitively efficient decisions. We rely heavily on heuristics in a digital environment. What needs are currently being fulfilled by current servicing choices? Howdoes this impact digital engagement, creating inertia to change? e.g. risk aversion How can we frame the benefits of digital to drive engagement, addressing barriers for different customer mindsets? e.g. simplicity & time saving benefits vs. security & peace of mind What short cuts and rules of thumb are customers currently using when engaging digitally in other categories? How can we leverage these to drive digital engagement for Capital One?

12. Examples of biases acting as behavioral triggers and barriers to digital engagement (ii) What principles might we be able to leverage? Cognitive ease Chunking Social Norms Our cognitive resources are limited and making decisions, even easy ones, quickly depletes this finite resource. Sometimes we can be overwhelmed by a goal or process. Breaking it down into steps – chunking –helps to make it manageable and keep users engaged. We look to others ‘like us’ to guideour behavior, using what others do as shortcutfor decision-making. Cognitive Ease Cognitive Strain System 1 is active –intuitive, low effort and automatic A problem exists and System 2 will be mobilized Are current digital communications & journeys streamlined and easy to engage with? Are certain comms or elements of the journey causing cognitive strain? How are we onboarding customers to digital services? Is the journey broken into simple steps? Are customers given feedback to encourage them along? Are there key sticking points? How can we leverage social normsto encourage digital adoption? e.g. ‘xxx customers use our mobile app’ ‘most customers manage their card and pay their bill online’

13. Our way of working – a collaborative approach, working closely with core client teamsOur priority is to be responsive, versatile and involved! Ongoing interaction and update sessions via Zoom video or phone Working together with you as one client/agency core team to meet project objectives and ensure findings are actionable Iterative analysis and sharing to co-create key outputs Where possible, making primary customer research accessible to core team via online viewing, attending face to face sessions or video links

14. Methodology

15. Our approach: A 3-phase methodology grounded in behavioral science 3 2 1 CUSTOMER BEHAVIORAL DEEP DIVE BEHAVIORAL FOUNDATION ACTIVATION Kick off meeting with key stakeholders Digital Detectives: Self ethnographywith 36 customers – via 10-day online research platform Rich understanding of customer mindsets Analysisusing behavioral science tools to identify triggers& barriersfor each customer mindset Immersion in current customer data & insights BEaudit of current digital communications 6 x follow-up face-to-face immersions to deepen understanding& bring to life customer mindsets(2 per segment) Actionable communications principles to drive digital enrollment and engagement for each customer mindset Behavioral hypotheses development & Zoom working session CREATING HYPOTHESES TESTING HYPOTHESES ACTIONABLE OUTPUTS

16. Phase 1: Behavioral Foundation – a robust starting point to focus investigation • KICK OFF MEETINGWITH STAKEHOLDER CALLS • Kick off meetingto brief TBA team and share cross functional perspectives on challenges and opportunities associated with digital engagement • Sharing of key background documents • IMMERSION & AUDIT • TBA review existing Capital One data on digital behaviors and any existing researchinto customer motivations, needs, mindsets etc. • TBA auditcurrent Capital One digital journeys and communications materials using a BE lens • BEHAVIORAL HYPOTHESES DEVELOPMENT & WORKING SESSION • TBA integrate our learning with Capital One’s learning to develop a seriesofbehavioral hypothesesto explore in Phase 2 research • ‘Zoom’ video working session with Capital One team to share and build on hypotheses and finalise scope of Phase 2 research

