The Payments InstituteJuly 21-24, 2019 • Emory University, Atlanta GA

The Internet of Things

Hector SandovalVice President, Product Line Leader

Early Warning

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• What is the IoT?

• How did it come about?

• What does adoption look like and how fast will it grow?

• What type of issues could arise?

• How should financial institutions protect themselves as they adopt this movement?

AgendaAgenda

The Mobile

Majority

Consumer adoption of

mobile devices and mobile

applications has changed the

nature of interactions

Market Trends

Internet of

Things (IoT)

Digital behavior across

devices, channels, products

and services shape a

consumer’s risk profile

Faster Money

Movement

Faster money movement is

key to enhanced consumer

experiences, and requires

real-time fraud/risk

protection

Fraud

Evolution

Millions of fraud signals

requires fast data analysis to

keep consumers and financial

institutions safe

Market Trends

The Internet of Things is big….and getting bigger!

28 billion devices will be connected by

2021Source: Aite Group, The Internet of Things: An Information Explosion, May 2017.

Device connections are

growing at a 27% compounded

growth rate vs. 3% for others

IoT will change the payments

ecosystem significantly

What is the Internet of Things?

Internet of Things (IoT)

Internet of Payment

Things (IoPT)

Machine-to-Machine (M2M)

The number of devices connected to the internet grows each year:

• 7.6 billion people today

• 25 – 50 billion by 2020

Source: www.comsoc.org/blog, Ericcson Mobility Report 2016

How many devices will people have?

How many devices do you have?

The number of connected devices is expected to grow at 12% CAGR over the next few years

People are becoming more interested in connected devices

Mobility

Telematics and fleet management

Tracking and remote monitoring

Condition-based maintenance

Insurance

Usage-based insurance

Telematics for insurance

Insured asset management

Retail

Automated checkout

In-store analytics and promotion

Inventory optimization

Healthcare

Proactive and connected monitoring

Early detection and diagnosis

Remote measurements

IoT will affect our lives and businesses in many ways

The emergence of the connected home

40.3mm Smart Homes

Revenue per home$146.54

Adoption 2018 – 32%2022 – 53%

Revenue $19.8mm

Source: Statistica 2018

No cash, no grocery list, no problem

https://www.youtube.com/watch?v=NrmMk1Myrxc

Insurance rates based on how you drive, when you drive, and how much you drive

Usage based models will

decrease risk and costs for

both consumers and insurance

companies

Connection to sensors in

vehicles or on devices worn by drivers can

reduce risk

New Insurance products to

meet specific demands

https://www.youtube.com/watch?v=neJmbMIis3Q

Health Insurance and IoT

• Users must use a wearable fitness tracker – Fitbit or Apple Watch• Company provides incentives for healthier living• Company provides rewards for reaching goals – gift cards, discounts

https://www.youtube.com/watch?v=TdBIjWnKaY4

Your doctor is with you wherever you go

With all these connected devices helping us, is there a downside?

How should Financial Institutions embrace this trend?

The mobile majority

Digital identity

Faster money movement

Customer experience

Account takeover

Token takeover

Malware

Social engineering in contact centers

Market Trends and Threats

Continuous Authentication

Friction-free transactions• Limit friction to the consumer through

active and passive authenticators proven to help reduce fraud

• Platform-based authenticators enables you to turn on additional authenticators with minimal implementation

Exposed information and data breaches are not going away:

• More than 6 billion data records have been compromised since 20131

• The majority of consumers only use a handful of username and password combinations across their online relationships1

• Bank accounts are increasingly opened online and on mobile devices2

• ~75% of cyber attacks are attempting to steal your customers personal information3

Sources: 1 Moving Beyond the Password: Consumer Views on Authentication” March 2017 Aite Group. 2 Aite Group, “Application Fraud Rising as Breaches Fan the Flames,” March 2016. 3 RSA Quarterly Fraud Report, Vo11, Issue 1, Q1 2018

Authenticating throughout the customer lifecycle

HIGH-RISK ACTIVITIESCONTACT CENTER

Mobile app login

Portfolio cleanup

ACCOUNT INTERACTIONS

Updating contact information

Mobile device bindingNew account applications

NEW CUSTOMERS

Mobile wallet card provisioning

Passwordlesslogins

Password resets

Click-to-callInbound contact center authentication Outbound contact verification

New account funding

• Is this the same Digital Persona you have previously “bound” to?

• Has another FI seen this device or phone number?

• When and what was the interaction?

Confidence in the “Digital Persona” of the Consumer

Best in class digital authentication requires a multi-layered approach

Network layer:

MNO intelligence

Persistent mobile alias

Software layer:

Device intelligence

Hardware layer:

Device bind to certificate

Software layer:

Browser intelligence

Who is Early Warning?

A bank-owned, privately-held

fintech company founded in 1990

OWNER BANKS

Bank of America, BB&T, Capital One, JP Morgan

Chase, PNC Bank, U.S. Bank and Wells Fargo

COMPANY ACQUISITIONS

WJM Technologies, Austin Logistics,

Authentify®, clearXchange®

LOCATIONS

Headquarters in Scottsdale, Arizona

Locations in Chicago, San Francisco and Tempe

Our Company

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Diversified Product Suite, Broad Customer Reach and Strong Talent Base

OUR CUSTOMERS

Early Warning® serves 43 of the top 50 financial services companies and over 2,500 customers directly and indirectly, including financial institutions, government agencies and payment companies. The Zelle Network® moved 433M transactions totaling $119B in 2018.

BANKS &CREDIT UNIONS

RESELLERS CONSUMERS(P2P NETWORK)

GOVERNMENTAGENCIES

OUR COLLEAGUESEarly Warning continues to attract the brightest minds inrisk management, technology and data science, and currently employs almost 900 colleagues in four offices nationwide

UNIQUE GOVERNANCEWe are 100% owned by Bank of America, BB&T, CapitalOne, Chase, PNC, U.S. Bank and Wells Fargo. Our operatingrules define provisioning and use of data contributed toEarly Warning

LEGAL STRUCTUREEarly Warning is a specialty consumer reporting agencyand is regulated by the office of the comptroller of currencyand the bureau of financial protection. Our legal structure designed to accommodate risk, fraud and anti-moneylaundering product development

QUESTIONS?