business plan for the development and operation of...

BusinessPlanfortheDevelopmentandOperationofaDigitalServicesPlatformDevelopedforDSPExpenseSharingAgreementParticipantsandOtherPotentialDSPLLCMembersUpdatedDecember2016

DigitalServicesPlatformBusinessCase PROPRIETARYANDCONFIDENTIAL

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Table of Contents

TableofContents...................................................................................................................2

ExecutiveSummary................................................................................................................4

Overview................................................................................................................................6

CurrentStateofDigitalDeliveryinFinancialServices.............................................................8

StrategicDirectionofDigitalDelivery....................................................................................10

DigitalServicePlatformSolutionDescription.........................................................................12Introduction...........................................................................................................................................12ApplicationContainer............................................................................................................................14ApplicationGateway..............................................................................................................................15CommonServices...................................................................................................................................16ManagementPortalOverview...............................................................................................................20

ValueProposition..................................................................................................................22Introduction...........................................................................................................................................22Members................................................................................................................................................22Clients....................................................................................................................................................23Owner-Operators...................................................................................................................................24ServiceProviders....................................................................................................................................25Owner-ServiceProviders........................................................................................................................25Owner-Resellers.....................................................................................................................................26

InitialMarketOpportunity....................................................................................................28Introduction...........................................................................................................................................28Owner-Operators...................................................................................................................................28Owner-ResellersandOwner-ServiceProviders.....................................................................................28Clients(non-Owners).............................................................................................................................29

DevelopmentStrategy...........................................................................................................30Introduction...........................................................................................................................................30

OperatingModel...................................................................................................................32Introduction...........................................................................................................................................32FunctionsSourcedInternally.................................................................................................................32FunctionsSourcedExternally.................................................................................................................33FunctionsSourcedExternallytoanOwner-Operator............................................................................34Owner-OperatorResponsibilities...........................................................................................................35Owner-ResellerandOwner-ServiceProviderResponsibilities..............................................................36DSPCUSOResourceModel....................................................................................................................37

FinancialModel.....................................................................................................................38Introduction...........................................................................................................................................38KeyAssumptions....................................................................................................................................38Fixedvs.VariableCosts..........................................................................................................................39ExpenseAllocationMethodology..........................................................................................................39SummaryFinancialModelandDiscussion:Owner-OperatorsOnly......................................................40


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SummaryFinancialModelandDiscussion:Owner-OperatorsPlusAdditionalClientSales..................42SummaryFinancialModelandDiscussion:ResellerImpact..................................................................44

Ownership/PartnershipTermsandConditions......................................................................45InitialInvestors.......................................................................................................................................45AdditionalInvestors...............................................................................................................................46

Governance...........................................................................................................................47BoardComposition................................................................................................................................47BoardCommittees.................................................................................................................................47

RisksandMitigationStrategies.............................................................................................48

ExitStrategy..........................................................................................................................50Introduction...........................................................................................................................................50Phase0...................................................................................................................................................50Phase1...................................................................................................................................................50Phase2...................................................................................................................................................50Phase3...................................................................................................................................................51

Appendices...........................................................................................................................52FinancialModel(spreadsheet)...............................................................................................................52


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Executive Summary

In2015,tenprominententitieswithinthecreditunionsystemincludingnaturalpersoncreditunions, credit union service organizations, and a corporate credit union (collectively, the“Partners”)soughttodefinethenextgenerationofdigitaldeliveryinfrastructure.ThePartnersprovidedfundingwhichenableddevelopmentofrequirementsandaworkingproof-of-concept(PoC).ThePoCwassuccessfullydemonstratedtothePartnersinDecember2015.ThisBusinessPlansummarizestheoperatingmodelanewentity(the“DSPCUSO”)wouldutilizeinordertocompletethebuild-outandcommenceongoingoperationofaDigitalServicesPlatform(DSP).The rapidadvanceof technology ineverything frommobilephones to cars andappliances ischanging consumer behavior and perhaps even more importantly their expectations. Creditunionvendorshavebeenslowtorespondtothesechanges,particularly intheareaofdigitaldelivery.Withnomotivationtochange,creditunionsareleftwith:

• Highdependenceonasmallnumberoflargevendorswithincompletesolutions• Restrictiveandexpensivevendorcontractsandcustomsolutions• Lackofnewfeaturesbeingintroducedbyvendorswithslowtimetomarket• Marketperceptionthatlargenationalbanksofferbetterdigitalsolutions• Limitedreuseofinvestmentsacrosschannels• Memberexperiencesthatvaryacrosschannels

The DSP is necessary to address the above issues and to ensure competitiveness with ourlargest competitors that are not bound by the limits of a vendor offering. Large financialinstitutions are investing hundreds of millions of dollars into robust digital platforms thatprovideimproveddesignandfarmoreinnovationthatanythingavailableinthevendormarkettoday. Some institutions have attempted to follow their lead by developing completely newservicesystemsinhouseonlytobecomemiredinthebusinessofsoftwaredevelopment.Manyof these brave pioneers are now opting to move back to a managed service environmentbecausetheoverheadofrunningtheirowndevelopmentbusinesswastoogreat.Digitaldeliveryrepresentsbothourgreatestchallengeandourmostspectacularopportunity.Itrepresents a challenge for credit unions with constricting budgets to meet the consumerdemands. As digital infiltration takes hold, consumers are waking up to the idea that allfinancial services should be faster and easier. Digital infiltration is making waves across theboard in areas such as automobiles, wearables, and home automation. Any of these couldbecomepotentialservicepointsformemberstoaccessdata,yetourindustrycontinuestoofferarethesamefiveservices:balances,transfers,transactions,billpayandmobiledeposit.Creditunionscanabsolutelybuyanicermobilepackagebutnone"comewith"theplethoraofvalueaddedmemberfeaturesandfunctionalitythatwillnotonlydelightandamaze,buthavethe real likelihood of moving service requests and processes out of our most expensive“people” powered channels including call centers and branches. We need to move beyondprettierdesigns for thesameservices.Wemusthaveanewwayofdevelopingandexposing


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digital services to them. We must have a platform that is endowed with our dynamiccooperativespiritandfocusedonthefastandeasydevelopmentofnewservices.The Partners, in collaboration with a third party, Mobile Strategy Partners, participated indesignsessions,developedaseriesofrequirementsdocuments,andthendeliveredaworkingproof-of-concept for the DSP that supports the above vision. The PoC demonstrated theviabilityofkeyarchitectureanduserinterfaceaspectsofthesolution.ComponentsoftheDSPplatforminclude:ApplicationContainer,ApplicationGateway,CommonServices,ManagementPortal,EnterpriseServiceBus,DataStorage,andDeveloperPortal.Together,thesecomponentsprovideasolutionthatwillbeabletooffercapabilitieswellbeyondtraditionaldigitalbanking.The Digital Service Platform offers value to a variety of constituencies starting with themember. Because the DSP offers a superior member experience through its ability to becompletelycustomizedby themember themselvesandanattractive total costofownership,credit unions will want to adopt the platform. The number of large credit unions that willleveragetheplatformwillinturnmaketheplatformattractivetoserviceprovidersthatwishtodeveloptiles,includingthoseofferingservicesbeyondtraditionaldigitalbanking.Resellerswillalsobeinterestedintheplatformto improvetheirproductoffering(andmayevenengageintiledevelopmentactivities).AthirdpartydevelopmentpartnerwillbeengagedtodeveloptheproductionDSPenvironmentandhasproposeda “not toexceed”priceof $17.1million todevelop the solutionover fourdevelopment phases. The four phases will deliver baseline infrastructure, unauthenticatedcontainer capabilities, mobile banking, and then online banking over a three-year timelineending in2018.Thisbidhasbeenreviewedbyan independentthirdpartyandbeendeemedreasonable from a scope, timeline, and cost standpoint,with development riskmitigated byextensiverequirementsdocumentation,phaseddelivery,andfixedpricing.In addition to Chief ExecutiveOfficer and Chief TechnologyOfficer positions staffed initially,application support, implementation support, and application development resourceswill beadded over time, eliminating dependence on the external development partner. A ProductManagerandaDeveloperRelations/TileReviewManagerwillalsobeadded.Other functionswillbesourcedexternally.CoastalFCUinRaleigh,NCwillprovidesharedservicesforfunctionssuchasfinance,humanresources,andfacilitiesandwillprovidespaceforDSPCUSOstaff.Ten-year financial models covering Owner-Operators and Owner-Operators Plus AdditionalClients were developed. Capitalization was determined in a manner that covers projectedcapitalandnetexpensesthroughdevelopmentandintoimplementation(through2020).Initialcapitalizationrequiredis$30million.10partnersareideallydesiredtoparticipate,but8-12willbeconsidered.Thecontributionamountrequiredis$3millionperpartnerfor10partners.Ifyouaremotivatedtochange,thenpartnerwithotherswhoarelike-minded.Thereisstrengthinnumbers. Leverage thepowerof creditunionsbyachieving innovationeconomiesof scale


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through cooperation. Digital Infiltration is a wave to be ridden by the few who have theforesighttopaddleoutinfront.

Overview

In2015,tenprominententitieswithinthecreditunionsystemincludingnaturalpersoncreditunions, credit union service organizations, and a corporate credit union (collectively, the“Partners”)soughttodefinethenextgenerationofdigitaldeliveryinfrastructure.ThePartnersentered into an Expense Sharing Agreement (the “Agreement”) which provided funding andenabled development of requirements and a working proof-of-concept (PoC). Partnersincluded:

• AffinityFederalCreditUnion(“Affinity”)• AmericaFirstCreditUnion(“AmericaFirst”)• CoastalFederalCreditUnion(“Coastal”)• Georgia’sOwnCreditUnion(“Georgia’sOwn”)• NusendaCreditUnion(“Nusenda”)• Open Technology Solutions, LLC (“Open-Tech”),which represents Bellco CreditUnion,

BethpageFederalCreditUnion,andStateEmployeesCreditUnionofMaryland• CO-OPFinancialServices(“CO-OP”)• CorporateOneFederalCreditUnion(“CorporateOne”)• CreditUnionDirectLending(“CUDL”)• CUNAMutualGroup(“CUNAMutual”)

Partner interests in being affiliated with the venture varied from those interested in theevolutionofdigitaltechnologytothoseinterestedinusingthedigitaltechnologyplatformasareplacementforexistingvendorprovidedapplicationsthatsupportservicessuchasonlineandmobilebanking.CertainPartnerswere interested indetermining the feasibilityofdevelopingapplications/tilesthatwouldbeavailablethroughtheplatformforcreditunionmemberstouseand/or inquire about products and services. Additionally, certain Partnerswere interested inpotential reselling opportunities and providing user support. Even though the Partners haddifferentinterestsintheinitiative,theysharedacommoninterestintheopportunitytobepartofthenextgenerationofdigitalinfrastructuresolutions.ThePartners’ initialobjectivewastodefinetheplannedarchitecturalcomponentsassociatedwiththeproposedsolution,aDigitalServicePlatform(the“Platform”or“DSP”)andtobuildaPoC demonstrating the proposed Platform. The official brand name for the DSP will bedeterminedatalatertime.Working together with Mobile Strategy Partners, LLC (MSP), the Partners developed therequirements for theDSPwhichweredelivered in the formof architectureand functionalityrequirementsdocuments.


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In December, MSP presented its development efforts to the Partners. The presentationreflected the fact that the concept of the proposed architecture and user interface wassuccessful.This Business Plan, facilitated by Crescent Consulting Group, LLC, summarizes the operatingmodelanewentity (referred toas“DSPCUSO”)wouldutilize inorder tocompletebuild-outand commence ongoing operation of the DSP. In addition, a financial model is included toillustratecapitalrequiredtoestablishtheDSPCUSOalongwithongoingincomeandexpense.


