Payments Strategy Research Program: 2011

1. Payments Strategy Research Program: 2011 Research and analysis from McKinsey’s GCI office For more information: David Stewart david_stewart@mckinsey.com (312) 795-7324 CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited

2. McKinsey’s GCI office will execute four multi-client studies in 2011 focused primarily on the impact of new regulatory changes Study Date Summary Fees* US Payments Map Feb • Comprehensive market sizing & trend analysis, including transaction, spend & revenue forecasts • Data tools and/or written deliverables to support business planning and strategy execution $35k+ Regulatory impact on the retail payments business Mar • In-depth analysis of regulation’s intended and unintended consequences on the market • Includes “Durbin,” Reg E/DD, and other regulations plus analysis of potential / pending legislation $10k Regulatory impact on the commercial payments business Apr • In-depth analysis of both consumer and commercial payments regulation on cash management, SME banking, acquiring and commercial card issuing • Includes Reg Q repeal, relevant consumer regulations, and potential / pending legislation $10k Regulatory impact on payments infrastructure May • Insightful analysis of the operational impact of new regulatory changes across retail and commercial payments • Case study insights and recommendations about operations and technology implementation $10k * Package discounts are available.

3. Overview The US Payments Map is a comprehensive, data-rich analysis of current and future trends in the US payments market. It reflects McKinsey & Company’s latest thinking on the size, direction, and critical trends of the US market. The Map includes estimates of fee income by product, net interest income, expenses, transaction volume and spend across all sectors of the payments market, including consumer and commercial payment services. It synthesizes the best available research, analysis and expertise into a single source for definitive industry insights. Clients use the Payments Map to benchmark their own performance against the market and as a fact base to support their most critical strategic initiatives. Deliverables Data tools for business case modeling and forecasting. User-friendly pivot tables allow robust querying to support mission-critical analyses. Summary report of US payments trends – an insightful overview of key trends in consumer and commercial payments markets, including forecasts through 2014. Scheduled Delivery: February 2011 Fees Reference year (2009) analysis and 5-year forecasts: Report (PPT)……………………………………….$15,000 Data tools (XLS) 2009 revenues, costs, transactions, flows....$35,000 20014 revenues, transactions, flows…….....$30,000 Additional data series...........................Call for price US Payments Map – Profit Pools, Forecasts, and In-Depth Analysis

4. Overview New regulations are causing banks and other payments providers to rethink their business models. A “new normal” has emerged as evidenced by BAC’s $10.4 billion “goodwill impairment charge” in Q3 2010 in anticipation of interchange price regulation. Regulation and other profit pressures, such as continued low interest rates, have sent banks in search of value propositions for which consumers are willing to pay. New regulations create new challenges for alternative payments providers whose success depends on a wide margin between debit and ACH clearing fees. They create both risks and opportunities for nonbank intermediaries whose profits depend on payments pricing arbitrage and their attractiveness to the unbanked or “underbanked.” This report will detail the likely impact of new regulations on consumer checking, credit card, and prepaid businesses. We will also examine the risks of further shocks to the system from litigation and further legislation. Among other issues, we will analyze the likely impact of The Federal Reserve Board’s interpretation of Dodd-Frank Act’s Durbin amendment and the threat of further regulation, e.g., additional measures by the Consumer Protection Bureau to curtail overdraft fees, credit card interchange regulation, etc. Deliverables: Written report (PPT) of findings & analysis. Scheduled Delivery: March 2011 Fees: $10,000 Regulatory Impact on the Retail Payments Business

5. Overview The cash management business faces a time of unusual uncertainty due to recent regulatory changes from Dodd-Frank and Basel III. The former repealed Reg Q, which prohibited banks from paying interest on commercial DDA. The latter created new capital and, importantly, liquidity requirements for banks. These changes will create new demands for liquidity, particularly core deposits, and give attackers new incentives and tools to innovate the commercial DDA business. This report examines the impact of corporate banking regulations, but also consumer regulations, on bank payment services to corporate clients. We will explore the impact of Reg. Q repeal on competition for small business deposits, sweep accounts and other liquidity products. In particular, we will explore potential actions of non-traditional players. We will analyze the knock-on affects of consumer payments regulation on merchant acquiring. Lower interchange will create new competitive dynamics as incumbents try to exploit a pricing surplus among their negotiated rate merchants and attackers gain share and drive market pricing down. Finally, we will address regulations affecting prepaid cards. New rules and pricing constraints create new challenges, while an expected wave of newly unbanked consumers could increase demand for corporate-issued prepaid products. Deliverables: Written report (PPT) of findings & analysis. Scheduled Delivery: April 2011 Fees: $10,000 Regulatory Impact on the Commercial Payments Business

6. Overview Much of the industry dialogue about new payments regulations focuses on fee impact, banks’ product strategies, or the competitive response to new regulations. The operational impact of new regulations receives relatively little “air time” – likewise the technical capabilities that new regulation-driven product innovations presuppose. In this report we look through a regulatory and product innovation lens at banks’ infrastructure to understand the direct and indirect implications of the changing regulatory environment. Our analysis will include all major major consumer and commercial payments regulatory changes: OD regulation and how banks are adapting front- and back-office practices to comply with Reg. E and DD revisions The impact of the Durbin amendment, such as its ban on debit network exclusivity Reg. Q repeal and the impact on commercial deposit pricing and liquidity management product operations Basel III requirements for better risk management capabilities and visibility into liquidity wherever it is across the enterprise Our analysis will also assess the operational implications of some of regulation’s secondary effects: new innovations / aspirations banks develop in response to new profit pressures. Deliverables: Written report (PPT) of findings & analysis. Scheduled Delivery: May 2011 Fees: $10,000 Regulatory Impact on Payments Infrastructure

7. Packages • Studies • Reports* • Data tools • US Payments Map • Regulatory Impact on… • Retail Payments • Payments Infrastructure • $ 31,500 • $ 35,000+ • Retail payments strategy • US Payments Map • Regulatory Impact on… • Commercial Payments • Payments Infrastructure • $ 31,500 • $ 35,000+ • Treasury services strategy • Payments operations and technology • US Payments Map • Regulatory Impact on Payments Infrastructure • $ 22,500 • $ 35,000+ • Enterprise payments strategy • US Payments Map • Regulatory Impact on… • Retail Payments • Commercial Payments • Payments Infrastructure • $ 38,250 • $ 35,000+ * Packages are suggestions only. Any number or combination of reports may be licensed. The following discounts apply: 5% off license of two reports, 10% off three, 15% off four.