2007 Payments Strategy Research Program

1. 2007Payments Strategy Research Program SYNDICATED RESEARCH Agenda and pricing September 5, 2006

2. PAYMENTS STRATEGY RESEARCH PROGRAM GCI will perform seven (7) studies for the 2007 program: • Check Electronification: Progress, Promise, and Pipe Dreams • Corporate Treasury Needs: Lower Middle-Market • Corporate Treasury Needs: Mid-Large Commercial • Building of the Perfect Retail DDA • Risk Management Across Payment Channels • Cash Displacement: The Next Great Frontier • Emerging Payments: Facts and Fiction, Threats and Opportunities Check Electronification Corporate Needs: Upper Mid-Market Payments Risk Management Emerging Payments Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Corporate Needs: Lower Mid-Market Building the Perfect DDA Cash Displacement

3. CHECK ELECTRONIFICATION: PROGRESS, PROMISE, AND PIPE DREAMS • Overview • Check electronification took a new twist in 2006 when bankers began to talk seriously about using the ACH to clear not just eCheck entries, such as ARC and BOC, but any check in a bank’s deposit stream. The latest initiative, “check-ACH,” would add to what some banks already consider a dizzying array of clearing alternatives for check payments. GCI will bring clarity to this issue and others in a definitive analysis of trends in check electronification. We will explore the operational and economic implications of check clearing alternatives, including the impact on current and future payments products. • Research Questions • What is true state of image exchange? What are the barriers to check-ACH adoption, and what needs to happen for each to be overcome? What has been Check 21’s real impact on the payments business? Which are the most or least profitable future state scenarios for check electronification, and how likely are they to come about? How is check electronification changing the cash management business? What is GCI’s projection for the future of check clearing in the US? • Methodology • Recommendations will be based on cost-benefit analyses and scenario modeling, analysis of public and proprietary data sources and, as needed, executive interviews with market leaders. • Scheduled Delivery: March 2007 • License Fee: $7,000

4. CORPORATE TREASURY NEEDS (PART 1): LOWER MIDDLE-MARKET • Overview • Each year GCI surveys US companies to assess their current and expected use of several dozen cash management products. This year, we will study the needs of two distinct segments of treasury services customers to provide banks with a broader forecast of market demand for core products and more leading edge offerings. The objective is to help banks set their near-term priorities for product development and/or sales. In the first of two studies we will forecast the needs of lower middle-market companies, defined here as those with annual sales between $40 million and $100 million. Based on US Economic Census data, we estimate this market to include about 30,000 companies whose needs exceed that of small business but, for most banks, may be served by off-the-shelf treasury management offerings. • Research Questions • What will be the most popular products for lower middle-market treasury practitioners in the areas of receivables management, payables management and liquidity management over the next 12-24 months? How do their needs differ by sub-segment? Which products are failing to meet market expectations? What new products or services would lower middle-market customers like to see from their banks? Which products will exhibit the greatest relative growth, and which will achieve the greatest absolute growth? • Methodology • Global Concepts will survey treasury practitioners at approximately 300 US companies with annual sales between $40 million and $100 million* using a quantitative survey supplemented by follow-up interviews with select participants. • Scheduled Delivery: April 2007 • License Fee: $7,000 * Based on most recent D&B records.

5. CORPORATE TREASURY NEEDS (PART 2): MID-LARGE COMMERCIAL • Overview • In the second of two studies to forecast treasury management services requirements, we will analyze the needs of corporate customers ranging from the high-end of middle-market up to large commercial customers just outside the Fortune 1,000. These are firms with annual sales between $100 million and $1.3 billion. Based on US Economic Census data, we estimate this market at about 35,000 firms. As in the first study, the objective will be to identify in very actionable terms where treasury management services providers should focus their efforts to better serve commercial customers outside the top tier of high-touch, low-margin corporates. • Research Questions • What will be the most popular products for mid-large commercial customers in the areas of receivables management, payables management and liquidity management over the next 12-24 months? How do their needs differ by sub-segment? Which products are failing to meet market expectations? What new products or services would mid-large commercial customers like to see from their banks? Which products will exhibit the greatest relative growth, and which will achieve the greatest absolute growth? • Methodology • Global Concepts will survey treasury practitioners at approximately 300 US companies with annual sales between $100 million and $1.3 billion* using a quantitative survey supplemented by follow-up interviews with select participants. • Scheduled Delivery: May 2007 • License Fee: $7,000 * Based on most recent D&B records.