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Current State of Digital Delivery in Financial Services

Withinthespectrumoffinancialservices,creditunionsplayastraightforwardgame.Weofferapro-consumerbankingalternativepoweredbyco-operativestrength.In ourmission to servemembers, credit unionshaveoperateddiligently and successfully fordecades. Like accomplished bowlers with expert muscle memory, we knock down cashdeposits, and check clearings, and loans, andmortgages likepins.Day afterday, frameafterframe.Wearegoodatwhatwedo…takingpride,andevencomfort,inourroteabilities.Now we face a different challenge: Digital Infiltration. While the tasks of banking remainrelatively the same, the expectations of consumers for how they are delivered are changingdramatically.Andtheywillchangeagain.Andagainafterthat.Today,itislikewearetryingtobowlonthedeckofanaircraftcarrierinhighseas.The rapidadvanceof technology ineverything frommobilephones to cars andappliances ischangingconsumerbehaviorandperhapsevenmoreimportantlytheirexpectations.Addingtothestormoftheenvironmentistheexplosionofinvestmentinfinancialtechnologyfrom“non-traditional”organizations,start-upsandventurecapitalists.In2015alonetheamountofmoneyinvested in Fintech by venture capitalists tripled from $2.2 billion the previous year to $6.8billion.These firmsarenotattemptingtodevelopthemselves into full service financial institutions—that comes with too much regulation. They are instead attempting to create single-useproductsandservicesthatresonatewithmicro-nichesofconsumers.Digitalattackscomenotasbigbangsbutinsteadviaathousandtinycutstoourbusiness.Theyattackcheckingservicesthroughpre-paidandmobilebasedpaymentservices,lendingthroughcrowdfundingandevencheck cashingbyallowing you tomeeta “teller” at a locationof your choosing to cash yourcheck.Whathasbeenourresponse?Dowebelievethatforsomereasonourmemberseschewsuchconveniencebecausewearebetteratmemberservice?Whatbetterserviceelementcantherebethanrespectingourmemberstimeandmakingitfastandeasytodobusinesswithus?Wehaveseenanendlessparadeofpunditsandthought leadersstandonastagewarninguswiththesametiredstoriesofthedemiseofrecordstoresandBlockbusterbecausetheyfailedtoseethechangecoming.Butwhatdidwedo?We kept signing expensive, long term contracts that locked us in to someone else’s view ofwhatdigital for financial services shouldbe.Howmanymember servicedelivery innovationshasyourmobileproviderbroughttoyourinstitutionoverthelastfiveyears?Doyouhaveanyreasontoexpecttheywilldelivermoreinthefuture?Thereissimplynoprofitinitforthem.Therefore,thereisnomotivationforchange.Andweareleftwith:

• Highdependenceonasmallnumberoflargevendorswithincompletesolutions


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• Restrictiveandexpensivevendorcontractsandcustomsolutions• Lackofnewfeaturesbeingintroducedbyvendorswithslowtimetomarket• Marketperceptionthatlargenationalbanksofferbetterdigitalsolutions• Limitedreuseofinvestmentsacrosschannels• Memberexperiencesthatvaryacrosschannels

The DSP is necessary to address the above issues and to ensure competitiveness with ourlargest competitors that are not bound by the limits of a vendor offering. Large financialinstitutions are hundreds of millions of dollars into robust digital platforms that provideimproveddesignandfarmoreinnovationthatanythingavailableinthevendormarkettoday.BankofAmericaannounced in January2016that theyaretriplingtheir investment inmobileservices.Wecan’tbesurehowmuchthismeansbutitwaswidelyreportedin2015thatBOAspends$3billionayearonsoftwaredevelopment.Youcanbetavery largeportionofthat isnowheadedtowarddigitalservicedeliveryinanattempttowintheheartsandwalletsofourmembers.Some institutionshave attempted to follow their leadbydeveloping completely new servicesystemsinhouseonlytobecomemiredinthebusinessofsoftwaredevelopment,codereleasesandsupporttasksallofwhichtakesawayfromtheirtruemissiontoservetheirmembers.Manyof these brave pioneers are now opting to move back to a managed service environmentbecausetheoverheadofrunningtheirowndevelopmentbusinesswastoogreat.Ifwearenotmotivatedtochange,soonwewillbestandingwaist-deepinaseaofconsumerexpectationsthathavebeenfueledbyhowdigitalhasimpactedeveryotherpartoftheirlives.Our members—not just the youngest among them—will have transformed into “DigitalNatives.” Andcreditunionswillhavenearly thesameofferingswehavetoday… askingthesameoldquestions:“CanIseeyourdriver’slicenseplease?”


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Strategic Direction of Digital Delivery

Digitaldeliveryrepresentsbothourgreatestchallengeandourmostspectacularopportunity.Itrepresents a challenge for credit unions with constricting budgets to meet the demands ofconsumers.Asthedigital infiltrationtakeshold,consumersarewakinguptothe ideathatallfinancial services should be faster and easier. Consumers expect services to be at theirfingertips.Wherewewillbegradedisnotonwhatourmobileappcando,butratherbywhatour members want to do but cannot. Institutions who plan to thrive long-termmust beginasking, “What can’t we do in mobile and why can’t we?” In order to capitalize on theopportunitiesofarisingtide,wemustbeginbuildingourmobilearktoday.Wemustcommittoputtingthenecessarydigitalinfrastructureinplacenowbecausemobileasweknowwillnotbetheend.Itisjustthebeginning.The auto industry has experienced a rapid acceleration of digital empowerment.Conceptualized in 1951, it took a federal regulatory act in 1991 to force the (now common)airbag into the automotive mainstream by the turn of the century. In a tenth of that timehowever, automakers have clamored to adopt vehicle telematics—technologies that includevehicleemergencywarningsystems,GPSnavigation,automaticdrivingassistancesystems,andintegratedhands-freecellphonesallmostlywithinthelastdecade.Garmin,agloballeaderinGPStechnologies,haslatelyrealigneditsfocusoutsideofthevehicletelematicsspace.Havinglost30%ofitsmarketsharein2015,Garminisinsteadrealigningitselfwiththenew“personaltracking”opportunitiesaffordedbysports/fitnessandsporting(marineandaviation)industries.Nowsensorsinyoursneakerscantrackyourjoggingrouteandcaloriesburned based upon elevations in the terrain. Digital infiltration is making waves across theboard.Automobiles,wearables,homeautomation,andotherpotentialservicepointsformemberstoaccess data are proliferating, yet our industry continues to offer the same five services:balances,transfers,transactions,billpayandmobiledeposit.Digitalinfrastructuredevelopmenttakestimeandmoney;changingyourstylesheetsdoesnot.Creditunionscanabsolutelybuyanicermobilepackage.Firms likeAlkamiandMalauzaiandmanyothersaredeliveringonthistoday,butthat is largelyall theyaredelivering.Theyhavetakenoursamebasic functionalityoutofthebrowncraftpaperwrapping,andglitzed itupabit. While prettier, none "come with" the plethora of value added member features andfunctionalitythatwillnotonlydelightandamaze,buthavethereallikelihoodofmovingservicerequests and processes out of ourmost expensive “people” powered channels including callcentersandbranches.


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Weneedtomovebeyondprettierdesignsforthesamelimitedservices.Inordertoprovidethebest service thatwecan forourmembersand thrive long termwemusthaveanewwayofdevelopingandexposingdigital services to them.Wemusthaveaplatform that is endowedwith our dynamic cooperative spirit and focused on the fast and easy development of newservices.Digitalrepresentssuchaspectacularopportunitybecauserightnowwehaveachancetocreatethenewstandardindigitalservices.Thevendorscreditunionsusetodayareconstrainedbytheproliferation of their meager services to so many clients that they are unable to radicallychangehowtheirsystemswork.We,atthismoment,havethechancetobuildanewkindofservice,backedbyapatentpendingdesign,thatcandramaticallytiltthelandscapeinourfavor.Ifyouaremotivatedtochange,thenpartnerwithotherswhoarelike-minded.Thereisstrengthinnumbers. Leverage thepowerof creditunionsbyachieving innovationeconomiesof scalethrough cooperation. Digital Infiltration is a wave to be ridden by the few who have theforesighttopaddleoutinfront.


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Digital Service Platform Solution Description

Introduction

ThePartners, in collaborationwithMSP, developeda series of requirementsdocuments andthen designed and delivered a working proof-of-concept for the DSP. Summary informationprovided in this section is a subset of details that can be found in Architecture and ProductRequirementDocuments(PRDs)availableinanelectronicarchiveavailabletoPartnerresourcesparticipatingonbusinessandtechnicalteams.TheDSPconsistsofsevenmajorcomponents:

1. TheApplication Container will provideWeb and hybrid applications with a run-timeenvironmentformemberaccesstoapplications/tilesondesktopandmobiledevices.Allapplications/tiles run within the Application Container and use the ApplicationContainercommonobjectmodel,businesslogic,andsoftwaredevelopmentkits(SDKs)for communicatingwith the local device, other applications/tiles, and the ApplicationGateway.

2. TheApplication Gateway hosts static web content, web services and application/tilebusiness logic. The Application Gateway is responsible to receive and routecommunications fromtheApplicationContainerandmanagementportal, andprovideintegrationwith commonservicesand third-partybackendsystems (including theESBfor connectivity to the creditunion’s corebanking systems). TheApplicationGatewaywillsupportmulti-tenancy(multiplecreditunionsonthesamesystem)andmayalsobeleveragedtohostandsupportapplicationdevelopertools.

3. CommonServicesenableapplicationdeveloperstomoreeasilycreateapplications/tileswithout having to worry about creating basic infrastructure such as memberauthentication,entitlements,messagingservices,etc.thatwouldotherwisehavetobebuilt in standalone systems. These are technically similar to third-party services butdiffer in that theycome 'readybaked' into theDSP forusebyapplicationdevelopers.Common services are important building blocks for applications/tiles and for creatingthe DSP application developer ecosystem. The DSP can be further extended withadditionalcommonservicesinthefuture.Initially,thefollowingcommonservicesareinthe scope of the initial DSP delivery: Authentication and Privileges Engine,MessagingandAlertsEngine,andothercommonservicesincludingImageProcessingServicesandFeeDisclosuresandBilling

4. The Management Portal enables the credit union and/or credit union serviceprovider(s) to manage the credit union settings (branding, credit union users, etc.),onboardmembers, andprovide support tomemberson theDSP.Reporting functionswillalsobeaccessiblethroughthemanagementportal.

5. TheEnterpriseServiceBus(ESB)isexternaltotheDSP,anddifferentcreditunionsmaychoosedifferentESBsolutions.The roleof theESB is toprovide routingandmessagetranslationservicesfortrafficfromtheApplicationGatewaydestinedforabankingcore.An individualESBcouldenabletheDSPto integratewithmultiplebankingcores, from


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differentvendorsindifferentlocations.CUFXisthemessageformatthatwillbeusedforallcommunicationsbetweentheApplicationGatewayandtheESB.(CUFXmessageswillalsobeusedtofacilitatecommunicationwithintheDSP(i.e.,betweentheApplicationContainer andApplicationGateway and between tiles and the Application Container)alongwithothermessagestypesandobjectmodesasrequired.)

6. Datastoragewillbeprovidedtosupport theApplicationGatewayaswellascommonservices. Specific functional needs will be outlined in the product requirementdocuments,andthedatastructurewillneedtobedefinedduringthetechnicaldesignphaseoftheDSP.DatastoragewillneedtosupportthefunctionalityoftheDSPoverallas well as individual member preferences (such as account nicknames) typicallyprovidedbymobileandonlinebankingsystems,andwillprobablyrequireextensibilitytomeettheneedsofsomeoftheindividualapplications/tilesdevelopedforuseontheplatform(ifsuchisnotprovidedthroughthird-partyserviceproviders).

7. Theautomatedapplicationdeveloperonboardingsystemand/orDeveloperPortalhavebeenidentifiedasamajorcomponentoftheDSP;however,therequirementshavenotbeendetailedincompaniondocuments.Itisanticipatedthatdependingonthenumberand types of application developers supported on the platform, a formal developerprogramwithadeveloperportalmaybecomenecessarytospeedvendoronboarding,training,TiledeploymentandvalidationofcreatedTiles.


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Thefollowingisahigh-leveldiagramoftheDSParchitecturetobedeveloped:

DSPArchitecture:Top-Level

Application Container

TheApplicationContainerisasetofWebcomponentsthatprovidestheon-deviceframeworkfor credit union members and prospective members accessing the DSP solution. It uses acombinationofHTML5, JavaScript, secure in-sessiondata storage,and stylesheets toprovidecommon functionality. The Application Container will support both Web and hybridapplications. Both utilize the same UI and business logic components. The key differencebetween the two is that hybrid applications have the credit union branding and initial userinterface screensalreadyembeddedwithin them.TheWebapplication loads theseelementsupon successful domain authentication when the user accesses the URL configured for thecredit union (e.g., firsthaven-demo.DSPws.net) using the configuration provided by theAuthenticationandPrivilegesEngineintheauthenticationresponse.The Authentication and Privileges Engine also provides an application/tile list to Web andhybrid applications that defines which applications/tiles to show to the user (e.g.,applications/tilestowhichtheuserisentitled,visibletotheusers,andshouldbepromotedtothe user). The initial application/tile list is used to present the tile desktop to anunauthenticateduser.Uponsuccessfuluserauthenticationtheupdatedapplication/tilelistfortheindividualuserisusedtorefreshthetiledesktopwiththeuserspecificconfiguration.


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Application Gateway

TheApplicationGatewaysitsatthecoreoftheDSP.Ithostsstaticwebcontent,webservicesandapplicationbusinesslogicandisresponsibletoreceiveandroutecommunicationsfromtheApplication Container andmanagement portal to common services, the ESB and third partybackendsystems.

DSPArchitecture:ApplicationGateway

WebHostingTheApplicationGatewaymust provide aweb server tohost a varietyof staticweb content,including the Application Container, branding files and portal web pages. Credit unions (ortenants)andsomeapplicationdeveloperswillalsorequiretheirownwebfolderstructureforstoringstaticfilesandbrandingcomponents(e.g.,.cssfilesandimages).Web Services

TheApplicationContainerandManagementPortalcanonlycommunicatewithserver-residentbusiness logic, common services, credit union backend systems and external services via theApplication Gateway. It does so via web services hosted in the Application Gateway. WebservicesconsistofbothDSPcommonmethods(ex:authentication,accountobjectrequests)aswell as any tile-specific methods for calling tile specific server-side functionality. All webservicesarefullyRESTfulandcompletelyagnosticofthedeviceonwhichthetilesarerunning.Controllers (Business Logic)

Behind the web services layer there is an internal business logic layer that supports theApplicationContaineraswellasthemanagementportal.Applicationdeveloperbusinesslogicisnottobesupportedhere,butcouldbeaddedtoexternalconnectors(describedbelow).


