afs mobile banking final 2
TRANSCRIPT
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Mobile Banking:Will This New Banking Channel be
Evolution or Revolution?
Bob Landry, Vice President Banking Group
September 12-14, 2010
AFT 2010 Annual Meeting
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Agenda
How does mobile expand / improve
the multi-channel delivery capabilities
now offered by financial institutions.
How is the mobile channel evolving,and its impact on existing channel
volumes.
What are the unique opportunities
that mobility and always on availabilityoffer to banks to build relationships
and profits.
2 Mercator Advisory Group 2010
http://rds.yahoo.com/_ylt=A9G_bF.QzBhLCBsAsT2jzbkF/SIG=12hp4co1g/EXP=1260002832/**http:/img518.imageshack.us/img518/3797/decisionmakingwe7.jpg -
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Bank Delivery Channels Are the Key toCustomer Satisfaction
CustomerBanker
CRM - Inside Out CEM - Outside In
Interaction
Customer Knowledge
Segmentation
Profitability
Demographics
Behavior
Life Style
Next Best Product
Customer Satisfaction
Loyalty
Advocacy
Brand Promise
Measurement:
Across Channels
Within Channels
By Process
Mercator Advisory Group 2010
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Companies With High Satisfaction ScoresAre Worth Significantly More
Average Market Value Added - High & Low ACSI Firms
Source: ACSI, MVA from Stern Stewart & Co
MVA = Market Value Added measures the difference between the market value of a firm (debt & equity) and the amount of Capital Invested
4 Mercator Advisory Group 2010
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BRANCH Office
71%
80%
75%
73%
69%
60%
46%
15%
45%
Availability of mobile (phone)
banking
Convenience of ATMs to
workplace
Convenience of branches to
workplace
Convenience of ATMs to
home
Ability to access account
online
Convenience of branches to
home
Interest rate/APY on the
account
The financial strength of the
bank
Other fees and terms
associated with the account
Convenient
To
Delivery Channels Are Important BankSelection Factors
Importance Of Factors In Selecting A Bank
For Checking Or Savings Account (all ages)
Source: Mercator Advisory Group Primary Research 2009
ONLINE
ATM
MOBILE
ATM
Home
Office
NA
NA
Channel
Mercator Advisory Group 2010
BRANCH Home
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New Channels Have NOT Reduced CostThey Have Increased Convenience
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Branch Teller Branch Sales Bank ATM & Cash Dispenser
Merchant Cash Dispenser Contact Center Agent Interactive Voice Response
Internet Banking Mobile Banking
Work Units
(000)
Source: FDIC, Mercator Advisory Group
ATM &
Cash
Dispenser
Telephone
Branch
Online
4.5% CAGR
1990 - 2000
3.1% CAGR
1980 - 1990
Delivery Channel Growth
1980 2009 3.8% CAGR
Delivery Channel Capacity Growth 1980 - 2009
3.8% CAGR
2000 - 2009
Mercator Advisory Group 2010
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Internet Channel of the Future BUT Overall Access toInternet Limits Access and Adoption
Source: Pew Internet & American Life Project, February 3, 2010http://www.pewinternet.org/Infographics/2010/Internet-acess-by-age-group-over-time.aspx
December
2009
Mercator Advisory Group 2010
Change in Internet Access By Age Group in US
2000-2009
74%
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Internet Adoption Has Slowed J ust LikeATM & Contact Center Growth Did
17%
30%34%
39%44%
49%53% 55%
57%
5%
9% 9%12%
15%18%
21% 19%24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2001 2002 2003 2004 2005 2006 2007 2008 2009
Have you ever done any banking online?
Did you do any banking online yesterday?
