mobile in context: a longitudinal look at the impact on financial services

Mobile In Context: A Longitudinal Look at the

Impact on Financial

Services

Financial institutions are entering both a period of new challenges and opportunities for transformation • A “new normal” has emerged in the financial services industry

– Regulatory changes limit revenues and the ability to reprice – Low interest rates and soft credit demand constrain revenue growth – Competitors are seeking ways to grow in a demanding environment

• Consumer behaviors are also rapidly changing – enabled first by the advancements of the internet (and access to broadband), but more recently by the advances in mobility – through both smartphones and tablets – These advancements put customers in the driver’s seat vis-à-vis

comparison shopping, choice and access to information wherever and whenever

– Financial institutions that recognize this and adjust accordingly have much to gain by engaging customers not just on price, but overall value and convenience

www.BAI.org/research 2

Bankers are aware of the challenges and opportunities ahead, especially the potential impact of technology on branch networks


Q. How do you see the role of the branch changing in the future? Source: BAI Research “Solutions Demand Pulse” Study, 2012

Branch Reduction

Shift from Transactions

“Many customers, particularly older clients, believe they need the branch

near where they live or work. That will become increasingly less important

with upcoming generations.” - EVP at a Community Bank with Assets Between $500M and $1B

“Steadily decreasing need for branches due to online and

mobile banking.” - President at a Community

Bank with Assets Under $500M

“Smaller facilities. More automation. Less transactional. More sales and service

focused. Better integration of partners (mortgage, investments, insurance, etc.).” - Head of Retail Banking at a Credit Union

with Assets Between $2.5B and $5B

“The branch network will remain an integral part of banking, in the respect that it

provides the personal relationships that customers crave. However, the branches

will be utilized less as technology increases, so the branches will have smaller staffs than

they traditionally have had.” - VP at a Large National Bank with Assets

of $500B or More

“Smaller footprint with more integration to other channels.”

- SVP at a Regional Bank with Assets Between $100B and $250B

“Branches will remain and will become even more important for those financial institutions who "get it"...Think Apple Stores, if

anyone could eliminate a retail store it could be Apple...but instead they drive business because of their retail destinations. Financial institutions need to find "play value" and reasons for people to

come to the branch.” - Director at a Credit Union with Assets Between $2.5B and $5B

Transformation must be deliberate and comprehensive as consumer/bank interaction is not contained to one channel

www.BAI.org/research 4 Source: BAI Research “New Dynamics of Consumer Banking Relationships”, 2012

• Although the introduction of new channels impact how a specific activity is carried out, other channel usage does not simply disappear. Engaging consumers with the newer, more efficient, and lower cost channels can increase their comfort levels and adoption rates. 77% 77%

66%

21%

14% 13% 12% 9%

7% 4%

2% 0% 0%

3% 1% 0%

5%

11%

23%

70% 74%

37%

22%

51%

4% 2% 2% 1% 1%

29%

57%

1% 1% 1% 4%

0% 0%

18%

7%

1%

7% 5%

3%

8% 11%

1% 1%

38%

Checkingbalances

Transferringfunds

Making a bankloan payment

Applying for abank loan

Opening or closingan account

Making a deposit

Withdrawingfunds

Solving a problemwith an account

Online Banking Mobile Banking In a Branch ATM Drive-thru Telephone

BAI Age and Income Segments


$50K or Less $50K - $125K $125K or More

18 - 29

30 - 44

45 - 54

55 - 64

65 +

Younger Low Income

21%

Emerging Affluent 7%

Older Low Income

22%

Mass Middles 24%

Mature Middles

15%

Affluent 11%

Annual Household Income

Ho

use

ho

ld A

ge

Knowing how to service your specific customer base is key as channel usage as preferences differ by consumer segments


Source: BAI Research Consumer Omni Study, 2012

-2%

-8%

5% 4%

-9%

5%

-4%

7%

-4%

4%

-4% -3%

4%

-3%

-1%

0%

7%

-2% -1%

6%

0%

-4%

-2% -1%

1%

-2%

0%

-2%

6%

1% 1% 1% 0%

-1%

2% 1%

-15%

-10%

-5%

0%

5%

10%

15%

Younger Low Income Older Low Income Mass Middles Mature Middles Emerging Affluent Affluent

Online In a branch ATM Drive-thru Mobile Telephone

Less than

average

More than

average

Total sample

• Certain consumer segments are adopting mobile faster than others. Tracking current mobile data may be a good indicator moving forward of who will be more willing to adopt new offerings in the future.