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Common Services Integration

The Application Gateway is responsible for integration with the DSP common services. Forexample,whentheApplicationGatewayreceivesauthenticationrequestsfromtheApplicationContainer, itwill communicatewith theAuthentication andPrivileges Engine to perform theauthentication and determine the entitlements for the credit union and the user. TheApplicationGatewayactslikeaproxyinthiscontext,passingtheentitlementsandusertokenitreceivesfromtheAuthenticationandPrivilegesEnginebacktotheApplicationContainer.Third Party Integration

TheApplicationGatewaywillsupportthird-partyconnectivityviaanexternalconnectorservice.TheApplicationGatewaycombinesthemessagepayloadfromtheApplicationContainerwithexternalconnectorparametersintheAuthenticationandPrivilegesEngineasrequiredtomakethethird-partyconnectionandcalltheappropriateexternalconnectorforfulfillment.Onesuchexternalconnector(orsetofconnectors)willsendCUFX-compliantmessagestotheESB,whichwillbeisresponsibleforroutingandfulfillmentofrequestsmadetocorebankingsystems.

CUFX

The CUFX message format will be used for all communications between the ApplicationGatewayandtheESB.CUFXmessageswillalsobeusedtofacilitatecommunicationwithintheDSP (e.g., between the Application Container and Application Gateway, and betweenapplications/tiles and theApplicationContainer).Othermessage types and/or objectmodelscanbeadded if required,butbyadhering to thisdocumentedstandardasmuchaspossible,applicationdeveloperswillbeabletoquicklyunderstandtheunderlyingsystemobjectmodel,includingbalances,accounthistories,etc.andhowtoperformsupportedtransactions.The Application Gateway will send the ESB CUFX requests for information and request toprocess transactions. The ESBwill route those requests according to awide variety of creditunion corebanking systems such as Symitar Episys and Fiserv’sDNAandXP2. The ESBmusttransformCUFXrequeststoprotocolsandstandardsunderstoodbytheindividualcoresystems.During the PoC, theCIMple ESB solution fulfilled the ESB role in theDSP architecture and isexpectedtoprovideaviable long-termsolutionfortheplatform,especiallygiventheexistingcore banking system connections available through the solution aswell as the core bankingintegrationexpertiseheldbythesolutiondeveloper.

Common Services

Authentication and Privileges Engine

The Authentication and Privileges Engine is a common service that maintains all user,applications/tilesandcreditunionsettingsandentitlements,aswellasauthenticationforcreditunion subdomains, users, and access to third-party systems. It can only be accessed via the


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Application Gateway; there is no other inbound external route to the Authentication andPrivilegesEngine.

DSPArchitecture:AuthenticationandPrivilegesEngine

Unauthenticated User

Priortoauthentication,usersareabletoaccessavarietyofapplications/tilesmadeavailabletothe public at large such as account opening, location finders, free services (such as financialcalculators)andbasicinquirycapabilities.TheAuthenticationandPrivilegesEnginewillsupporttheconfigurationofapplications/tilesthataremadeavailabletounauthenticateduserssotheApplicationContainercanproperlyrendertheinitialtiledesktop.

Enrollment

Allowing prospective users of the DSP to easily enroll is essential tomaximize adoption andminimize theoperational effort by the credit union. The self-service enrollment functionalitywill supportenrollmentofbothcreditunionmembersandnon-members. Inaddition toself-serviceenrollment,thesystemwillsupporttwomethodsforthecredituniontopre-provisionusers, streamlining their enrollment in the DSP. These methods are exposing an API to thecreditunion’snewaccountopeningsystemand throughauser interface in themanagementportal.

Authentication

Whenauserattemptstologin,theAuthenticationandPrivilegesEnginereceivesarequesttoauthenticatetheuser.TheAuthenticationandPrivilegesEnginewillvalidatethecredentialsineithertheAuthenticationandPrivilegesEnginedatabaseorexternally,dependingonwherethecredit union has their credentials stored. The service will also support multifactorauthentication(MFA),whichistypicallyinvokedimmediatelyfollowingvalidationoftheuser’scredentials.AnexternalcallwillbemadetoanMFAsolution(e.g.,RSA)basedonparametersset for thecreditunion. Inaddition tosupporting the initialMFAauthentication request, the


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systemwill support a secondary authentication event triggered by a “high risk transaction.”High-risktransactionswillbeidentifiedbytheMFAsolutionand,whentriggered,willcausethesystemtofurtherchallengetheuser’sidentityasrequired(e.g.,challengequestions,one-timepasscodes,etc.).Entitlements

Inthemanagementportal,thecreditunionwillbeabletodefinetherulesandbusinesslogicmaintained in the Authentication and Privileges Engine, which determines whatapplications/tiles areavailable towhichusers andwhen, through the creationof tile groups.Tile groupsare logical entities in the system thatmatcha selectionof applications/tileswitheligibilitycriteriatobeabletoaccessthoseapplications/tiles.TheAuthenticationandPrivilegesEnginegeneratestileliststocommunicatesuchentitlementstotheApplicationContainer.Tilelistsfurtherincludetheuser’sentitlementstatuswithrespecttoeachapplication/tile.

User Settings

Thecreditunionwillbeable toestablish the initial setting forapplication/tilevisibility in themanagementportal.Ata later time, if allowed foragivenapplication/tile, theendusermaychange the visibility setting using the tile management mechanism to hide/displayapplications/tiles.Forinstance,ifanapplication/tileisnotonthemember’sdesktop,theycanselectdisplay,whichputstheapplication/tileontheirdesktopandchangestheapplication/tilevisibilitysettingto“visible.”TheAuthenticationandPrivilegesEnginewillstorethesesettings,displayorder forapplications/tileson the tiledesktop,andaccountnicknames foruseacrossapplications/tiles.Disclosure Agreements

TheDSPmustmaintainandenforceuser acceptanceofdisclosureagreements asdefinedbythe credit union. The credit union configures the disclosure agreement requirements in themanagement portal. These requirements are stored as parameters entitled as “StoredDisclosure Parameters” in the Authentication and Privileges Engine. When a user accepts adisclosureagreement,theAuthenticationandPrivilegesEnginerecordstheacceptance“StoredConsentEvents.”TheApplicationGatewayperformsbusinesslogic,usingtheinformationfromthe Authentication and Privileges Engine to determine when presentation of a disclosureagreementisrequired.Management Portal

The Authentication and Privileges Engine will also support credit union user access to theManagementPortal.Thisincludesauthenticationandmanagementofuserentitlements.Userauthentication may be provided by the Authentication and Privileges Engine, an externalservicesuchasthecreditunion’snewaccountopeningsystems,orthroughauserinterfaceintheManagement Portal such as LDAP or a single sign-on. Entitlementswill be a function of


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implementingthecreditunion’spolicyforaccessmanagement.Userswillhaverolesandroleswillhaveentitlementstoactionapplicationresources.Messaging and Alerts Engine

The messaging and alerts engine provides the underlying server-side communicationsinfrastructuretofacilitatecommunicationsbetweenanindividualcreditunionanditsmembersinastandardizedwaythatcanbeutilizedacrossapplications/tiles,aswellasacrossoriginatingandfulfillmentsystems.Inadditiontothisbasicinfrastructure,messagingapplications/tileswillbeused to support thepresentationof secureemail capabilities andalerts. Theexchangeofdocuments and status updates are alsomade possible through this infrastructure. Individualapplicationdeveloperswill notneed tobuild in coremessagingandalerts capabilitieswithintheirindividualapplications/tiles.Memberswillreceivecommunicationsfromtheircreditunioninasinglelocation,whicharepresentedinacohesivemanner.

DSPArchitecture:MessagingandAlertsEngine

Other Common Services

In addition to theAuthenticationandPrivilegesEngineand themessagingandalertsengine,two other common services are in the scope for the initial DSP delivery. These are ImageprocessingservicesandFeeDisclosuresandBilling.Eachof theseservicesshouldbereusableacross applications/tiles, such that individual application developers need not build thesecapabilitieswithintheirindividualapplications/tilesandsupportingsystems,fosteringgrowthinthedeveloperecosystembyenablingrapidintroductionofnewapplications.


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Image Processing Services

The DSP image processing services need to provide application developers a consistentmechanismtofacilitatethecaptureofdocumentimagesthroughmobiledevices,aswellastheabilitytoprocessandextractdatafromthosedocumentsasneededtocompletetransactionsandstreamlinebusinessprocesses.

Fee Disclosures and Billing

TheFeeDisclosuresandBillingcommonservice is intendedtoallowmemberstopurchaseorsubscribetopremiumfee-basedbankingservices.ThisserviceisintendedtobedifferentthanpurchasingTiles,asApplemayviewthisactivityasapplicationupgrades,subjectingthisprocessto In-App Purchase restrictions and related fees (i.e. 30% of sales). The Fee Disclosures andBilling common services providesmechanisms for chargingmembers for premium fee-basedbankingservicesoutsideofcommercialAppStores(notthroughIn-AppPurchasing).Examplesofpremiumbankingserviceswouldbeone-timeandongoingservicessuchasadvisoryservices,budgetingtools,educationalservicesandotherofferings.Fee Disclosures and Billing will leverage the disclosures infrastructure documented in theAuthenticationandPrivilegesEngineandManagementPortalProductRequirementDocumentsalongwithexistingCreditUnionbillingsystemstoallowuserstoacceptandpayforservicefeesassociatedwiththeuseofpremiumbankingservicesofferedtomembersthroughtheDigitalBanking Platform. This service supports the functionality needed forCredit Unions to disclose fees to members for premium servicesprovided through Tiles and to integrate with Credit Union backendsystemsforbillingandcollectionoffees.Management Portal Overview

TheDSPwillincludeamanagementportaltoprovidetheDSPoperator,credit union service providers, and credit union employees with theability to onboard andmanage credit unions on the system, supportusers,maintainbrandingassets,andaccessreports.Employees thatneedaccess to themanagementportalwillneed tobegivencredentialsandentitlements sufficient to perform the scope of their role(s). An administrator role will berequiredtoassignpermissionstorolesandassociateusers,orgroupsofusers,withappropriateroles. All administrative activity performed in the management portal must be logged forreportingandauditpurposes.The DSP operator and credit union service providers will be able to publish productdocumentation, announcements and other messages to the management portal usercommunitytohelpensuretheirsuccesswiththesystem.


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The four key areas that will be addressed by the management portal are credit unionmanagement,endusersupport,reporting,andcommunityinformationresources.Analytics and Reporting Overview

TheDSPwillprovidecreditunionsandtheDSPCUSOwiththeability togeneratereports foranalysisofuseractivitiesacrossthesystemviatheManagementPortal.Abaselinerequirementforthesystemistocapturealluseractionsperformedonthesystem.LoggingfunctionswillbeprovidedviatheanalyticsandreportingsystemthatispluggedinviatheApplicationGateway.Datarecordsultimatelyneedtobestoredinadedicatedreportingdatabasethatisaccessibleforgeneratingreportsaccordingtoascheduleoronanadhocbasis.Oneofthereportingoptionswillbeauserinterfaceforreportingprovidedinthemanagementportal.Standardreportswillbemadeaccessiblethroughthemanagementportal.Entitleduserswillthenbeabletocustomizethesestandardreportstomeetthecreditunion’sspecificneeds.Theabilitytosavecustomizedreportcriteriaforfutureusewillbeprovided.


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Value Proposition

Introduction

The Digital Service Platform offers value to a variety of constituencies starting with themember. Because the DSP offers a superior member experience through its ability to becompletelycustomizedby themember themselvesandanattractive total costofownership,credit unions will want to adopt the platform. The number of large credit unions that willleveragetheplatformwillinturnmaketheplatformattractivetoserviceprovidersthatwishtodeveloptiles.Resellerswillalsobeinterestedintheplatformtoimprovetheirproductoffering(andmayevenengageintiledevelopmentactivitiesthemselves).For these reasons as well as additional cost-of-ownership enhancements, clients, serviceproviders,andresellers,ownershipoftheDSPCUSOwillbeanattractivevalueproposition.Members

TheDSPcannotbesuccessfulunlessmembersrealizesubstantialbenefitsvs.whatisavailabletothemtoday.Membersaredefinedastheend-usersoftheDSPandwillbenefit infourkeyareas:

• Extensive member self-service capabilities, including complete access to their creditunion’sproductsandservices

• Superior member experience, including consistent service features across all digitalchanneltypes

• Membercontroloftheirdigitalserviceexperience• Quickeraccesstonewinnovationandextendedcapabilities

Robust traditional digital banking capabilities such as account/transaction inquiry,internal/externaltransfers,billpay,messaging,etc.arejustasubsetofthecapabilitiesthattheDSPwillprovidetomembers.Memberswillhaveaccesstoamarketplace(the“tilestore”)thatwillenablethemtoextendcapabilities.Someofthesecapabilitieswillbefree(anATM/branchlocator, for example) and somewill possibly be fee-based tiles (credit reportmonitoring, forexample). These capabilitieswill be available for all digital channels includingmobile, tablet,anddesktop.Asuperiormemberexperiencewillbeprovidedviathemesandconsistency.TheDSPCUSOwillmake a base set of themes available to credit unions that have incorporated current userexperiencedesignelements.Creditunionscanopttocustomizethosethemesfurtherifdesiredorbrandwithintheexistingthemes.Consistencywillbeprovidedthroughuseofcommonuserinterface design across mobile, tablet, and desktop form factors. However, where a givendevicetypehasuniquecapabilitiessuchascameraorGPS,thesewillbeleveragedbytheDSP.


