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Digital Wallets In Depth

What are they? How do they work?

And where do credit unions fit in?

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Today’s Presenters

AMANDASMITH Senior Manager,

Technology & Innovation

CAROLINEWILLARD Executive Vice President,

Marketing & Strategy

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Agenda

A Look Inside: Digital Wallets Demystified

Expectation: What Do Consumers Want?

Experience: What Do Consumers Experience Now?

Opportunity: Where Do Credit Unions Fit In?

Engagement: When Will Wallets Take Off?

Q&A

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A Look Inside

Digital Wallets Demystified

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What is a Digital Wallet?

Software that resides on a buyer’s

computer and holds digital cash,

and a digital certificate with a digital

signature, as well as billing, shipping,

and payment information for

online transactions.

Source: BusinessDictionary.com

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Introducing the Mobile Wallet

• Contains “wallet-like” information

• Acts as payment and

shopping hub

• Integrates payment,

geolocation, merchant loyalty

• Eliminates the need for a

regular wallet

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Wallets in Use

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Mobile Wallet: Unpacked

Loyalty

Programs

ID &

Insurance

Info

Geolocation

Features

Tickets

Cardless

Payments to

Merchants

Mobile P2P:

Send &

Receive

Coupons

& Special

Offers

Electronic

Receipts

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Mobile Wallet: Unpacked

Mobile Wallets Also Need These Attributes:

• Connect with merchants

and other wallets

• Integrate with shopping

and geolocation

• Secure, trustworthy

• Part of the financial

services package

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Expectation

What do consumers want?

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PayPal Study

of Americans would prefer to

leave their wallet at home.

WHO WANTS ONE?

of Americans have been

“stiffed” by friends, either

intentionally or not.

PAYBACK IS A HITCH

Source: PayPal Global Study 2013 – Survey conducted by Wakefield Research

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Awareness Gap

50 percent of people are aware of what a mobile wallet is.

Of those, 22 percent look forward to adopting one.

FAMILIAR

WITH MOBILE

WALLET

FAMILIARITY VS. USAGE

FAMILIAR &

LOOKING

FORWARD

TO ADOPTING

Source: CMB Consumer Pulse, Spring 2013: The Mobile Moment: Barriers and Opportunities for Mobile Wallet

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What actions did consumers take in past 6 months,

or plan to take in next 6 months?

Usage Gap

USED A MOBILE WALLET HAD NOT USED A MOBILE

WALLET BUT PLANNED TO

HAD NOT USED NOR

PLANNED TO USE

Source: CMB Consumer Pulse, Spring 2013: The Mobile Moment: Barriers and Opportunities for Mobile Wallet

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Security concerns are the top barrier to usage

Which of the following reasons prevent you from

using a mobile wallet?

Worried about security

Don’t want to pay fees

Don’t want the store to have my wallet info

Credit cards have better rewards

Don’t know which app is best

Technology doesn’t always work properly

It’s too difficult on a small screen

Not as convenient as cash or credit cards

No single payment system across merchants

Not available at stores where I would use it

Source: CMB Consumer Pulse, Spring 2013: The Mobile Moment: Barriers and Opportunities for Mobile Wallet

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Fantasy vs. Reality

in mobile payments this year

UP 69%

201 Million in 2012

UP FROM

Gartner, "Forecast: Mobile Payment, Worldwide, 2013 Update." Gartner, "Forecast: Mobile Payment, Worldwide, 2013 Update." Gartner, "Forecast: Mobile Payment, Worldwide, 2013 Update."

Gartner, "Forecast: Mobile Payment, Worldwide, 2013 Update

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Experience

What’s the mobile wallet space like

right now?

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Mobile Wallets

No dominant brand or identity

Rival technology with

no clear winner

Competition over

who’s in charge

Consumers confused,

not engaged

NO CONSENSUS

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Split Personality

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NFC Payment: So Cool, No One Uses It?

0

50

100

150

200

250

2012 2013 2014 2015 2016 2017

NFC Enabled Smartphones NFC Handsets in Use for Payments

NU

MB

ER

OF

DE

VIC

ES

(in

mill

ion

s)

NORTH AMERICAN NFC USAGE

Source: Juniper Research: NFC Mobile Payments Market update – Business Models &Forecasts 2012-2017

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A Vicious Cycle?

The Vicious Cycle of NFC Rejection

Source: Juniper Research: NFC Mobile Payments Market update – Business Models &Forecasts 2012-2017

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“The Cloud” via PayPal

NO NFC, BUT NOT UNIVERSALLY AVAILABLE

“FUN” ELEMENT IS SKETCHY

WORKS WITH YOUR EXISTING CARDS

NOT A GAME-CHANGER… YET

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Who’s in Charge?

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Apple and the Great Unknown

iPHONE APP

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Usage is Up

0

25

50

75

100

125

2011 2012 2013 2014 2015 2016

ACTIVE MOBILE WALLET USERS MAKING DOMESTIC TRANSFERS (in millions)

NORTH AMERICA

INDIAN SUBCONTINENT

FAR EAST & CHINA

AFRICA & MIDDLE EAST

Source: Juniper Research: Mobile Money Transfer & Remittances – Business Models & Monetisation Opportunities 2011-2016

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When Will We Reach Critical Mass?

SMARTPHONE USE Widespread and Growing

REAL BRANDS Unity Raises Awareness

MERCHANT AVAILABILITY Spotty and Confused

TECHNOLOGICAL CONGRUITY Fragmentation Everywhere

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Opportunity

How Do Credit Unions Win Now?

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CO-OP Recommendations

PARTICIPATE IN MANY PROGRAMS ENCOURAGE ADOPTION

WITH THE MARKET OFFER KEY FEATURES LIKE P2P

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Be There!

Future Engagement of Members

Tied to Wallet Usage

To Incentivize Adoption

Mobile, Social, Online, Print, In-Branch

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Reinforce Card Relationships

Revitalize your card

programs.

Promote rates, features,

benefits.

Use analytics to track

interest and usage.

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Mobilize Now

• Real-time good funds model

• Digital account management

• Transactions between credit union accounts

• Me2You transactions within credit unions

• Remote deposit capture

• And more to come, including Me2Anyone

payments, “to ubiquity.”

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Engagement

Will Wallets Take Off?

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Mobile Wallets: A Work-In-Progress

A number of elements are in place, but mobile wallets

aren’t there yet.

MOBILE BANKING MOBILE P2P PROPRIETARY PAYMENT CARDS/APPS

?

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The Shopping Suite

MOBILE SHOPPING LOYALTY CARDS & APPS COUPONS & OFFERS

E-RECEIPTS TICKETS

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Geolocation

With a smartphone, you are (almost) never lost.

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How effortlessly could the transition happen?

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CO-OP is Here

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More to Come!

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Q&A

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