Changes in technology are impacting non-recurring deposit methods

• The affluent segments are more engaged with advanced technologies like Smartphones and tablets which lend themselves to easy utilization of bank services such as RDC. – Younger segments comfort level with technology is evident in their heavier

use of ATMs for deposits.


55%

79% 67%

73%

58% 62%

39%

19%

27% 26%

31% 22%

6% 2% 7% 1%

11% 16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Teller ATM RDC


Consumer payment preferences are also impacted by channel usage and the emergence of mobile



Less than

average

More than

average

Total sample

• Having the ability to link cards and payment accounts (i.e. – PayPal) to mobile phones may be impacting the usage of these methods, especially among the younger and affluent segments.

7%

1%

3%

-9%

5%

-9% -8%

-6%

-2%

10%

5%

13%

4%

0% 0%

-5% -5%

-3%

-5%

0% 1%

4%

-7%

-3%

-5%

5%

-4%

3%

-5%

0% 1%

0% 0%

-1%

5%

1%

3%

-1% -1%

-4%

1%

-2%

-15%

-10%

-5%

0%

5%

10%

15%


Debit card Credit card Cash Online bill payment Paper check PayPal Other

Servicing SBOs requires a different approach as they lag behind consumers in adoption of new banking technologies


61%

37%

41%

18%

4% 8%

5%

11%

66%

38%

24%

19%

9% 10% 9% 9%

74%

35%

19% 19%

14%

7% 7% 6%

Onlinebanking

Onlinebill pay

Debitcard

Mobilebanking

Remote DepositCapture (RDC)

Mobilebill pay

P2P (Peer to Peer)payments

Debit cardwith rewards

$100K to $1M $1M to $5M $5M to $10M

Source: BAI Research Small Business Banking Study, 2012

• This may be due to their comfort in a branch setting which is where they conduct two-thirds of all their banking activities.

• Financial institutions are looking for mobile banking to contribute in many areas of their business, including expense reductions and customer acquisition and retention.

As Smartphones become more widely owned and used, mobile banking has become more advanced and offers more functionality


Disclaimer – Important Information Regarding this Presentation • This AlixPartners March 2013 Mobile Financial Services Trends and the Implications for Financial

Institutions (“Presentation”) was prepared by AlixPartners, LLP (“AlixPartners”) for general information and distribution on a strictly confidential and non-reliance basis. The recipients of the Presentation accept that they will make their own investigation, analysis and decision relating to any possible transactions and/or matter related to such and will not use or rely upon this Presentation to form the basis of any such decisions. Accordingly, no liability or responsibility whatsoever is accepted by AlixPartners and its employees, partners or affiliates for any loss whatsoever arising from or in connection with any use of this Presentation.

• This Presentation may be based, in whole or in part, on projections or forecasts of future events. A forecast, by its nature, is speculative and includes estimates and assumptions which may prove to be wrong. Actual results may, and frequently do, differ from those projected or forecast. Those differences may be material. Items which could impact actual results include, but are not limited to, unforeseen micro or macro economic developments and/or business or industry events.

• The information in this Presentation reflects conditions and our views as of this date, all of which are subject to change. We undertake no obligation to update or provide any revisions to the Presentation to reflect events, circumstances or changes that occur after the date the Presentation was prepared. In preparing this Presentation, AlixPartners has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise provided to us. AlixPartners has not audited or verified the data reviewed in connection with the preparation of this report.

• The Presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by AlixPartners which forms part of the Presentation.

• Neither the Presentation nor any of its contents may be copied, reproduced, disseminated, quoted or referred to in any presentation, agreement or document with or without attribution to AlixPartners, at any time or in any manner other than for the internal use of the recipient, without the express, prior written consent of AlixPartners.