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Memberswillbeabletocustomizetheirexperiencetosuittheirindividualneedsbyaddinganddeleting tiles. Adding tiles will be accomplished via the tile store that will offer additionalapplicationsbeyondtraditionaldigitalbankinginafamiliar“appstore”paradigm.

The tile store provides members with access to a broader range of services that otherwisewould not be available. For example, a credit union may not deploy personal financialmanagement(PFM)technologyforitsmembersduetothehighcostofofferingtheservice.Afee-basedtileofferingcouldmakethispossible.Inaddition,memberswillrealizequickeraccessto new innovation and enhancements in the tile store thanks to offerings from a variety ofserviceproviders.

Clients

Clientswillbeabletoenjoyafavorablecoststructurewhileofferingsuperiorcapabilitiesandmemberexperience.ClientsaredefinedascreditunionsthatoperatetheDSPforthebenefitoftheirmembershipandwillbenefitinfourkeyareaswhichcanbesummarizedasfollows:

• Abilitytoofferallofthebenefitsdescribedin“Member”valuepropositionincluding:o Extensive member self-service capabilities, including complete access to their

creditunion’sproductsandserviceso Superior member experience, including consistent service features across all

digitalchanneltypeso Membercontroloftheirdigitalserviceexperienceo Quickeraccesstonewinnovationandextendedcapabilities

• Increasedbreadthofapplications fromavarietyofServiceProvidersandreportingonutilization

• Lowertotalcostofoperationandpotentialrevenueopportunity• Greatlyreducedtechnical/integrationandregulatoryburden

First,Clientswillbeabletoofferasolutiontomembersthathasallofthebenefitsdescribedinthe “Member” value proposition including robust digital banking capability, access to a tilestore with access to additional applications, and a consistent, customizable user experiencethattakesadvantageofuniquedeviceformfactors,etc.Clientswillbeabletoleveragethepowerofthecreditunionprovidermarketplacetodeliverabroaderrangeofservicestomembersvs.traditionaldigitalbankingviathetilestore,includingsalesandfulfillmentapplicationsthatgeneratebalancesandfees.Thenumberof largecreditunionClientsrunningtheplatformmayalsoenablethemtoinfluencetheirthirdpartyvendorsto become Service Providers and develop tiles, further increasing the number of servicesavailablewithin theDSP.Clientswillbeable touse theDSP’s reporting capabilities togainadeeperunderstandingofmemberpreferencesandusagepatternsvs.competingsolutions.TheDSPoffersClientslowerdeploymentandoperatingcostsvs.“for-profit”solutionproviders.In addition, Clients will be able to offer premium services via fee-based tiles that generate


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additional revenue—these include applications that Clientsmay not havemade available tomembersinthepastforcostreasons.Clients have an opportunity to simplify their technical and integration environments byleveraging the outsourced DSP solution. Separate applications for each channel (sometimesmultiple applications for a given channel) can be eliminated alongwith any internal hostinginfrastructure.IfaClientwishestodevelopitsowntiles,itwillhavetheabilitytodesign,test,and deploy new features and services with less integration friction than other solutions,leveraging capabilities such as pre-built authentication. From a regulatory and securitystandpoint, a standard vendor onboarding and certification processwill be used by the DSPCUSOforthird-partytiles.Clients are initially contemplated to be CreditUnions. This does not preclude other types ofentitiesfrombecomingClientsinthefuture. Owner-Operators

Owner-OperatorsareasubsetofClients,withthekeydifferencebeingthatOwner-Operatorshave a Class A ownership stake in the DSP CUSO. Owner-Operators enjoy all of the Clientbenefitsthatweresummarizedaboveincluding:

• Abilitytoofferallofthebenefitsdescribedin“Member”valuepropositionincluding:o Extensive member self-service capabilities, including complete access to their

creditunion’sproductsandserviceso Superior member experience, including consistent service features across all

digitalchanneltypeso Membercontroloftheirdigitalserviceexperienceo Quickeraccesstonewinnovationandextendedcapabilities

• Increasedbreadthofapplications fromavarietyofServiceProvidersandreportingonutilization

• Lowertotalcostofoperationandpotentialrevenueopportunity• Reducedtechnical/integrationandregulatoryburden

Ownershipprovidesadditionalbenefitsincluding:

• FurtherimprovementintheDSPcostofoperationmodel• Abilitytorealizedividends/gainsasaDSPCUSOowner• Influenceoverdevelopmentguidelines

ThecostmodeloftheDSPCUSO,alreadyfavorableforClients,isfurtherimprovedforOwner-Operators,asthemarkuponchargesbilledtoOwner-OperatorswillbelessthanthemarkuponchargesbilledtoClients.AsaDSPCUSOClassAmember,Owner-Operatorswillhavetheopportunity toparticipate individends (onceprofitability isachieved fromsourcessuchasClientcharges,ServiceProvider


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charges,etc.)andpotentiallyparticipateinrealizingagainonsaleoftheDSPCUSOshouldthateveroccur.Owner-OperatorswillhavetheabilitytoinfluencedevelopmentguidelinesthatprovidespecificstandardswhichdeveloperswillberequiredtomeettoutilizetheApplicationContainer.Theywill also serve in a technical advisory role, providing the DSP CUSO CEO guidance on futurefunctionality and architecture enhancements. Corporate credit unions may present anincidental business-to-businessOwner-Operator use case, as theymay use theDSP CUSO toprovidedigitalservicestotheirownmembership.

Service Providers

ServiceProviderswillbeabletotakeadvantageofthenumberofClientsthatwillbeoperatingthe DSP (and their membership) to offer services via tiles. Service Providers, sometimesreferredtoasDevelopers,aredefinedascorporatecreditunions,CUSOs,andothersthatofferoneormoreservices,accessibleviatiles,toClientsoftheDSP.ServiceProviderswillbenefitintwokeyareas:

• AccesstotilestoretoofferservicestoClientsandultimatelytheirmembers• Fasterspeed-to-marketandlowerdevelopment,support,andcompliancecosts

ServiceProviderswillbeabletodeveloptilesandmakethemavailableviathetilestore.ThesetileswouldthenbeavailabletoallClientsoperatingtheDSPandtheycanchoosetomakethemavailabletotheirmembers.AkeybenefitofthetilestoretoServiceProvidersisthe“one-stop”opportunitytoselltomanycreditunions(andtheirmembership),reducingsalesandmarketingcosts. Tiles can generate income for Service Providers via making tiles fee-based or viaincreasedvolumeforservicesprovidedbytiles(increasedloanvolume,forexample).Inaddition,ServiceProviderswillrealizefasterspeed-to-marketaswellaslowerdevelopment,support, andcompliancecostsbyoffering tiles via theDSP.Development costswillbe lowerduetoavailabilityofreusablecommonservicessuchascoreintegration,reusabledeploymentinfrastructure (tile store, containers, developer portal, etc.), and pre-built authentication. Infact, Service Providers will not need to consider the unique qualities of any core system orauthenticationmodeltocreateanewservicetile.ThetilereviewprocesswillensureadherencetoDSPtechnicalandsecuritystandards.Owner-Service Providers

Owner-ServiceProvidersareasubsetofServiceProviders,with thekeydifferencebeing thatOwner-Service Providers have a Class A ownership stake in the DSP CUSO. Owner-ServiceProvidersenjoyalloftheServiceProviderbenefitsdescribedaboveincluding:

• AccesstotilestoretoofferservicestoClientsandultimatelytheirmembers• Fasterspeed-to-marketandlowerdevelopment,support,andcompliancecosts

Ownershipprovidesadditionalbenefitsincluding:


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• Reducedcostsfordeployingtilesandquickerturnaroundvs.non-owners• Abilitytorealizedividends/gainsasaDSPCUSOowner• Influenceoverdevelopmentguidelines

Owner-ServiceProviderswillhavepreferredpricingvs.non-ownersfortiledeployment-relatedfees. In addition, they will have a “gold” or equivalent status that may positively influencebuyers (similar to theSymitar“VIP”program, forexample).Owner-ServiceProviderswillalsoreceivepriorityforcodereviewwhichisrequiredtoputaneworupdatedtileintoproduction.As a DSP CUSO Class A member, Owner-Service Providers will have the opportunity toparticipate in dividends (once profitability is achieved from sources such as Client charges,ServiceProvidercharges,etc.)andpotentiallyparticipateinrealizingagainonsaleoftheDSPCUSOshouldthateveroccur.Owner-ServiceProviderswillhavetheabilitytoinfluencedevelopmentguidelinesthatprovidespecific standards which developers will be required to meet to utilize the ApplicationContainer. They will also serve in a technical advisory role, providing the DSP CUSO CEOguidanceonfuturefunctionalityandarchitectureenhancements.Owner-Resellers

Owner-Resellers aredefinedas corporate credit unions andCUSOswith aClassAownershipstake intheDSPCUSOthatresell theDSPtofinancial institutionClients.Owner-Resellerswillbenefitinfivekeyareaswhichcanbesummarizedasfollows:

• Abilitytoresellasolutionwhichoffersallofthebenefitsdescribedin“Member”valuepropositionincluding:

o Extensive member self-service capabilities, including complete access to theircreditunion’sproductsandservices

o Superior member experience, including consistent service features across alldigitalchanneltypes

o Membercontroloftheirdigitalserviceexperienceo Quickeraccesstonewinnovationandextendedcapabilities

• Abilitytorealizerevenueasaresellerofthebasesolution(withpreferentialpricingforowners)andasadeveloperorresellerofadditionaltiles;resellerswillhaveexclusivitytoresellthesolutionwithintheirmarketsegments

• AbilitytobroadentheOwner-Reseller’sclientbasebecauseoftheDSPoffering• Abilitytorealizedividends/gainsasaDSPCUSOowner• Influenceoverdevelopmentguidelines

First,Owner-Resellerswillbeabletoofferasolutiontotheirclientsthathasallofthebenefitsdescribedinthe“Member”valuepropositionincludingrobustdigitalbankingcapability,accessto a tile store with access to additional applications, and a consistent, customizable userexperiencethattakesadvantageofuniquedeviceformfactors,etc.


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Owner-Resellerswill be able to realize revenue as a reseller of the base solution. Favorablepricing forownersenablesOwner-Resellers to realize anattractivemarginonDSP services ifdesired. Inaddition,Owner-ResellerscanrealizerevenuefromdevelopingtheirowntilesasaService Provider and from offering value-added services such as first-line and second-linesupportoftheDSP.TheDSPwill enableOwner-Resellers tooffer anadditional solution thathas thepotential tobroadentheirclientbase.Again,Owner-ResellersmayalsochoosetobecomeServiceProvidersandoffer tiles through the tile store. This in turnhas theopportunity to generateadditionalrevenue for the Owner-Reseller through fee-based tile revenue or via increased volume forservicesprovidedbytiles(increasedloanvolume,forexample).

As aDSP CUSOClass Amember,Owner-Resellerswill have the opportunity to participate individends (onceprofitability isachieved fromsourcessuchasClientcharges,ServiceProvidercharges,etc.)andpotentiallyparticipateinrealizingagainonsaleoftheDSPCUSOshouldthateveroccur.Owner-ResellerswillhavetheabilitytoinfluencedevelopmentguidelinesthatprovidespecificstandardswhichdeveloperswillberequiredtomeettoutilizetheApplicationContainer.Theywill also serve in a technical advisory role, providing the DSP CUSO CEO guidance on futurefunctionalityandarchitectureenhancements.

While corporate credit union and CUSOOwner-Resellers are targeted initially, this does notprecludeadditionaltypesofentitiesfromresellingtheDSPinthefuture,includingnon-ownerentities.


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Initial Market Opportunity

Introduction

Themarket opportunity for each potential stakeholder of the DSP is defined in this section.Discussionofmarketopportunity includespotential investors aswell aspotential customers.GuidelinesforsegmentstargetedasOwnersandClientsareincludedbutthisdoesnotprecludetheDSPCUSOfromtargetingdifferentgroupsatalatertime.Owner-Operators

Owner-Operators will be the first institutions to deploy to DSP beginning in 2018 and areexpected tobenaturalpersoncreditunions.Todate,eightOwner-Operatorcandidateshavebeen identified (including the three that Open-Tech services). If adequate funds cannot beraised fromtheOwner-OperatorandOwner-Resellercandidatesalready identified,additionalOwner-Operatorcandidatescouldbepursued.AdditionalcriteriaforOwner-Operatorsincludes:

• InterestintheOwner-Operatorvaluepropositiondescribedearlier• AbilitytoinvestintheCUSOattheneededcapitallevel• AbilitytointegratewiththeDSPviaoneofthethreecoreintegrationmethodsorCUFX

asdescribedonClientmarketopportunityslide• CommitmenttoconvertingtotheDSP

ThemostlikelycandidatesforOwner-OperatorswouldcomefromthepoolofpotentialClients(discussedon theupcomingClients slide). Potential Clients include120natural person creditunionswith$1billioninassetsormorerunningonofthethreecoreswithdirect integration.These120creditunionshave10.5millionmembersusingdigitalchannelsperNCUAdata.The guideline of $1 billion threshold does not preclude smaller, aligned credit unions frombecomingOwner-Operatorsshouldtheneedarise.However,theselargercreditunionswillbetargetedinitially.Owner-Resellers and Owner-Service Providers

Owner-Resellers will be the institutions responsible for reselling DSP services to Clientsbeginninginapproximately2020.Owner-ServiceProviderswilldevelopcontent(“Tiles”)fortheDSPfortheirownuseorusebyClients.EachoftheseentitiesareexpectedtobeCUSOsand/orcorporatecreditunions.Todate,twoOwner-ServiceProvidercandidateshavebeenidentified,includingoneCUSOandonecorporatecreditunion.Inaddition,twoadditionalCUSOshavebeenidentifiedasOwner-Service Providers. If adequate funds cannot be raised from theOwner-Operator andOwner-Reseller candidates already identified, additionalOwner-Reseller andOwner-Service Providercandidatescouldbepursued.