17. Phase 2: Customer Behavioral Deep Dive – ‘Digital Detectives’ • Recruit 36 x Capital One customers to take part in a 10-day online self-ethnography • Respondents setmissionsto explore triggers & barriers to digital engagement • Avoid direct questioning that risks eliciting overly rational/post-rationalised responses. • Unlock deeper insights using‘behavioral funnel’to guide questioning: • Digital context: Deep dive into existing digital behaviors within financial services and beyond, exploring web & app engagement on mobile, PC, tablet etc. • Understand broader context within which Capital One aims to drive digital engagement • Barriers to digital: Missions to explore reasons for non-engagement with Capital One digital servicing options e.g. status quo bias, negative associations with risk, peak/end memories of previous engagement • Surface barriers to digital engagement, begin to identify different customer mindsets • Digital deep dive: Explore experience of current Capital One servicing choices before tasking customers to engage with Capital One digital tools (web & app) • Further explore customer mindsets and triggers & barriers to digital, surfacing role of behavioral biases e.g. chunking, framing, heuristics, priming, • Deconstruct digital propositions: Explore different ways of framing Capital One digital proposition e.g. safe & secure vs. flexible & liberating vs. easy & simple vs. • Surface further insights into triggers & barriers to digital enrolment & engagement • Capital One team members will be able to view the research in real time – we encourage clients to get involved and share their observations with the TBA team. BEHAVIORAL FUNNEL • 1. Digital context • Existing digital behaviors within financial services and beyond 2. Barriers to digital Motivations & mindsets underlying digital non-engagement 3. Digital deep diveCurrent Capital One servicing choices vs. digital servicing options 4. Deconstruct digital propositions Potential comms strategies

18. Phase 2: Customer Behavioral Deep Dive – Face-to-face customer immersions • Follow-up face-to-face immersions with selected customers from the previous research • 6 x 2-hour in-home sessions filmed with high quality video • Interviews will further deepen our understanding of different customer mindsets and associated triggers and barriers to digital adoption • Video footage will enable us to bring to life: • Key themes coming out of the research • Potential customer mindsets – via video pen portraits • Behavioral biases underpinning key triggers and barriers • 1 Capital One team member will be able to attend each face-to-face immersion session.

19. Proposed sample structure 3 segments (36 customers) • Additional Digital engagement criteria to be agreed upon commissioning • Recruitment from customer list provided by Capital One

20. Recruitment screening criteria (i)

21. Recruitment screening criteria (ii)

22. Phase 3: Activation • TBA ANALYSIS & DEBRIEF WRITING • TBA analyse findings from stages 1 & 2 and prepare a debrief • IN PERSON DEBRIEF AT CAPITAL ONE HQ • Debrief presentation exploring TBA findings, to include: • Foundational insights into digital engagement triggers & barriers for different customer mindsets • Edited videos to bring to life customer mindsets • TBA recommendations for driving enrolment and increasing engagement • Communications & activation thought starters based on leveraging specific behavioral biases

23. Our Team

24. Our Team – a strong strategic team with specialist knowledge of Behavioral Science We are a team of experienced consultants and researcherswith extensive financial experience • Sarah has over 25 years experience as strategic consultantand qualitative researcher. • Prior to starting The Behavioural Architects, she was Global MD of The Futures Company heading up the Qualitative & Innovation team. • Her focus is on using innovative research techniques to better understand consumer behavior and exploring how new behavioral thinking can be applied to client challenges. • Sian has nearly 30 years experience as a marketing consultant and researcher. Her expertise spans qualitative and quantitative research methods. • Prior to starting The Behavioural Architects, Sian was Global CEO of The Futures Company, a WPP group company. • Sian uses a blend of creativity and rigor to unearth foundational behavioral insights to inform product development, innovation and brand strategy. Sarah Davies, Founder Sian Davies, Founder • Sarah and Sian have both been working on Financial challenges for over 20 years. Since launching The Behavioural Architects in 2011 they have led and developed TBA’s work in this sector and have pioneered the application of Behavioral Economics to numerous client challenges, including developing tool kits and training large organizations in the application of Behavioral Economics. • Much of the focus of their work had involved decoding behavioral biases in order to optimize communication and propositions to drive desired customer outcomes.