11

The Current Document Is Based on AlixPartners’ Franchise Health Consumer Research

• Survey conducted semi-annually in Q2 and Q4 since May 2008 with an online panel from SurveyMonkey

• Nationally representative sample of U.S. consumers, at least 18 years of age

• Survey addresses six critical consumer behavior issues − Primary bank switching and bank choice − Banking channel behaviors and usage − Consumer trust in primary banking and other financial relationships − Product usage and share of wallet drivers − Mobile banking, payments, and shopping behaviors − Financial behaviors of the unbanked

• Most recent Franchise Health survey executed in Q4 2012

12

We Are Way Beyond the Tipping Point with Mobile… • Mobile banking is now tablestakes

• Mobile banking adopters change how they engage with their

primary bank

• Mobile plays a significant role in consumers’ primary bank switching decisions

• The providers of compelling mobile banking offerings today have competitive advantage

• To acquire today’s mobile-driven consumer, providers need to deliver a steady stream of mobile innovation

13

www.alixpartners.com 14

Today, More Than Half of Mobile Devices Are a Smartphone/Tablet

Question: Q4 2009, Q2 2010, Q4 2010: Do you have a conventional cell phone or a smartphone (e.g., iPhone, Android or Blackberry)?; Q2 2011, Q4 2011, Q2 2012, Q4 2012: Which of the following mobile devices do you have and use daily? Select all that apply.

Source: AlixPartners Mobile Financial Services Tracking Study Q4 2009 (N=1,744), Q2 2010 (N=858), Q4 2010 (N=2,518), Q2 2011 (N=2,294), Q4 2011 (N=4,647), Q2 2012 (N=3,751), Q4 2012 (N=3,721).

Smartphone/Tablet Ownership Among Mobile Device Owners, Q4 2009 – Q4 2012

30%

39% 39%

52% 55%

61%

70%

32%

36%

45%

53%

62%

67%

71%

24%

33% 34%

40%

52%

61%

69%

18%

24% 25% 26%

37%

46%

54%

12%

19% 19% 19%

27%

39%

45%

8% 9%

6%

13%

18%

24%

28%

21%

27% 28%

35%

42%

50%

55%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012

18-2526-3435-4445-5455-6465 and aboveOverall


Mobile Banking Adoption Continues to Grow, Led by Younger Consumers

Question: Have you used mobile banking (i.e. have you accessed balances, paid bills, or made account transfers using your mobile device to access a mobile banking website or using a mobile device application)?

Source: AlixPartners Mobile Financial Services Tracking Study Q2 2008 (N=3,204), Q4 2008 (N=2,051), Q2 2009 (N=1,050), Q4 2009 (N=2,113), Q2 2010 (N=1,032), Q4 2010 (N=2,942), Q2 2011 (N=2,799), Q4 2011 (N=5,594), Q2 2012 (N=4,554), Q4 2012 (N=4,516).

Mobile Banking Adoption Among All Respondents, Q2 2008 – Q4 2012

7%

13%

16% 18%

21% 22%

23%

28% 30%

34%

7%

12%

16%

20% 22%

23%

21%

29%

33%

35%

10% 11%

10%

11%

10%

13% 14%

19%

24%

27%

4%

11% 12%

7% 7% 8%

6% 10%

13% 14%

5%

7% 6% 5% 5% 6% 5% 5%

9% 9%

3%

5% 4%

2% 1%

2% 1% 2%

4% 5%

7%

10%

10%

10%

10% 12% 12%

15%

18% 19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2008 Q2 2008 Q4 2009 Q2 2009 Q4 2010 Q2 2010 Q4 2011 Q2 2011 Q4 2012 Q2 2012 Q4

18-25 26-34 35-44 45-54 55-64 65 and above Overall


Among Smartphone/Tablet Owners, Mobile Banking Adoption Is Running Near 40%

Question: Have you used mobile banking (i.e. have you accessed balances, paid bills, or made account transfers using your mobile device to access a mobile banking website or using a mobile device application)?

Source: AlixPartners Mobile Financial Services Tracking Study Q4 2010 (N=2,942), Q2 2011 (N=810), Q4 2011 (N=1,967), Q2 2012 (N=1,876), Q4 2012 (N=2,052).