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AdditionalcriteriaforOwner-ResellersandOwner-ServiceProvidersincludes:• Interest in the Owner-Reseller and/or Owner-Service Provider value proposition

describedearlier• AbilitytoinvestintheCUSOattheneededcapitallevel• IfanOwner-Reseller,abilitytoreselltheDSPtoClientsbeginningin2020and/orability

todeveloptilesbeginningin2017(unauthenticated)or2018(authenticated)• If an Owner-Reseller, no direct competition with other Owner-Resellers (exclusivity

withinmarketsegment)2008 data from CU Answers showed a universe of 515 wholly-owned and 177multi-ownedCUSOs that could be potential candidates to be Owner-Service Providers. Because of directcompetition and because the DSP value proposition may not be relevant due to segmentspursuedbysomeoftheseCUSOs,halfofthesemaynotbepotentialtargets.Clients (non-Owners)

ClientswillbeinstitutionsthatdeploytheDSPanddonothaveaClassAownershipstake.InitialClientsarewillbenaturalpersoncreditunionsthatareabletointegratewiththeDSPviaoneofthe following four methods: Symitar Episys connector, Fiserv DNA connector, Fiserv XP2connector,orgenericCUFXconnectorPotential Clients include 120 natural person credit unions with $1 billion in assets or morerunningonofthethreecoreswithdirectintegration.These120creditunionshave10.5millionmembersusingdigitalchannelsperNCUAdata.Again, the guideline of $1 billion threshold does not preclude smaller, aligned credit unionsfrombecomingClientsshouldamutuallybeneficialvaluepropositionexist.Infact,374naturalpersoncreditunionswith16milliondigitalchannelsusersrunononeofthethreecoreswithdirectintegrationperNCUAdata.However,thelargercreditunionswillbetargetedinitially.Owner-Resellers will have responsibility for sales to Clients, as no direct sales capability iscontemplatedbytheDSPCUSOcurrently.ResellingisanticipatedtobeginatthepointwherealloftheOwner-Operatorshaveconverted(orarewellintotheconversionprocess).Additional Clients are not contemplated in the financial model but may be targeted in thefuture due to the benefits a Digital Service Platform can provide tomany kinds of financialservicescompanies.PotentialClientsthatcouldbepursuedinthefutureinclude:

• Banks• Specialtylenders(creditcard,mortgage,etc.)• Alternative/marketplacelenders(LendingClub,etc.)• Alternativedepositoryinstitutions(GreenDot,etc.)• Otherfinancialservicescompaniessuchasinsurers


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Development Strategy

Introduction

A third-party development partner will be engaged to develop the production DSPenvironment.Aphasedapproachwillbeusedtodeliversolutioncomponentsoverthenearlythree-year development period. The four phases will deliver baseline infrastructure,unauthenticatedcontainercapabilities,mobilebanking,andthenonlinebanking.The Phase 0 statement of work with the development partner will be a time andmaterialsengagement.However,amajordeliverableinthisphasewillbetheworkbreakdownstructureandresourceplannecessarytodeliverafixed-bidengagementfortheremainingphases(Notethata“nottoexceed”numberwasutilizedforthebusinessplanestimate).One bid from Mobile Strategy Partners (MSP) has been secured for development. Phase 0containstheactualdevelopmentcosts incurredtodateandPhase1-3isatimeandmaterialsestimatewitha“nottoexceed”priceof$15,000,000:

Phase0: $674,000Phase1: 2,860,000Phase2: 6,338,000Phase3: 5,802,000Subtotal $15,674,000Add:DeveloperPortal 2,250,000TOTAL $18,033,000

ThePhase1-3estimatealsoincludes$500,000towardimplementationofoneunauthenticatedcontainer per owner for up to 10 containers total. Since this will be part of the initialinvestmentrequestitwillnotbebilledbacktotheownersasadirectexpense.MSPprovidedanoriginalestimate(nolongerincludedintheestimateabove)of$1.06millionforuserexperiencedevelopmentwork.TheDSPCUSOwillneedtofindanalternativefirmorinternalresourcestoconductthisworkeffort.An appraisal of the MSP Phase 0-3 bid was secured from a third party. After reviewingdocumentationand interviewingMSP, the thirdparty created itsowndevelopmentestimateandagreed that theoverallprojectcostand timelineprovidedwere reasonable.Further, thethird party noted that the level of detail in the design documentswasmore comprehensivethanusualatthisstagewhichwill reducetherisk inthedevelopmenttimeline.Developmentrisk is further reducedwithMSP’s agreement to a fixedbid. The financialmodel includes anadditional development contingency to account for features not considered in the estimate,furtherdecreasingrisk.


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CapabilitiestobeDeliveredbyPhase

Phase0Ramp-up(‘16)

Phase1UnauthenticatedContainer(‘17)

Phase2MobileBanking

(‘18)

Phase3OnlineBanking

(‘19)

Capability

NoCapabilitiesorTileswillbedeliveredinthisPhase.Theactivitiesbelowwillbecompleted:• Detaileddesign• Phase1-3workbreakdownstructureandresource/costestimate

• MFAtoolselection• Entitlementstoolreviewandbuy/buildrecommendation

• Confirmationofsupportingtoolstack

• UnauthenticatedContainer

• ApplicationGateway• ExternalConnectorFramework

• AuthenticationandPrivilegesEngine(Branding)

• ManagementPortal(basicCUandtilesetup,logging)

• FullAuthenticatedContainer

• MultifactorAuthentication

• AuthenticationandPrivilegesEngine(TileGroups)

• CoreConnections(Symitar,DNA,XP2,CUFX)

• ManagementPortal(memberenroll-ment,profilemgt.,Container-leveldisclosures/entitle-ments,securemess-aging,basicreports)

• BasicDeveloperTools(andsupport/training)

• MessagingandAlerts(basic,deliverytomessagingtiles)

• AuthenticationandPrivilegesEngine(non-memberenrollment)

• ManagementPortal(non-memberenrollment,Tile-leveldisclosures,andentitlements,extendedreporting)

• MessagingandAlertsEngine(extendeddeliverytopush,SMS,andemail)

• ImageProcessingServices

• FeeDisclosuresandBillingIntegration

• ExtendedDeveloperTools

TileDevelopment

• NewAccountOpening(Gro)–notfundedbyDSPCUSO

• Balances• Transfers• BasicMessagingTiles(CoreMessagingTile+UnauthenticatedMessagingTile)

• EnrollmentfromMobile

• ManageTiles(basic,asmodeledinPoC)

• ExpandedCoreMessagingTileFeatures

• RemoteDepositCapture(Ensenta)

• BillPay(Checkfree)• BillPay(Metavante)• AccounttoAccountTransfers(backendTBD)

• PersontoPersonTransfers(backendTBD)

• eStatements• ManageTiles(“TileStore”)

DevelopmentTime 5months 5months 12months 12months

Agroupofpartnerssharingthisdevelopmentexpenseofapproximately$18millionsolvestheproblemsdescribedearlier:

• Highdependenceonasmallnumberoflargevendors• Restrictiveandexpensivevendorcontractsandcustomsolutions• Lackofnewfeaturesbeingintroducedbyvendorswithslowtimetomarket• Marketperceptionthatlargenationalbanksofferbetterdigitalsolutions• Limitedreuseofinvestmentsacrosschannels• Memberexperiencesthatvaryacrosschannels


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Operating Model

Introduction

AstheDSPCUSOmovesfromadevelopmentstatetoanoperatingstate,theOperatingModelwillevolve.Initially,theDSPCUSOwillbeheavilyreliantonoutsideprovidersfordevelopmentandsupport,butasproductionusageofthesolutionbegins internalresourceswillbeadded.Ultimately, the DSP CUSO will have internal resources for development, support,implementation,developer relations,andproductmanagementandwill continue to leveragethirdpartiesforinfrastructureandadministrativeservices.Functions Sourced Internally

The first positions formed upon funding of the DSP CUSO are those of the Chief ExecutiveOfficer (CEO) and Chief Technology Officer which will also carry Chief Information SecurityOfficerresponsibilities.Application support, implementation support, and applicationdevelopment resourceswill beadded over time, ultimately eliminating dependence on the external development partner(although it does not preclude the DSP CUSO from continuing to work with the partner asdesired).OtherpositionsthatwillbestaffedincludeaProductManagerandaDeveloperRelations/TileReviewManager.

FunctionsSourcedInternallyPhase0

Ramp-up(‘16)


Phase2MobileBanking

(‘18)

Phase3OnlineBanking

(’19)

Phase3Ongoing('20-)

• None • Admin(CEO)• CTO/CISO

• Admin(CEO)• CTO/CISO• DSPApplicationSupport***

• DSPImplementationSupport**

• Admin(CEO)• CTO/CISO• DSPApplicationSupport***

• DSPImplementationSupport*****

• DSPProductManagement

• DeveloperRelations/TileReview**

• DSPApplicationDevelopment**

• Admin(CEO)• CTO/CISO• DSPApplicationSupport*

• DSPImplementationSupport***

• DSPProductManagement

• DeveloperRelations/TileReview

• DSPApplicationDevelopment

• UXDevelopment* SupporttoClientinstitutionsonly** SharedresponsibilitywithDSPCUSO*** SomedirectimplementationactivitieswillbeconductedbyOwner-Operators,Owner-ServiceProviders,andClients

directly


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Functions Sourced Externally

As noted above, the DSP CUSO will be heavily reliant on its development partner initially.Gradual addition of DSP CUSO resources from Phase 2 through Phase 3 will eliminatedependenceonthedevelopmentpartnerfordevelopment,support,andimplementation.Externalproviderswillbeleveragedforkeyinfrastructure,includingAmazonWebServicesforhostingandamulti-factorauthenticationprovidertobedetermined.ThiseliminatestheneedforadatacenterandforcustomdevelopmentofaMFAsolution.Third partieswill also be leveraged for professional services such as financial audit, controlsaudit, managed security, and legal. In addition, one of the Owner-Operators will performadministrativefunctionsdescribedinthenextsection.

FunctionsSourcedExternallyPhase0

Ramp-up(‘16)


Phase2MobileBanking

(‘18)

Phase3OnlineBanking

(’19)

Phase3Ongoing('20-)


• DSPInfrastructure• DSPProductManager

• Multi-FactorAuth.• Legal


• DSPInfrastructure• Multi-FactorAuth.• DSPApplicationSupport*

• UXDevelopment• DSPProductManagement

• Legal• ManagedSecurity• FinancialAudit• PenetrationTesting• SecureCodeAudit• SOC2TypeIIReport


• DSPInfrastructure• Multi-FactorAuth.• DSPApplicationSupport***

• UXDevelopment**• DSPProductManagement

• DSPImplementationSupport*****



• DSPInfrastructure• Multi-FactorAuth.• DSPApplicationSupport***

• UXDevelopment**• DSPImplementationSupport*****


• DSPInfrastructure• Multi-FactorAuth.• ManagedSecurity• FinancialAudit• PenetrationTesting• SecureCodeAudit• SOC2TypeIIReport

• Legal

* SupporttoClientinstitutionsonly** SharedresponsibilitywithDSPCUSO*** SomedirectimplementationactivitieswillbeconductedbyOwner-Operators,Owner-ServiceProviders,andClients

directly


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Functions Sourced Externally to an Owner-Operator

TheDSPCUSOdoesnotintendtobuildoutcertainadministrativefunctions,insteadoptingtoleverageoneoftheOwner-Operatorsfortheseservices.Thiseliminatestheneedfordedicatedstaffandsystems.CoastalFCU inRaleigh,NC,hasagreedtoperformadministrativefunctionsfortheDSPCUSOincludingfinance,billing,humanresources,andenterpriseIT(i.e.,thosesolutionsnothostedatAWS).CoastalhasalsoagreedtoprovidefacilitiestohouseDSPCUSOstaff.MostDSPCUSOstaffwillbehoused inCoastal’sheadquarters inRaleigh.Somedevelopmentandsupporttalentfromthedevelopmentpartnermayberetained,leavingopenthepossibilityof a portion of theDSPCUSO staffworking remotely from their homes, in the developmentpartner’slocation,oradifferentlocationinthesamegeographicareaoncethesefunctionsareassumedbytheDSPCUSO.