6. BUILDING THE PERFECT RETAIL DDA • Overview • Banks face a daily challenge to optimize shareholder value by meeting customer demand and competitive pressures within the constraints of finite resources. They place huge bets on new products, packages and incentives in hopes that theirs will be the most attractive – or least offensive – offering to retail customers. Too often this means reactive product offerings or giving away too much for too little gain. This study analyzes the relative value consumers place on the various sticks and carrots that banks can offer to increase “stickiness,” encourage more profitable transaction behavior, increase balances, etc. The objective is to identify, for each of several distinct consumer segments, where banks should invest to optimize the value of the retail DDA relationship. • Research Questions • What factors do consumers actually consider in their cost-benefit “model” for doing business with a bank? What is the relative importance consumers place on each factor? If a bank could spend a dollar, would it be better spent on increasing rewards, reducing fees, increasing account yields, or some other variable? How do consumer segments differ in their appreciation of various costs and benefits of their DDA choices? • Methodology • Recommendations will be based on the analyses of a projectable national sample of US adults. We will conduct a controlled experiment to quantify consumer response to different bank offerings. • Scheduled Delivery: June 2007 • License Fee: $7,000

7. RISK MANAGEMENT ACROSS PAYMENT CHANNELS • Overview • In this study GCI will analyze risk and its role in the economics of payments. This study will explore the comparative risk of competing payment alternatives to each party in the payments “value chain,” including the payer, the payee, and the banks that provide payment services. GCI will estimate the risk component of payments costs and analyze the implications for banks of various trends in payments migration. We will model several future state scenarios, and recommend responses by client banks to potential future risks. • Research Questions • What are the risks in providing payments services, and who bears them? How do the risks vary by payments instrument? Where are the weak links in the chain? What does the migration from paper to electronics mean to payments industry risk? What are the risk implications of check conversion to ACH, for example, and how does it change under best, worst and most likely case scenarios? Where are the red herrings in the industry dialogue about risk? • Methodology • Recommendations will be based on cost/benefit analyses and scenario modeling, analysis of public and proprietary data sources and, as needed, executive interviews with market leaders. • Scheduled Delivery: September 2007 • License Fee: $7,000

8. CASH DISPLACEMENT: THE NEXT GREAT FRONTIER • Overview • The banking industry earns over $7 billion annually in fee income in support of cash payments in the US but less than a nickel for every transaction – by far the lowest rate of any payments instrument. Banks and non-banks alike increasingly view low-value payments as the next frontier in paper-to-electronic migration. Unfortunately, industry leaders know precious little about cash usage or how it is changing. This study is a deep exploration of consumers’ changing use of cash and the implications for retail banking and commercial cash management. We will model various future state scenarios to help banks understand likely and unlikely outcomes in the migration of cash to electronic payments. • Research Questions • How is consumer behavior around the use of cash – including access methods and spending patterns – changing? Which payment technologies are consumers likely to adopt as alternatives to cash, and why? How will consumer demand for cash affect commercial cash management services? How will changes in cash usage affect banks’ payments infrastructure and costs? How can banks influence customer behavior to optimize payments profitability and ward off non-bank competitors? • Methodology • Recommendations will be based on analyses of a projectable national sample of US adults and on cost/benefit analyses and scenario modeling. The modeling will use public and proprietary data sources as appropriate. • Scheduled Delivery: October 2007 • License Fee: $7,000 Source: McKinsey & Company, Payments Map

9. EMERGING PAYMENTS: FACTS & FICTION, THREATS & OPPORTUNITIES • Overview • With characteristic clarity and objectivity, GCI will deliver a definitive analysis of emerging payment technologies and the competitive threats and opportunities for large banks. Our objective will guide banks through the fog of rhetoric and misunderstanding surrounding “emerging payments.” We will profile and handicap non-bank competitors and new technologies, and we will analyze the comparative economics of competing alternatives across the payments “value chain.” Our recommendations will include actionable suggestions about how to respond to emerging threats and opportunities from both a retail and commercial banking perspective. • Research Questions • Who are the non-bank competitors that banks should have on their radar screens today, what are their offerings, and where do they fit in the payments value chain? Which non-banks pose the greatest threats to bank profits, and why? Which new technologies will consumers really adopt, and which are solutions in search of a problem? Which new technologies present real competitive advantages? How will emerging payments adoption affect commercial deposit and payment services? • Methodology • Our analysis will draw on original market research based on a representative random sample of US adults, secondary sources, and proprietary data about trends in payments technologies and economics. • Scheduled Delivery: November 2007 • License Fee: $7,000

10. PROGRAM FEES • Fee per study: $7,000 • Multi-study discounts apply (see below) • Discounts apply only for studies licensed before January 31, 2007. • For more information: David Stewart, (773) 667-5637, david_stewart@mckinsey.com * Discounts are approximate.