Mobile Banking Adoption Among Smartphone/Tablet Owners, Q4 2010 – Q4 2012

34%

39%

45%

48% 47%

41% 41%

45%

48% 49%

31% 31%

36%

40% 41%

28%

25% 26%

30% 27%

25% 23%

17%

26% 24%

22%

16%

11%

20% 19%

33% 33% 35%

38% 37%

0%

10%

20%

30%

40%

50%

60%

Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012



Consumers Who Use the Mobile Banking Channel Reduce Their Usage of Other Bank Channels

Question: How do you interact with your primary bank by the following means?; You said that you routinely interact with your primary bank by each of the following means. In an average month, how many times do you interact with your primary bank these ways?; Before you began using mobile banking, how often did you interact with your bank by the following means?; You said that before you began using mobile banking, you routinely interacted with your bank by each of the following means. In an average month, how many t imes did you interact with your bank these ways?

Source: AlixPartners Mobile Financial Services Tracking Study Q4 2012 (N=225).

Frequency of Channel Usage Avg. Number of Times Consumers Use Each Channel per Month, Among Smartphone/Tablet Owners

Who Frequently Interact With Their Bank Using Their Mobile Device, Q4 2012

2.2

3.9

9.4

1.1 1.0 0.7 1.1

3.1

10.8

0.9 1.0 0.7

0.0

2.0

4.0

6.0

8.0

10.0

12.0

In-branch services ATM access Online Phone-based "live"customer service

Phone-based automatedresponse system

By mail

Before Mobile

After Mobile

Down 49%

Down 21%


Mobile’s Role in Consumer Decisions to Switch Primary Banks Is Reaching a Peak, as Mobile Banking Becomes Tablestakes

Question: How would you describe the role mobile banking services played in your decision to change primary banks? Note: Numbers may not add due to rounding. Q2 2010 through Q2 2011, based on 6 months switching; Q4 2011 through Q4 2012 based on one year switching. Source: AlixPartners Mobile Financial Services Tracking Study, Q2 2010 (N=14), Q4 2010 (N=31), Q2 2011 (N=44), Q4 2011 (N=99), Q2 2012 (N=193), Q4 2012 (N=174).

Role of Mobile Banking in Primary Bank Switching Decision Among Smartphone/Tablet Owners Who Switched Primary Banks, Q2 2010 – Q4 2012

Please read the important information regarding this presentation in the Disclaimer on page 2.

7%

13%

7%

15% 18% 17%

10%

30%

26%

30% 27%

7%

23%

36%

41%

48%

44%

0%

10%

20%

30%

40%

50%

60%

Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012

Important

Extremely important

U.S. Consumer Bank Switching Rates Have Stabilized at Around 8%; the “Sweet Spot” for Consumers’ Switching Banks Is Well Defined


Annual Switching Rates % of Consumers Who Switched Primary Banks

10.2%

13.6%

7.9% 8.7%

7.7% 7.3%

8.2% 8.3% 8.2% 8.3%

0%

3%

6%

9%

12%

15%

Q22008

Q42008

Q22009

Q42009

Q22010

Q42010

Q22011

Q42011

Q22012

Q42012

Note: In 2011 we refined the survey question to better capture actual switching behavior. Question: How long have you been a customer of your primary bank?; How long have you considered your current primary bank to be your primary banks; if considered primary bank for less than a year, did you switch primary banks or was your bank merged/acquired? Source: AlixPartners Financial Services Franchise Health Study Q2 2008 (N = 3,204), Q4 2008 (N = 2,051) , Q2 2009 (N = 1,050) , Q4 2009 (N = 2,113) , Q2 2010 (N = 1,032) , Q4 2010 (N = 2,942) , Q2 2011 (N = 2,782) , Q4 2011 (N = 2,792) , Q2 2012 (N = 4,554), Q4 2012 (N = 4,516)

Q2 2008 – Q4 2012 Q4 2012

Household Income

Less than $25,000

$25,000 to$49,999

$50,000 to $99,999

$100,000 and above Overall

Ag

e

18-25 17% 21% 13% 10% 16%

26-34 18% 15% 27% 11% 18%

35-44 11% 12% 7% 8% 9%

45-54 8% 10% 4% 3% 6%

55-64 6% 4% 3% 1% 4%

65 and above 2% 2% 1% 1% 2%

Overall 10% 9% 9% 6% 8%

Among Consumers Changing Banks, the Preferred Features Sought in a New Bank Varies Considerably by Age Cohort


Note: Younger switchers are ages 18-34, older switchers are ages 35 and older.