FunctionsSourcedExternallytoanOwner-OperatorPhase0

Ramp-up(‘16)


Phase2MobileBanking

(‘18)

Phase3OnlineBanking

(’19)

Phase3Ongoing('20-)

• CapitalRaiseCoordination

• ExternalProviderCoordination

• FinanceandBoardReporting

• HumanResources• EnterpriseIT(exDSP,MFA,etc.)

• Facilities



• Facilities• BillingandA/R








Page35

Owner-Operator Responsibilities

Owner-OperatorshavearesponsibilitytoguidethedirectionoftheDSPCUSOthroughactiveboardandtechnologycommitteeparticipation.Ultimately,eachOwner-OperatorwillhavetheresponsibilityofmigratingtotheDSPplatform.Each Owner-Operator will be responsible for their institution-specific conversion activitiesincluding testing, branding, andworkingwith their third-party vendors asnecessary.Once inproduction,Owner-Operatorswillprovidefirst-linesupporttotheirmembers.Optionally,Owner-Operatorsmaychoosetodevelopandsupporttheirowntiles.TilescouldbefortheexclusiveuseoftheOwner-OperatorortheycouldbemadeavailabletootherClients.Ineithercase,theOwner-Operatorisresponsibleforsupportingtheircustomtiles.

Owner-OperatorResponsibilitiesPhase0

Ramp-up(‘16)


Phase2MobileBanking

(‘18)

Phase3OnlineBanking

(’19)

Phase3Ongoing('20-)

• BusinessCommitteeParticipation

• TechnologyCommitteeParticipation**

• CapitalContribution

• BoardandBoardCommitteeParticipation


• TileDevelopment(optional)



• DSPUserAcceptanceTesting

• UXConfigurationandBranding

• TileDevelopmentandSupport(optional)





• DSPImplementation*

• DSPfirst-linemembersupport






• DSPImplementation*

• DSPfirst-linemembersupport


* Implementsolutionandproviderelatedimplementationsupportforowninstallation** CommitteeservesinanadvisoryroletotheDSPCUSOCEO


Page36

Owner-Reseller and Owner-Service Provider Responsibilities

LikeOwner-Operators,Owner-Resellers andOwner-Service Providers have a responsibility toguide the direction of the DSP CUSO through active board and technology committeeparticipation.Owner-ServiceProviderswilldevelop(orcontractfordevelopment)andsupporttheirowntiles.Tiles could be for the exclusive use of the Owner-Service Provider or they could be madeavailabletootherClients.Inanycase,theOwner-ServiceProviderisresponsibleforsupportingtheircustomtiles.Owner-Resellers will have responsibility for reselling the DSP once it becomes available forresale.Owner-ResellerswillhavearoleinassistingtheirClientswithmigratingtotheDSPandmay offer optional value-added services such as first-line member support and second-lineClient support. Owner-Resellersmay also beOwner-Service Providers should they choose todeveloptheirowntiles.

Owner-ResellerandOwner-ServiceProviderResponsibilitiesPhase0

Ramp-up(‘16)


Phase2MobileBanking

(‘18)

Phase3OnlineBanking

(’19)

Phase3Ongoing('20-)


• BusinessCommitteeParticipation


• CapitalContribution



• TileDevelopment(ifServiceProvider)



• TileDevelopmentandSupport(ifServiceProvider)







• DSPUserAcceptanceTesting(ifReseller)

• DSPfirst-linemembersupport(ifofferedasReseller)

• DSPsecond-lineClientsupport(ifofferedasReseller)

• Sales(ifReseller)** CommitteeservesinanadvisoryroletotheDSPCUSOCEO


Page37

DSP CUSO Resource Model

Chief ExecutiveOfficer and Chief TechnologyOfficer (with Chief Information Security Officerresponsibility)positionswillbestaffed initiallytoguidetheearlystagesoftheDSPCUSOandprovideoversighttothirdpartydevelopmentactivities.Resources will be gradually added as the DSP CUSOmoves from a development stage to aproductionstage.Eachactivecontainerisexpectedtoaddapproximately1FTEinadirectsalesmodeland3/8FTE in theresellermodel (shouldthatmodelbepursued).TheFTEaddition ismade up of partial FTE of each of four resource types: development, application support,engineering,andimplementationsupport.ProductManagerandDeveloperRelations/TileReviewManagerpositionswillalsobeaddedastheDSPmovesintoproductiontosupportenhancementstothesolutionandadditionofnewtilesfromServiceProviders.ProjectedDSPCUSOHeadcount(modelassumesdirectsalesonly) 2016

(Phase0)2017

(Phase1)2018

(Phase2)2019

(Phase3)2020

(ongoing)2021

(ongoing)2022-

(ongoing)LiveClients:Unauthenticated 0 1 9 12 16 22 26

LiveClients:Authenticated 0 0 1 5 12 22 26

ApplicationDevelopment 0 1Dev 1Mgr

1Dev1Mgr2Dev

1Mgr4Dev

1Mgr6Dev

1Mgr7Dev

ApplicationSupport andEngineering (incl.AWS)

01Mgr1Supp1Eng

1Mgr1Supp1Eng

1Mgr2Supp2Eng

1Mgr4Supp4Eng

1Mgr6Supp6Eng

1Mgr7Supp7Eng

ImplementationSupport 0 1Mgr

1BA1Mgr1BA

1Mgr2BA

1Mgr4BA

1Mgr6BA

1Mgr7BA

OtherPositions CEOCTO/CISO

CEO

CTO/CISO

ProductMgr.

DevRel./TileReviewMgr.

CEO

CTO/CISO

ProductMgr.


CEO

CTO/CISO

ProductMgr.


CEO

CTO/CISO

SalesMgr.ProductMgr.


CEO

CTO/CISO

SalesMgr.ProductMgr.


ProjectedTotalFTE 0 8 11 15 23 32 36


Page38

Financial Model

Introduction

ThedetailedFinancialModel,whichcanbefoundinaspreadsheetreferencedintheAppendix,contains a 10-year projection of cash flow for theDSP CUSO. This discussion covers the keyassumptionsusedinthemodel.Alsoseethe“ScenarioAssumptions”tabinthemodelitselfalong with implementation dates for individual Owner-Operators, as these directly drivemodelresults.Changestotheassumptions,realizationofrisksdescribedlaterinthisPlan,aswell as other differences in execution from this Plan and the model assumptions maymateriallyalteractualresults.Key Assumptions

Themodel is available in a consolidated form and can be adjusted to account for scenarioswhere only Owners are leveraging the solution and where additional direct Client sales arelayeredonto theOwners-only scenario.A standalone tabdescribes the impactof anOwner-Resellerresellingtheunauthenticatedcontainersolution.Revenueincludesthefollowing:

• Monthly costs billed to Owner-Operators, Owner-Resellers, and Owner-ServiceProviders,markedupbasedonthepercentagenotedinthemodel

• ImplementationcostsbilledtoOwner-OperatorsandOwner-ServiceProviders• Monthlycostsbilledtonon-OwnerServiceProvidersandClients,withahighermarkup

basedonthepercentagenotedinthemodel• Implementationcostsbilledtonon-OwnerClients• TilefeesfromServiceProviders

Revenuedoesnotinclude:

• ResellerincomefromDSPCUSOresellingservicessuchasbillpayExpensesinclude:

• DSPDevelopmentExpenses• DSPOperatingExpenses(AmazonWebServices(AWS),thirdpartysystemsupport,etc.)• PersonnelExpenseforinternalemployees• TravelExpensesforemployees,managers,etc.• Directequipmentandsuppliesexpensesforinternalemployees• Professionalandotherservicefees(audit,security,insurance,etc.)• Sharedserviceexpenses(Accounting,HR,Facilities,etc.)

Expensesdonotinclude:

• Out-of-scopedevelopment costs (forunique tiles/capabilities thatMSP isnotbuildingforallofthePartners)

• Implementationcosts(inthiscase,costsincurredfromPartners’thirdpartyproviders)


Page39

• CustomUserExperiencethemedevelopment• Third party service costs (Bill pay, A2A, P2P, multi-factor authentication, enterprise

servicebus,newaccountopening,imagedepositprocessing,etc.)• Enterprise service bus implementation (if necessary—would only apply to reseller or

creditunionifSymitarEpisys,FiservDNA,orFiservXP2isnotthecoresolution)

Fixed vs. Variable Costs

Reoccurringcostsareconsidered“fixed”andincludealloftheexpensesnotedabovewiththeexceptionofmostof theAWScostswhichwill beusage-based. These fixedexpensesensureongoing operation of theDSP CUSO andwill be shared amongOperators, Service Providers,Resellers,andClients.VariablecostsincludecostsassociatedwithactualusageoftheDSPplatformcontainers(AWSandMFAcosts,primarily).AnaveragecostpergeneralAPIcallandaveragecostperimageAPIcall hasbeenestimatedbyMSPandwill bebilledmonthly toDSPCUSOmembersbasedonlogged usage. Per earlier discussion, a higher markup will be applied to non-Ownertransactions.Theaveragecostswillbe reviewedperiodically toensurealignmentwithactualAWScharges.A“bundled”per-user,per-monthpricingofferingforClientsmaybeofferedinthefuturebutisnotcontemplatedatthistime.Expense Allocation Methodology

Expenseswillbeallocatedasfollows:Phase 0

AllexpenseswillbesharedequallyamongthePartnerspertheAgreement.Phases 1 through 3 (and continuing into 2019 and 2020)

All fixed expenses as described above will be shared equally among the Partners per theAgreementandareincludedintheinitialinvestment.CoststobebilledtoanindividualPartnermayinclude:

• Containerimplementationcosts(MSPestimatesanaverageunauthenticatedcontainerimplementation cost of $50,000 and an average authenticated containerimplementation cost of $250,000, with the business case assuming only theauthenticatedcontainerimplementationchargeispassedthroughtoPartners)

• Incrementalstaffingcosts forsupport,engineering, implementation,anddevelopmentresourcethatscalewiththenumberofclients

• VariablecostsforproductionuseofUnauthenticatedContainer,onceavailable(waivedduringbetaperiod)


Page40

• Variable costs for production use of Authenticated Container, once available (waivedduringbetaperiod)

Partnersmayalsoincurcostsdirectly(andarenotpartofthefinancialmodeling).ThesecostsarebilleddirectlytoPartnersbywhomevertheycontractwithandmayinclude:

• Out-of-scopedevelopment costs (forunique tiles/capabilities thatMSP isnotbuildingforallofthePartners)

• Implementationcosts(inthiscase,costsincurredfromPartners’thirdpartyproviders)• CustomUserExperiencethemedevelopment• Thirdparty service costs (Bill pay,A2A, P2P,multi-factor authentication, newaccount

opening,imagedepositprocessing,etc.)• Enterprise service bus implementation (if necessary—would only apply to reseller or

creditunionifSymitarEpisys,FiservDNA,orFiservXP2isnotthecoresolution)

Summary Financial Model and Discussion: Owner-Operators Only

Theten-yearfinancialmodelforOwner-Operatorscanbefoundonthenextpage.Thismodelassumes twelve Owner-Operators only. Other models follow that cover sales to additionalClientsdirectlyorviaresellers.The model suggests that initial capitalization will be enough to cover projected capital andoperatingexpenses (netofrevenue)throughPhase3ofdevelopmentwhichextendsthrough2018, and into implementation extending through 2020. Fixed costs were established in amannerthatresultsinabreak-evencashflowprojectionbymid-2020.Notethatamortizationofdevelopmentexpensesresultinnegativeprofitabilityandcostoflivingincreasesforexpenseitemsreduceprofitabilityprojectionsinsubsequentyears.ProjectionsarebasedonproductionuseofContainersbyOwner-Operatorsasfollows(assumes8 Class A members that all implement a total of 9 Authenticated and 9 Unauthenticatedcontainers and 8 Class B members that implement the same number of Authenticated andUnauthenticatedcontainers): 2016

(Phase0)2017

(Phase1)2018

(Phase2)2019

(Phase3)2020

(ongoing)2021

(ongoing)2022-

(ongoing)LiveOwner-Oprs:Unauthenticated 0 1 9 12 15 17 17

LiveOwner-Oprs:Authenticated 0 0 1 5 11 17 17


Page41

TENYEARFINANCIALMODEL--CONSOLIDATEDDescription 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025IncomeCategory

ImplementationFees 0 0 250,000 1,000,000 1,500,000 1,500,000 0 0 0 0UsageFees 0 10,887 414,230 2,200,619 5,178,585 9,719,259 10,784,537 10,976,126 11,083,119 11,196,472DeveloperProgramFees 0 0 76,664 193,198 231,242 250,296 246,070 248,446 249,738 251,109InterestIncome 0 243,965 158,943 65,621 13,294 41,260 80,126 112,644 145,589 179,044TotalIncome 0 254,852 899,838 3,459,437 6,923,122 11,510,814 11,110,733 11,337,216 11,478,446 11,626,625