25. Our Team – a strong strategic team with specialist knowledge of Behavioral Science • Kate joined The Behavioural Architects in January 2016. Prior to joining TBA she spent 3 years at Basis Research where she worked with a range of clients including TSB, EE, and BUPA Global. • Kate is a key member of our Financial Services team and leads work for a number of clients in this sector. She has recently worked on projects involving auditing communication materials through a BE lens, building Behavioral Economics tool kits and training programs and home Insurance journey mapping. • She also has experience of researching customer journeys and communications across a range of sectors. • Ben began his career with Tangible Branding and most recently was working at The Behavioural Architects Sydney, where he was based for 2 years. • Ben has now joined The Behavioural Architects London team, where he is continuing to fulfill his ambition of applying behavioral science to research challenges. • Ben has extensive experience of working on communications challenges relating to life insurance and investment products for a major Australian financial services provider. • He also has experience of developing and bringing to life customer segments. Ben Jones, Senior Strategic Consultant Kate Jones, Senior Strategic Consultant

26. Our Team – a strong strategic team with specialist knowledge of Behavioral Science • Liz has 12 years of global consulting experience and an academic background in Economics with a BA and MSc in Economics from Cambridge and Oxford. • She is Head of our Core intelligence, which is dedicated to furthering the application of the latest Behavioral insights to marketing and research. • This includes the application of Behavioral Science across a wide range of sectors including financial services. Throughout her career she has worked with a wide range of financial service providers and institutions in the UK & globally including several years’ consulting for Allianz and other consulting projects for Zurich, the FCA and CalPERS. Liz Barker, Head of Behavioral Intelligence & Networks – Project Advisor • Since joining The Behavioural Architects, Liz has worked on a multi-year consulting assignment with a major Australian financial services provider focused on leveraging BE to help put the customer at the heart of the organisation. The scope of TBA’s work has included developing approaches to optimise communications and a multi-year programme of training and dissemination of Behavioral Science thinking. • Liz has co-authored over 150 articles on BE and Behavioral Science - including several focused on financial management and decision-making. She monitors developments in the application of BE to financial regulation. Liz is networked with Stefan Hunt who last year set up the FCA’s internal BehavioralScience and Data Science Team. Liz also contributed to the FCA’s discussion paper on Ageing Population and Financial Services published in Feb 2016. The chapter was entitled ‘Behavioural Insights into the Ageing Mind’.

27. Case Study: Building habitual usage of a mobile app Our Challenge To drive adoption and habitual usage of a mobile app PEAK MOMENTS? GETTING TO KNOW THE APP NEW HABIT DEVELOPING? NUDGED TO USE APP LACK OF REWARD DOWNLOADING OUR CLIENTS APP REVERTING TO OLD HABIT? Our client - a global tech company –wanted to drive adoption and usage of a mobile app. The client specifically wanted to uncover potential communications ideas to nudge more habitual usage of the app. A key challenge was the fact that app usage is often automatic and consumers lack awareness of their behaviours and habits.

28. Case Study: Building habitual usage of a mobile app

29. Case Study: Building habitual usage of a mobile app Key Insights and Impact We mapped the user journey to deconstruct app usage habits and identify key behavioral levers that represent opportunities for our client to deploy disruptive communications Deconstructing app rewards Rewards can come from small design and layout optimisations that make a big difference to the consumer experience Exciting consumers via the on-boarding process Onboarding has the potential to instantly connect with consumers, don’t let it go to waste! Establishing the right external triggers Clarify the benefits of the app and increase salience e.g. nudging consumers to move it to their iPhone ‘docks’ Creating powerful internal triggers Tap into the underlying consumer needs and motivations via in the moment disruptive messaging TBA findings and recommendations have been widely circulated, reaching board level stakeholders, and continue to fuel our client’s thinking “Move it to use it”

30. Costing & Timings

31. Outline Project Timings - to be agreed on project commission BEHAVIORAL FOUNDATION CUSTOMER BEHAVIORAL DEEP DIVE ACTIVATION

32. Project Costs: US $82, 788 PLUS expenses Total investment for PO = $116, 538 INCLUDING expenses Expenses Budget (included in total investment figure above) Please allow a budget of $33, 750 to cover travel for 2 trips to USA for 2 team members Expenses will be passed on at cost & kept to a minimum. BEHAVIORAL FOUNDATION CUSTOMER BEHAVIORAL DEEP DIVE ACTIVATION Based on exchange rate of £1/$1.35 US dollars

33. Thank you! sian@thebearchitects.com sarah@thebearchitects.com