Question: Which features were most important when you chose your primary bank? Pick up to three. Source: AlixPartners Financial Services Franchise Health Study 2012 (Younger switchers N=54, Older switchers N=37, All switchers N=91)

Preferred Features When Choosing a New Primary Bank Among Smartphone/Tablet Owners Who Switched Banks in the Past Year, Q4 2012

4%

7%

9%

9%

13%

13%

15%

17%

19%

22%

22%

24%

31%

0% 10% 20% 30% 40%

Availability of special discounts andcoupons with retailers

Financial soundness and stability

Wide range of products to choose from

Availability of special value-addedservices

Convenient access to ATMs

Relationship pricing that appropriatelyvalues my relationship with the bank

Rates on deposits

Convenient access to branches

Fees on products or accounts or services

Online bill pay

Reputation for good customer service

Mobile banking

Online banking

Among Younger Switchers

8%

16%

5%

5%

16%

8%

11%

30%

27%

24%

19%

0%

19%

0% 10% 20% 30% 40%







Rates on deposits



Online bill pay


Mobile banking

Online banking

Among Older Switchers

5%

11%

8%

8%

14%

11%

13%

22%

22%

23%

21%

14%

26%

0% 10% 20% 30% 40%







Rates on deposits



Online bill pay


Mobile banking

Online banking

Among All Switchers


Among Smartphone/Tablet Owners Willing to Switch Banks for Mobile Banking, “Time and Convenience” Are the Most Valuable Features

Question: What are the most important features of mobile banking that would cause you to switch primary banks? Please choose your top three features. Source: AlixPartners Mobile Financial Services Tracking Study, Q2 2012 (N=815), Q4 2012 (N=856)

Mobile Banking Features That Would Cause People to Switch Primary Banks Among Smartphone/Tablet Owners at Least Slightly Likely to Switch Primary Banks for Mobile Banking,

Q2 2012 – Q4 2012

3% 4%

4%

4%

5%

7%

7%

9%

9%

10%

11%

13%

14%

17%

20%

21%

25%

36%

39%

4%

4%

3%

4%

5%

8%

5%

5%

11%

7%

13%

13%

14%

15%

17%

14%

17%

33%

33%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Peer to peer payments

Find location of nearest ATM along with maps and directions

Changing PINs

Access to loan accounts

Access to investment accounts

Status of check, stop payment on check

Due date of payment

Monitoring of term deposits

Recent transactions

Access to card statements

Transfer funds

Check balances on savings, checking or credit cards

Alerts on account activity or passing of set thresholds

Pay bills wherever you are

Check account balance

Statements of account history

Take pictures of bills to pay them

Make a deposit

Take pictures of checks for deposit

Q2 2012

Q4 2012


Across Most Consumer Age Segments, Adoption of Mobile Remote Deposit Capture Is Growing Fast Among Smartphone/Tablet Owners

Question: Some banks now offer a secure way to deposit a paper check by taking a picture of the check using a camera-equipped mobile device and sending the picture to your bank using your mobile device. This technology is referred to as remote deposit capture. Are you aware of this service?; Have you ever used the remote deposit capture service at your bank to deposit a check wi th your camera?

Source: AlixPartners Mobile Financial Services Tracking Study Q4 2011, Q2 2012, Q4 2012.

Mobile Remote Deposit Capture Adoption Among Smartphone/Tablet Owners, Q4 2011 – Q4 2012

6% 6%

4%

6%

2% 1%

5%

11%

21%

8% 8% 7%

5%

12%

18%

26%

15%

9%

6% 6%

15%

0%

5%

10%

15%

20%

25%

30%


Q4 2011

Q2 2012

Q4 2012

Q4 2011 N = 145 253 273 160 81 69 981

Q2 2012 N = 242 512 435 337 190 160 1,876

Q4 2012 N = 242 474 498 394 234 210 2,052


Many Consumers Who Currently Do Not Use Mobile RDC Would Use the Service If Offered by Their Primary Bank

Question: Some banks now offer a secure way to deposit a paper check by taking a picture of the check using a camera-equipped mobile device and sending the picture to your bank using your mobile device. This technology is referred to as remote deposit capture. Are you aware of this service?; If your primary bank offered the ability to take a picture of a check with your mobile phone to deposit it and your cell phone had the required capabilities, how likely would you be to use remote deposit capture?

Note: Numbers may not add due to rounding.