ExpensesCategoryCompensation 0 1,608,200 2,349,200 2,856,200 3,480,200 4,130,200 4,364,200 4,364,200 4,364,200 4,364,200Travel/Conference/Education 0 255,000 44,000 60,000 76,000 91,000 98,000 98,000 98,000 98,000OfficeOperations 0 19,200 39,000 55,200 76,800 96,600 102,000 102,000 102,000 102,000Equipment(Staff) 0 45,600 17,100 68,400 62,700 96,900 62,700 96,900 62,700 96,900PlatformDevelopment&Operations

Development 693,590 5,218,604 5,191,544 7,218,602 0 0 0 0 0 0Implementation 0 50,000 650,000 100,000 0 0 0 0 0 0ThirdPartySupport 0 0 206,960 206,960 0 0 0 0 0 0OperationsAWS-Shared 0 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000AWS-ClassA/B 0 9,897 270,891 557,790 905,824 1,479,401 1,674,096 1,843,358 1,935,468 2,033,103AWS-Add'lClient 0 0 0 0 0 0 0 0 0 0AWS-Reseller 0 0 0 0 0 0 0 0 0 0MiscSoftware 0 40,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000Magnet 0 100,000 150,000 150,000 150,000 150,000 200,000 200,000 200,000 200,000

Operations 0 161,897 492,891 779,790 1,127,824 1,701,401 1,946,096 2,115,358 2,207,468 2,305,103DevelopmentandOperations 693,590 5,430,501 6,541,395 8,305,352 1,127,824 1,701,401 1,946,096 2,115,358 2,207,468 2,305,103ProfessionalServices

Legal 24,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000Insurance(Cyber,CGL,D&O) 0 20,500 33,500 41,000 47,000 53,500 54,000 54,000 54,000 54,000SharedServices 0 35,700 66,375 88,650 114,750 139,575 145,200 145,200 145,200 145,200FinancialAudit 0 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000SOCIIType2Report 0 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000ManagedSecurityServices 0 60,000 120,000 120,000 120,000 120,000 200,000 200,000 200,000 200,000PenetrationTest 0 60,000 120,000 120,000 120,000 120,000 160,000 160,000 160,000 160,000CodeReview 0 130,000 75,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000ProfessionalServices 24,000 466,200 574,875 579,650 611,750 643,075 769,200 769,200 769,200 769,200

ExpenseContingency 1,200 130,305 218,701 235,310 271,764 337,959 367,110 377,283 380,178 386,770CostofLivingAdjustment 0 67,863 107,746 109,293 119,730 140,143 150,580 151,690 150,907 151,927

TotalExpenses 718,790 8,022,869 9,948,267 12,269,405 5,826,768 7,237,278 7,859,886 8,074,631 8,134,654 8,274,099AccumulatedExpenses 718,790 8,741,659 18,689,926 30,959,331 36,786,100 44,023,378 51,883,265 59,957,895 68,092,549 76,366,648

NetCashFlow (718,790) (7,768,016) (9,048,430) (8,809,968) 1,096,354 4,273,536 3,250,847 3,262,585 3,343,792 3,352,525AccumulatedNetCashFlow (718,790) (8,486,806) (17,535,236) (26,345,204) (25,248,850) (20,975,315) (17,724,468) (14,461,883) (11,118,090) (7,765,565)

IncomeStatementAdjustmentsCapitalizationofS/W 693,590 5,408,604 5,442,794 7,388,602 0 0 0 0 0 0DepreciationonCapitalizedS/W 0 0 0 0 (1,893,359) (1,893,359) (1,893,359) (1,893,359) (1,893,359) (1,893,359)

NetIncome (25,200) (2,359,412) (3,605,636) (1,421,366) (797,005) 2,380,177 1,357,488 1,369,226 1,450,433 1,459,166AccumulatedNetIncome (25,200) (2,384,612) (5,990,248) (7,411,614) (8,208,619) (5,828,443) (4,470,955) (3,101,729) (1,651,295) (192,129)

CashFlowWithCapitalizationBeginCashBalance 706,190 26,987,400 19,219,384 10,170,954 1,360,986 2,457,340 6,730,875 9,981,722 13,244,307 16,588,100Capitalization 27,000,000Income 0 254,852 899,838 3,459,437 6,923,122 11,510,814 11,110,733 11,337,216 11,478,446 11,626,625Expenses (718,790) (8,022,869) (9,948,267) (12,269,405) (5,826,768) (7,237,278) (7,859,886) (8,074,631) (8,134,654) (8,274,099)EndingCashBalance 26,987,400 19,219,384 10,170,954 1,360,986 2,457,340 6,730,875 9,981,722 13,244,307 16,588,100 19,940,625

Summary Financial Model and Discussion: Owner-Operators Plus Additional Client Sales

Theten-yearfinancialmodelforOwner-OperatorsplusadditionalClientsalescanbefoundonthenextpage.Thismodel tenassumesthesamenumberofOwner-Operatorsas in thepriormodelplusonlyandsalestobetween5and6Clientsperyearfrom2020through2025.ThesesaleswouldbedirectsalesbytheDSPCUSO—impactofresellersalesisprojectedinthenextmodel.AswiththeOwner-OperatorsOnlymodel,thismodelsuggeststhatinitialcapitalizationwillbeenoughtocoverprojectedcapitalandoperatingexpenses(netofrevenue)throughPhase3ofdevelopmentwhichextendsthrough2018,and into implementationextendingthrough2020.Fixedcostswereestablished inamannerthatresults inabreak-evencashflowprojectionbymid-2020 and profitability beginning in 2021. Note that cost of living increases for expenseitemsreduceprofitabilityprojectionsinsubsequentyears.Usinga30%markuponfixedandvariableexpenses(vs.theOwner-Operatormarkupof10%onvariable costs only), the DSP CUSO can offer competitive pricing to Clients while realizingmaterial profitability on eachClient (about $150,000per quarter in reoccurring net income).Witharamp-upto22ClientsinadditiontoOwner-Operators,theDSPCUSOcouldrealizenetincomeof$10millionperyearby2025.Buy-insfortheseadditionalClientscouldbeconsideredbytheDSPCUSObutarenotprojectedinthemodel.Projections are based on production use of Containers by Clients as follows (these are inadditiontotheOwner-Operatorcontainersdiscussedearlier):

2020 2021 2022 2023 2024 2025LiveClients:Authenticated 1 5 9 13 19 25


Page43

TENYEARFINANCIALMODEL--CONSOLIDATEDDescription 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025IncomeCategory

ImplementationFees 0 0 250,000 1,000,000 1,750,000 2,500,000 1,000,000 1,000,000 1,500,000 1,500,000UsageFees 0 10,887 414,230 2,200,619 5,410,385 12,989,568 17,866,899 21,959,759 27,032,355 33,214,565DeveloperProgramFees 0 0 76,664 193,198 231,662 257,982 260,842 272,211 285,547 302,360InterestIncome 0 243,965 158,943 65,621 13,294 55,378 138,142 242,346 376,942 555,184TotalIncome 0 254,852 899,838 3,459,437 7,405,341 15,802,928 19,265,882 23,474,316 29,194,845 35,572,109

ExpensesCategoryCompensation 0 1,608,200 2,349,200 2,856,200 3,480,200 4,546,200 5,092,200 5,508,200 6,132,200 6,652,200Travel/Conference/Education 0 255,000 44,000 60,000 76,000 107,000 114,000 126,000 146,000 154,000OfficeOperations 0 19,200 39,000 55,200 76,800 111,000 127,200 141,600 163,200 181,200Equipment(Staff) 0 45,600 17,100 68,400 62,700 119,700 85,500 142,500 131,100 165,300PlatformDevelopment&Operations

Development 693,590 5,218,604 5,191,544 7,218,602 0 0 0 0 0 0Implementation 0 50,000 650,000 100,000 0 0 0 0 0 0ThirdPartySupport 0 0 206,960 206,960 0 0 0 0 0 0OperationsAWS-Shared 0 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000AWS-ClassA/B 0 9,897 270,891 557,790 905,824 1,479,401 1,674,096 1,843,358 1,935,468 2,033,103AWS-Add'lClient 0 0 0 0 32,340 468,852 1,052,476 1,693,290 2,551,369 3,651,662AWS-Reseller 0 0 0 0 0 0 0 0 0 0MiscSoftware 0 40,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000Magnet 0 100,000 150,000 150,000 150,000 150,000 200,000 200,000 200,000 200,000

Operations 0 161,897 492,891 779,790 1,160,164 2,170,254 2,998,572 3,808,648 4,758,838 5,956,764DevelopmentandOperations 693,590 5,430,501 6,541,395 8,305,352 1,160,164 2,170,254 2,998,572 3,808,648 4,758,838 5,956,764ProfessionalServices

Legal 24,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000Insurance(Cyber,CGL,D&O) 0 20,500 33,500 41,000 47,500 60,500 69,000 77,000 87,000 99,000SharedServices 0 35,700 66,375 88,650 115,200 159,675 182,850 203,850 233,550 261,600FinancialAudit 0 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000SOCIIType2Report 0 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000ManagedSecurityServices 0 60,000 120,000 120,000 120,000 120,000 200,000 200,000 200,000 200,000PenetrationTest 0 60,000 120,000 120,000 120,000 120,000 160,000 160,000 160,000 160,000CodeReview 0 130,000 75,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000ProfessionalServices 24,000 466,200 574,875 579,650 612,700 670,175 821,850 850,850 890,550 930,600

ExpenseContingency 1,200 130,305 218,701 235,310 273,428 386,216 461,966 528,890 611,094 702,003CostofLivingAdjustment 0 67,863 107,746 109,293 119,796 153,757 174,068 188,951 208,354 226,133

TotalExpenses 718,790 8,022,869 9,948,267 12,269,405 5,861,788 8,264,302 9,875,356 11,295,639 13,041,336 14,968,200AccumulatedExpenses 718,790 8,741,659 18,689,926 30,959,331 36,821,120 45,085,422 54,960,778 66,256,417 79,297,753 94,265,953

NetCashFlow (718,790) (7,768,016) (9,048,430) (8,809,968) 1,543,553 7,538,626 9,390,526 12,178,677 16,153,509 20,603,908AccumulatedNetCashFlow (718,790) (8,486,806) (17,535,236) (26,345,204) (24,801,650) (17,263,025) (7,872,499) 4,306,178 20,459,687 41,063,596

IncomeStatementAdjustmentsCapitalizationofS/W 693,590 5,408,604 5,442,794 7,388,602 0 0 0 0 0 0DepreciationonCapitalizedS/W 0 0 0 0 (1,893,359) (1,893,359) (1,893,359) (1,893,359) (1,893,359) (1,893,359)

NetIncome (25,200) (2,359,412) (3,605,636) (1,421,366) (349,806) 5,645,267 7,497,167 10,285,318 14,260,150 18,710,549AccumulatedNetIncome (25,200) (2,384,612) (5,990,248) (7,411,614) (7,761,419) (2,116,153) 5,381,014 15,666,332 29,926,482 48,637,032

CashFlowWithCapitalizationBeginCashBalance 706,190 26,987,400 19,219,384 10,170,954 1,360,986 2,904,540 10,443,165 19,833,691 32,012,368 48,165,877Capitalization 27,000,000Income 0 254,852 899,838 3,459,437 7,405,341 15,802,928 19,265,882 23,474,316 29,194,845 35,572,109Expenses (718,790) (8,022,869) (9,948,267) (12,269,405) (5,861,788) (8,264,302) (9,875,356) (11,295,639) (13,041,336) (14,968,200)EndingCashBalance 26,987,400 19,219,384 10,170,954 1,360,986 2,904,540 10,443,165 19,833,691 32,012,368 48,165,877 68,769,786


Page44

Summary Financial Model and Discussion: Reseller Impact

Incremental reseller net income, should the DSP CUSO pursue resales of unauthenticatedcontainersviaaresellerstrategy,isestimatedasfollows(modeldemonstratesprofitabilityif60unauthenticatedcontainersaresold):

Basedonmodelassumptions(resellermarkupthatDSPCUSOwouldreceiveissameforOwner-ResellersandOwner-Operators),eachresaleclientwillgeneratenominalincome(~$5,000peryearatscale).TheBoardwillultimatelydeterminewhen/ifreselleractivitywillbegin.