2001 2005
27% CAGR
2006 2009
6% CAGR
CAGR = Compound Annual Growth RateSource: Pew Internet & American Life Project, Usage Over Time, http://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspx, Mercator Advisory Group
Mercator Advisory Group 2010
Online Banking Adoption of Internet Users 2001 - 2009
http://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspxhttp://www.pewinternet.org/Trend-Data/Usage-Over-Time.aspx -
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How is the Mobile Channel Evolving
Multi Channel Integration
Customer Centric
Multi Channel Experience
Mercator Advisory Group 2010
http://rds.yahoo.com/_ylt=A0WTbx4E9KZL7VMA.8GjzbkF/SIG=12kgnscbm/EXP=1269319044/**http:/www.call-center.net/images/MPj04092880000%5b1%5d1.jpg -
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J ust Like Internet, Mobile Device OwnershipLimits Access & Adoption
17%
47%
29%
12%
21%
43%
31%
12%
Smart Phone
Device
Voice & Text
Messaging Cell
Phone
Basic Voice Cell
Phone
Do Not Own a
Phone of Any
Type
2009 2010Source: Mercator Advisory Group CustomerMonitor Survey Series June 2010
Mobile Device Ownership By Device Type(Base = All Consumers - June 2010)
Mercator Advisory Group 2010
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Cant Ignore Non-Smart PhoneAlternatives In Near Term
Key segments indicate theyare likely to purchase smart
phone device In Next 12
Months
Smart phone adoption ratehyped unless carriers change
cost structure
Cost & acceptance will
impede further rapid growth
Early adopters saturated next
year
Data plan cost inhibits further
growth
27%
17%
12%14%
0%
5%
10%
15%
20%
25%
30%
35%
Age 18-34 Income $100k+ College degree Use text
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013 2014 2015 2016
Smart Phone Other Phones & No MobileSource: Mercator Advisory Group CustomerMonitor Survey Series June 2010
(base = own mobile phone, probably or definitely will purchase)
Key Segments Will Purchase
Smart Phone This Year
Overall Adoption of Adult Population
Will be Further out Than Many ProjectBase = All adults
Mercator Advisory Group 2010
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Telephone Delivery Channels Will Get A NewLife With Mobile IVR Mobile
0
100
200
300
400
500
600
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Contact Center Agent Interactive Voice Response Mobile Banking
Source: Mercator Advisory Group
Delivery Units
(000)
13.4% CAGR
1990 - 2000
3.5% CAGR
2000 - 2009
2.6% CAGR
2009 - 2015
46.8% CAGR
1980 - 1990
Mercator Advisory Group 2010
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What Are The Unique Opportunities ThatMobility Offers
Multi Channel Integration
Customer Centric
Multi Channel Experience
Mercator Advisory Group 2010
http://rds.yahoo.com/_ylt=A0WTbx4E9KZL7VMA.8GjzbkF/SIG=12kgnscbm/EXP=1269319044/**http:/www.call-center.net/images/MPj04092880000%5b1%5d1.jpg -
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Adoption Quality Experience
Continuous Promotion & Education
Cross Sell Message Targeting
Preferred Channel Pricing
Usage and Relationship Value
EBPP
Expedited Payments & eBills eMail and Mobile Alerts
Personal Financial Management
Consumer Check image Deposits
Adoption
Number ofCustomers
Usage and Relationship Value
High
Low
OLB Strategies to Increase Adoption,Access, Usage and Relationship Depth
High
Online BankingStrategies
Mobile Phone
AccessAlways On, Convenience,
Immediacy, Location Awareness
Mercator Advisory Group 2010
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Adoption Quality Experience
Continuous Promotion & Education
Cross Sell Message Targeting
Preferred Channel Pricing
Usage and Relationship Value
EBPP
Expedited Payments & eBills eMail and Mobile Alerts
Personal Financial Management
Consumer Check image Deposits
Adoption
Number ofCustomers
Usage and Relationship Value
High
Low
Mobile Is Necessary to Increase Online BankingAdoption, Access, Usage and Relationship Depth
High
Online BankingStrategies
AccessAlways On, Convenience,
Immediacy, Location Awareness
New CapabilitiesMerchant Discounts,
P2P
Mercator Advisory Group 2010
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Mobile Banking Offers By Type
21
13
19
12
9
6
98
5
3 4
1
4
6
3
7
0
5
10
15
20
25
Mobile
Banking
SMS Text Browser Smart Phone
App
TotalTop 10 Banks
Banks 11-20
Banks 21-30
Mobile Banking Installed Base by Solution Type(Top 30 Retail Bank Web Sites 7/2010)
Mercator Advisory Group 2010
Source: Mercator Advisory Group 7/2010
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Mobile Banking Alternatives Offered
6
2
1 11 1
3
5
1
4
2
3
0
1
2
3
4
5
6
7
Offers 3 Offers 2 Offers 1 No MobileBanking
Top 10 Banks
Banks 11-20
Banks 21-30
Number of Mobile Banking Alternatives Offered(Top 30 Retail Bank Web Sites 7/2010)
Mercator Advisory Group 2010
Source: Mercator Advisory Group 7/2010
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Banks Are DeployingNew Online Banking Capabilities
2
7
17
21
0 5 10 15 20 25 30