Source: AlixPartners Mobile Financial Services Tracking Study Q2 2012, Q4 2012.

Likelihood to Use Mobile Remote Deposit Capture If Offered by Primary Bank Those Likely /Extremely Likely to Use Among Smartphone/Tablet Owners Who Do Not Use Mobile RDC

or Conduct MRDC at a Provider Other Than Their Primary Bank, Q2 2012 – Q4 2012

Q2 2011 N = 81 210 205 152 93 75 816

Q4 2012 N = 198 350 425 359 219 198 1,749

30% 29%

24%

18%

22%

15%

24%

34%

37%

24%

18%

15%

11%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%


Q2 2012

Q4 2012


Moreover, 18% of Smartphone/Tablet Owners Are Willing to Switch Primary Banks to Get Access to Mobile RDC

Question: Some banks now offer a secure way to deposit a paper check by taking a picture of the check using a camera-equipped mobile device and sending the picture to your bank using your mobile device. This technology is referred to as remote deposit capture. Are you aware of this service?; How likely would you be to switch primary banks to get access to a service that allows you to use your mobile device to take pictures of checks for deposit?

Note: Numbers may not add due to rounding.

Source: AlixPartners Mobile Financial Services Tracking Study Q2 2012, Q4 2012.

Likelihood to Switch Primary Banks to Get Access to Mobile Remote Deposit Capture

Those Likely/Extremely Likely to Switch Among Smartphone/Tablet Owners, Q2 2012 – Q4 2012

Q2 2012 N = 242 512 435 337 190 160 1,876

Q4 2012 N = 242 474 498 394 234 210 2,052

21%

29%

13%

8% 6%

2%

16%

26%

36%

17%

10%

4%

2%

18%

0%

5%

10%

15%

20%

25%

30%

35%

40%


Q2 2012

Q4 2012

Banks Are the Preferred Providers of the Digital Wallet, Closely Followed by Visa and PayPal; But Preferences Vary Significantly by Age


47%

32% 34%

17% 18%

8%

15%

18%

11% 13%

11%

5% 7%

2% 1%

41%

36%

31%

16%

20%

14%

10%

15%

12% 10% 11%

7% 6% 6% 4%

54%

41%

33%

26%

20% 20%

15% 12%

14%

8% 9% 9%

4% 6%

3%

55%

34% 32%

24%

13% 15%

19%

7%

11%

6% 6% 8%

3% 2% 2%

73%

31% 32%

16%

8%

21%

14% 12%

10%

18%

9% 8%

4% 4% 4%

56%

31%

34%

19%

8%

16%

24%

5%

13%

6%

0%

6% 5%

3%

0%

51%

36%

32%

20%

17% 15% 14%

13% 12% 10% 9%

7% 5% 4%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Primary bank PayPal Visa Mastercard Google AmericanExpress

I don't know Apple Discover A group ofretailers such

as Targetand Wal-Mart

Facebook A bank otherthan

PRIMARYBANK

An onlineprovider offinancial

services suchas Intuit or

Mint

ISIS led by agroup of

mobile phonecarriers,including

Verizon orAT&T

A mobilepaymentprovider,

such as BlingNation, Boku,

Zong, etc.

18-25

26-34

35-44

45-54

55-64

65 and above

Overall

Preferred Providers of the Digital Wallet Among Smartphone/Tablet Owners at Least Somewhat Interested in the Concept, Q4 2012

Question: Some institutions now offer a service that allows you to create a “digital wallet”, a tool that stores all your payment card numbers (e.g., credit cards, debit cards), loyalty and gift card information, reward programs information, coupons and discounts. All the stored information could be easily used to make payments on your mobile device. Are you aware of this digital wallet product/service?; How interested would you be in using a digital wallet?; From which firm would you be interested in such a digital wallet service? Select all that apply Source: AlixPartners Mobile Financial Services Tracking Study Q2 2012 (18-25 N = 164, 26-34 N = 323, 35-44 N = 282, 45-54 N = 172, 55-64 N = 77, 65 and above N = 62, Overall N= 1,080)

The Digital Wallet Could Be a Strong Acquisition Tool for Banks, With a Group of Consumers Willing to Switch Banks to Get Access to the Tool