AnnualReoccurringIncomeFixedIncome 1,123,200$ Thisusestheabovetablewithno"markup"fromScenarioAssumptionsAWSVariableCostRecoveryIncome 1,033,344$ AWSVariablecostbelowplus"markup"inScenarioAssumptionsTotal 2,156,544$

AnnualFixedExpensesSalaryandBenefits 812,500$ SeeaboveassumptionsOfficeOperations 27,000$ SeeaboveassumptionsEquipment 21,375$ SeeaboveassumptionsInsurance 120,000$ SeeaboveassumptionsSharedServices 133,875$ SeeaboveassumptionsTotal 1,114,750$

AnnualVariableExpensesAWSfixed -$ IncludedinvariablebelowAWSvariable 662,400$ SeeOtherSizingAssumptionsaboveTotal 662,400$

NetIncomeNetincome 379,394$ annualper60resoldunauthenticatedcontainers

MemoItemsAnnualGrossIncomeperContainer 35,942$MonthlyGrossIncomeperContainer 2,995$One-TimeUnauthenticatedContainerImplementationFee 7,500$ ClassAfeeusedhere;ExcludedfromallcalculationsOne-TimeCUSOBuy-inperContainer -$ ExcludedfromallcalculationsAnnualNetIncomeperContainerperYear 6,323$


Page45

Ownership/Partnership Terms and Conditions

Initial Investors

Based on the FinancialModel, the initial capitalization required to support the DSP CUSO isapproximately $27 million. Legal counsel will be retained to recommend the appropriatecapitalization method, but a private common stock offering of Class A, B, and C units isanticipated.10partners, includingnaturalpersonCUs,CUSOs,andcorporateCUs,are ideallydesired to participate in the offering, but 8-12will be considered. Founding partnerswill beexpectedtocontributeequalamountsofcapitalwithintheirrespectiveunitclasses.Basedon capital raiseactivities todate, themost likely fundraising scenario shows8ClassAmemberscontributing$3millioneach,2ClassBmemberscontributing$1millioneach,and2ClassCmemberscontributing$500,000each. Ina scenariowhere the fullamountcannotberaised,theClassAmemberswillcontributethedifferencewhichcouldbeasmuchas$700,000perClassAmemberassuming7ClassAmembersarecommittedatthattime.Capitalization will be enough to cover projected capital and operating expenses (net ofrevenue) through Phase 3 of development which extends through 2018, and intoimplementationextendingthrough2020.Fixedcostswereestablishedinamannerthatresultsin a break-even cash flow projection by mid-2020. Note that amortization of developmentexpenses result innegativeprofitabilityandcostof living increases forexpense items reduceprofitability projections in subsequent years. Bringing additional Clients onto the platformbeginning in late 2020 will result in increased reoccurring net income to the DSP CUSO ofapproximately $150,000 per quarter per Client. Buy-ins for these additional Clients may berequiredbutarenotprojectedinthefinancialmodels.Only Owner-Operators, Owner-Resellers, and Owner-Service Providers will be considered asClassAmembers initially.Owner-Resellerswillhaveexclusivitywithintheirmarketsegments.Non-Operators/Resellers/ServiceProvidersarenottargetedinitiallybutmaybeconsideredatalaterdate.AmeetingofPartnerCEOswillbeheldinFebruary,2016togaugeinterest in investingintheDSPCUSO.LettersofIntentfrominterestedpartnerswillbesecuredwithagoaloffundingtheDSP CUSO by mid-2016. The Phase 0 discussion in “Exit Strategy” later in this documentdescribeswhatoccursintheeventDSPCUSOfundingisnotsuccessful,butadditionalinvestorswillbesoughtshouldPartnersfailtosupplyadequatefunding.Dividends for Class A/B/C members may be possible once a material amount reseller andservice provider income is being realized. Class A members will have have dividend andliquidationpreferenceuntiltheirbuy-inamountshavebeenreturned.


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Additional Investors

AdditionalinvestorswillincludeDSPCUSOClientswhowillberequiredtobuyintotheCUSOatanamounttobedeterminedbytheboard.TheseinvestorswillreceiveClassBUnits.InsteadofpurchasingafullClassAownershipinterest,someOwner-ServiceProvidersmayoptforalowerlevelofinvestmentiftheyareinterestedinleveragingtheflexibilityoftheplatformtohighlighttheirproductsandservicestothemembersofcreditunionsandbelievethatthisisa prudent investment of the credit union industry. Investments in the Class C units will beearmarkedforthecreationofdevelopersupportenvironment,development/testingtools,andspecifications.ClassCmemberswillbedesignatedasStrategicChannelPartnersandreceive:

• ReferencesforancillaryservicesfrompotentialcustomersoftheCUSO• AccessandRepresentationonnon-governanceBusinessCommittee• AccessandRepresentationonnon-governanceTechnicalCommittee• AccessandRepresentationonnon-governanceUserExperienceCommittee• PriorityinthetestingandapprovalofTilesdevelopedbythememberinthefuture• Considerationforfuturedividends• 5 years paid subscription to the Tile Developer VIP Programbeginning after the first

productiondeploymentofthefullsolution(a$125Kvalue)• InclusionofTilesdevelopedbythememberinthedistributionforfuturecontainers

The 10 original investors that contributed $200K each to fund the proof-of-conceptdevelopmentwillreceiveClassDunits.ClassDmembersreceivenorepresentationonboardornon-governancecommitteesandno furtherClassDmembersaresought. Organizations thatare solely ClassDmemberswill receive no access to the Intellectual Property ownedby theCUSO,noaccesstousetheplatform,andnodiscountforfutureservicescontractedfor.Theboardwill approve any sale of stockbyClassA, ClassB, andClass Cmembers. TheDSPCUSOwill retainanoptiontobuybackstock.ClassAmemberswill retainarighttomaintaintheirproportionatestakeshouldanotherClassAmembersellstock.Employeeswillnothaveanequitycompensationplan,butprofit-sharingiscontemplatedwithdetailstobedeterminedbytheboard.


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Governance

Board Composition

AboardofmanagerswillbeestablishedwithatargetnumberofmanagersequaltothenumberofClassAmembersplusoneClassBrepresentative.Chairman,ViceChairman,Secretary,andTreasurer positionswill be established in theboard charterwith term limits. Theboardmayconsideradditionaldiscretionaryboardmembersatitsdiscretion.ClassAmemberswillreceiveoneboardseateach.ClassBmemberswillreceiveatotalofoneboardseatoncethreeClassBmembershaveinvestedintheDSPCUSO,meaningasingleClassBboardseatwillrepresentallClassBmembers.Eachboardseatwillhaveonevoteonboardmatters.ClassCandClassDmembersreceivenoboardrepresentation.Afullmembervotewillberequiredformatters including issuanceofequity/debt,transferofcompanyassets,andcompanydissolution.Formembervotes,votingrightswillbebasedonthemembers’percentageoftotalClassA/B/Cunitsissued.Board Committees

Theboardwillestablishcommittees.Forreference,typicalcommitteesestablishedinstartupsareoutlinedbelow:Audit and Risk Committee

Thiscommitteewouldlikelybemadeupofthreerotatingboardmembers.Keyactivitiesofthiscommittee includeoversightof independent assurance capability aswell asoversightofDSPCUSOgovernance,riskmanagement,andcontrolprocesses.Compensation Committee

This committeewould likelybemadeupof three rotatingboardmembers. The committee’sprimary responsibility is to oversee the DSP CUSO compensation program, including profitsharingplansforemployeesandtheperformanceappraisalfortheCEOoftheDSPCUSO.Governance Committee

The governance committee usually includes the board chair and CEO plus one additionalrotating board member. Key activities are to maintain the meeting schedule, coordinatemeetinglogistics,distributemeetingmaterials,andrelatedactivitiestoensureboardactivitiesrunsmoothly.Nominating Committee

ThiscommitteewouldlikelybemadeupofthreerotatingboardmemberswithamainpurposefortheDSPCUSOofidentifyingClassBManagercandidatesoncethereareClassBmembers.


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Risks and Mitigation Strategies

Therearesignificantrisksinvolvedincreatinganewcompany,developingacomplexsoftwaresolution, implementing participating organizations, and operating the company successfully.The primary risks are identified below along with the mitigation strategies that have beenincorporatedintothedevelopmentstrategy,operatingmodel,financialmodel,andgovernancemodeldiscussedinthisbusinessplan. Investorrisk–Willwegetenoughinvestorstodevelopthesolution?

• Lownumberofinvestorsneededforviability(8-12)• Excellentstrategicandeconomicvalueproposition• Broadpoolofpotentialinvestors(247creditunionswithassetsover$1billion)• Willnotmoveforwardwithouttheneededaggregateinvestment

Developmentrisk–Canwebuilditanddosowithinplannedtimeframe/cost?

• Successfulproofofconceptdemonstratingfeasibilityofkeycomponents• Thirdpartyvalidationofdesign,timeline,andcostestimatesasreasonable• Phasedawardingofcontracts• Financialallowanceforunanticipatedexpenses

Participant risk – Will we get enough participants using the solution to make the businessviable?

• Investorcreditunionshavesignificantfinancialmotivestoimplement• Fewcreditunionimplementations(8)neededtoreachbreakeven• Excellentstrategicandeconomicvalueproposition

Vendorrisk–Whatifakeypartnerdoesnotperformordeparts?

• Partnershipownsthedesigns,specificationsandcode• Codinganddocumentationstandardsexist• Modulardesignanddevelopmentallowingformultiplevendors• Thirdpartyreviewswillbeconductedforallsoftwarecomponents

Financialrisk–Willtherebeenoughfundingtobuilditandoperateitprofitably?

• Initialcapitalraisewillcoverentirebuildcostandinitialyearsofoperation• “Nottoexceed”contractawards• Thinoperatingmodelproduceslowburnrate–Developmentisperformedbycontract

resources. Technical platform services and associated operations are performed bycontracted managed service providers. Support services (e.g. facilities, humanresources,accounting,desktop technology services)areout-sourced toaparticipatingcreditunion

• Fewcreditunionimplementations(8)neededtoreachbreakeven• Financialallowanceforunanticipatedexpenses• Deferringfullpricediscountstofurthermitigatefinancialrisks


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Effectivenessrisk–Howdoweknowthatthesolutionwillmeettheneedsofnaturalpersonmemberusers,thecreditunions,andcontentproviders?

• Specifications developed by teams of experts from owner-operators, experts fromcontentproviders,andthirdpartiesbringingbestpractices

• Userexperiencecommitteetogovernlook-and-feel,usability,valuetouser,andflow• Marketplaceapproachproducesalternativesolutionstoselectfrom• Robustinfrastructureplussoftwaredevelopmenttoolkitallowsindividualorganizations

to feasibly develop their own applications, dramatically reducing dependence oncommonsolutions

Keypersonrisk–Whatifweloseakeyleaderorkeydeveloper(s)?

• Officercompensationprovidessignificantincentivetoremainandachieve• Modular design and incremental deliverables minimize the scope the developers are

impactingatanygiventimeandthusimpactstheexposure


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Exit Strategy

Introduction

This section is intended to summarize exit strategies for members in various scenarios.Execution of this business plan comes with risk which may result in dissolution of the DSPCUSO.Or,amembermaywishtodivesttheirstake.AnacquisitionoftheDSPCUSO,whilenotthelong-termintentofthePartners,couldalsooccur.Phase 0

Phase0takesplacepriortotheestablishmentoftheDSPCUSO.Themainriskduringthisphaseis thatof funding.ShouldadequatefundingnotbesecuredtoestablishtheDSPCUSO,termsalready covered in the Agreement regarding distribution of remaining assets would apply.Agreement participants would be granted rights to the intellectual property and remainingfundswouldbedistributed.Note thatonce thisphase iscompleteandtheDSPCUSO is funded,Participants thatdidnotbecomemembershavenointellectualpropertyrights.Phase 1

InPhase1while theUnauthenticatedContainer is indevelopment, themain risk involvesaninability to complete development with available funds. Other risks include infringement orotherlegalclaimsandcyberbreach.IntheeventtheCUSOisdissolved,ClassAmemberswouldbegrantedrightstotheintellectualpropertyandremainingDSPCUSOassetsdistributedbasedonownershipstake.IfanindividualClassAmembersellstheirstaketheyretainnointellectualpropertyrightsandwouldhavetoenterintoanon-competeagreement.

Phase 2

In Phase 2 while the Authenticated Container and Mobile Banking capabilities are indevelopmentand theUnauthenticatedContainer is live, themain risks involvean inability tocompletedevelopmentwithavailable fundsandmaterialquality/requirements fit issueswithcodealreadydeployed.Otherrisksincludeinfringementorotherlegalclaimsandcyberbreach.IntheeventtheCUSOisdissolved,ClassAmemberswouldbegrantedrightstotheintellectualproperty and remaining DSP CUSO assets distributed based on ownership stake. Class Bmembers,ifany,wouldhavenointellectualpropertyrights.MemberscouldalsoelecttoselltheDSPCUSOandwouldreceiveproceedsfromsalebasedonownership stake (with ClassA andClass Bmembers treated differently as discussed earlier).ClassAmembersmaynot retain intellectual property rightsdependingonhow theboardofmanagersnegotiatesthesale.


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During thisphase, ifan individualClassAmembersells their stake theyretainno intellectualpropertyrightsandwouldhavetoenterintoanon-competeagreement.

Phase 3

In Phase 3 while Online Banking capabilities are in development and the UnauthenticatedContainer and Mobile Banking are live, the main risks involve an inability to completedevelopmentwith available funds,material quality/requirements fit issueswith codealreadydeployed, and ongoing operational/support issues. Other risks include infringement or otherlegalclaimsandcyberbreach. IntheeventtheCUSOisdissolved,ClassAmemberswouldbegrantedrightstotheintellectualpropertyandremainingDSPCUSOassetsdistributedbasedonownershipstake.ClassBmembers,ifany,wouldhavenointellectualpropertyrights.MemberscouldalsoelecttoselltheDSPCUSOandwouldreceiveproceedsfromsalebasedonownership stake (with ClassA andClass Bmembers treated differently as discussed earlier).ClassAmembersmaynot retain intellectual property rightsdependingonhow theboardofmanagersnegotiatesthesale.During thisphase, ifan individualClassAmembersells their stake theyretainno intellectualpropertyrightsandwouldhavetoenterintoanon-competeagreement.


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Appendices

Refertospreadsheetsforthefollowinginformation:Financial Model (spreadsheet)