Home Check Image
Deposit Capture
Personal FinancialManagement
Electronic BillPresentment - eBills
Mobile Banking
Alerts
Online Banking Capabilities(Top 30 Retail Bank Web Sites 7/2010)
Number of Banks
Mercator Advisory Group 2010
Source: Mercator Advisory Group 7/2010
Mobile
Enhanced
MobileFocused
Mobile
Focused
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Deeper Relationship
Increased Usage
Bill Payment
& Presentment
Personal
FinancialManagement
Basic
Online
Banking
Control
YourFinances
Manage Your
Net Worth
New Capabilities Are KeyTo Expanding Usage & Relationships
Electronic
Bill Payment
Bill Presentment
eBills
P2P &
Bank Transfers
Home Check
Deposit Image
CaptureTransfers
Account
AlertsBalance
Inquiries
1
2
3
4 Mercator Advisory Group 2010
Achieve
YourGoals
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Mobile Applications For Routine FinancialTasks Are More Openly Received
24%22%
19%
14%
Receive electronic
coupons on my phone
from merchants I select
that I could redeem
Check my bank
account balances using
my mobile phone
Receive bill payment
reminders through text
alerts on my mobile
phone
Transfer money
between my bank
accounts using my
mobile phone
Openness To Mobile-Based Financial Applications(base = own mobile device, top 2 box agreement ,excludes current app users)
Mercator Advisory Group 2010
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Alert Usage Remains Stable; More CommonWith Smart Device Users
92% 90%
8% 10%
2009 2010
Do Not Use Alerts Use Alerts
12%
21%
11%12%
16%
23%
13% 13%
Age 18-33 Use Smart
Phone
Use Text $100k+
Income
2009 201 0
Use Text Alerts From Banking Or
Credit Card Providers(base = own mobile phone, excludes dont know)
Segment Percentages Using Alerts(base = own mobile phone, excludes dont know)
Source: Mercator Advisory Group CustomerMonitor Survey Series June 2010
Mercator Advisory Group 2010
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Mobile Security Confidence Increases WithExperience, But Remains Low Overall
39%
15%
49%
39%
12%
46%
Not Confident
(bottom 3 box)
Mid-Range Confident (top 3
box)**
2010 2009
25%
15%
35%
26%24%
18%
31%
22%
Age 18-34* Use smart
device
Use text** Use text
alerts**
2009 2010
Confidence In Mobile Phone Security
For Use In Payments(base = own mobile phone, 10 point scale)
Segments That Were Most Confident
Percentage Indicating Top 3 Box Confidence(base = own mobile phone)
SecurityMost Important ConsiderationWhen Selecting Payment Type
Source: Mercator Advisory Group CustomerMonitor Survey Series June 2010
Mercator Advisory Group 2010
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WhoP
ays
What is the P2P Opportunity?
Consumers Businesses Government
Consumers C2C C2B C2G
Businesses B2C B2B B2G
Government G2C G2B G2G
Who ReceivesPayment Types
Paper Instruments Cash
Check
Payment Cards
Debit Credit
PrepaidOther
Online Bill Payment Bank account Debit
Source: Federal Reserve Survey of Consumer Payment Choice 2008
Cash Monthly Usage - 28.3 TX: 17 Retail Goods, 5.2 Other Services
Convert a portion of other services to electronic
Mercator Advisory Group 2010
C h i C
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Most Cash Transaction are Consumer toBusiness P2P Opportunity Small
131.4144.9
166.5
13.4 14.8 170 0 1.50
20406080
100120140160180
2002 2007 2012(E)Consumer 2 Business Consumer 2 Consumer Cash
Consumer 2 Consumer Electronic (P2P)
US Consumer 2 Consumer Payment Transaction VolumeBillions Tx
Mercator Advisory Group 2010
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Payment Acceptance Based On Attributes
Solution Attribute Solution Attribute DescriptionAcceptance Is the recipient willing to take it? How easy is it for the
recipient to receive funds?
Convenience
(Accessibility)
Are both sender and recipient able to connect to the
process?
Speed ToSpendability
How soon is the recipient likely to have irrevocable useof the funds?
Cost What are the fees to the sender, the recipient, or both?
Risk How reliable is the transmission mechanism? What is
chance of non-delivery?
Security What is chance of theft or misdirection of the payment?
Bi-directional Can payments be sent in reverse?
Currency
Capability
Can value be delivered in different currency? How many
currencies?
Solution Attribute Solution attribute description Mercator Advisory Group 2010
C h O t f P2P Alt ti O ll
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Cash Outperforms P2P Alternatives Overalland For Top 4 Criteria
0102030405060708090
Cash Check A B C D EAll Attributes Top 4 Attributes
Mercator Advisory Group 2010
USAA Pi iPh APP f
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USAA Pioneers iPhone APP forConsumer Check Image Deposits
Mercator Advisory Group 2010
Ch Off iPh B d
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Chase Offers iPhone BasedConsumer Check Image Deposits
Mercator Advisory Group 2010
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Thank you!
Questions