Likelihood of Switching Primary Banks to Get Access to the Digital Wallet

Top-Two Box Willingness to Switch Primary Banks Among Smartphone/Tablet Owners at Least Somewhat

Interested in the Concept, Q2 2012 – Q4 2012

Question: How interested would you be in using a digital wallet? How likely would you be to change your primary banking relationship to get access to a digital wallet service? Source: AlixPartners Mobile Financial Services Tracking Study Q2 2012, Q4 2012

27%

40%

24%

15%

7%

2%

26% 23%

52%

22%

15%

5% 2%

28%

0%

10%

20%

30%

40%

50%

60%

18-25 26-34 35-44 45-54 55-64 65 andabove

Overall

Q2 2012

Q4 2012

Q2 2012 N = 1,023 Q4 2012 N = 1,080

Interest in the Digital Wallet % at Least Somewhat Interested Among

Smartphone/Tablet Owners, Q2 2012 – Q4 2012

68% 65%

57%

42% 44%

31%

55%

68% 68%

57%

44%

33% 30%

53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

18-25 26-34 35-44 45-54 55-64 65 andabove

Overall

Q2 2012

Q4 2012

Q2 2012 N = 1,876 Q4 2012 N = 2,052

Consumers, Moving at Mobile Speed, Are Redefining the Business


• Consumers are adopting mobile banking, and mobile banking services that deliver on convenience, at dizzying rates

• The adoption of mobile banking, and related services, is fundamentally changing how consumers engage and interact with their bank

• Banks that are deploying and promoting mobile have gained the upper hand

• Future winners will deliver a steady stream of mobile innovation, aimed at capturing the imagination of consumers, and therefore market share

• The consumer data is quite clear, and therefore… “…Go Big or Go Home, Because It’s True…” - Eliza Dushku

Appendix

Additional BAI Specific Data Cuts That Will be Available in Mobile Studies Moving Forward

• BAI Age and Income Segments – Details shown on next slide

• Investable Assets – Less than $1M – $1M or more – $2.5M or more – $10M or more

• Mobile Banking Usage – Users vs. Non-Users

• RDC Usage – Users vs. Non-Users

• Primary Financial Institution Used – Results available based on number of respondents who indicate they

use a specific FI


BAI Research – A long track record of excellence in market intelligence

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

THE QUEST FOR DEPOSITS

DEPOSIT PERFORMANCE BENCHMARKING*

FRONTLINE FACTOR

SMALL BUSINESS PAYMENTS

FRONTLINE EXPERIENCE

SMALL BUSINESS BENCHMARKING*

RELATIONSHIP EXPERIENCE

DEPOSIT PULSE*

COMPETING IN THE RETIREMENT DOMINATED FUTURE

FRONTLINE SALES BENCHMARKING*

PAYMENTS PREFERENCES

STATE DEPOSIT PULSE*

SMALL BUSINESS PULSE*

PAYMENTS DIAGNOSTIC*

NAVIGATING IN TURBULENT TIMES: COMPETING FOR DEPOSITS AND RELATIONSHIPS

BRANCH PERFORMANCE DIAGNOSTIC*

HOME EQUITY PULSE*

RETAIL BANKING DIAGNOSTIC*

SMALL BUSINESS STATE PULSE*

NON-INTEREST INCOME DIVERSIFICATION BENCHMARKING*

BRAND & DEMAND TRACKER: SELF SERVICE

SOLUTIONS DEMAND PULSE

THE NEW DYNAMICS OF CONSUMER BANKING RELATIONSHIPS

CONSUMER MARKET PULSE*

•Proprietary (bank only) benchmarking/tracking programs based on actual data (tracked at least semi-annually/longitudinally. We currently track 100+ million households, 300+ million accounts, and $2 trillion+ in deposits through such programs.

EXPENSE BENCHMARKING*

BAI SMALL BUSINESS RESEARCH

CHANNEL OPTIMIZATION STUDY* PLANNED

PROJECTS

BUSINESS LENDING PULSE*

CONSUMER CASH MANAGEMENT STUDY*

MOBILE TRACKING RESEARCH

MARKETVIEW INSIGHTS

30 www.BAI.org/research

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Key Contact

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Managing Director, Research

[email protected]

(312) 683-2486

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mobile in context: a longitudinal look at the impact on financial services

Documents

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affluent segments

retail banking

regional bank

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