Created with Haiku Deck, presentation software that's simple,beautiful and fun.By Drew Wolff

Photo by Andrea

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Time for a new chassis...

Created with Haiku Deck, presentation softwarethat's simple, beautiful and fun.By Drew Wolff

Photo by Abdulrahman AL-Daithan

page 2 of 7

Time for a new chassis...

Typical Current Account Structure: Multi-tier profit model*1. Core product is a standardized service (but high quality and efficiently produced) Tieredstructure results from a low-end competitive base layer product through to a ‘Rolls-Royce’ setof products and services.2. The checking account service is the lifeblood of a retail bank; most profitable product sales'up the pyramid' come from that base.3. Works best if the core product cannot be undercut by a low cost competitor. In banking,that has become free checking. Even though bankers talk about the difference in checkingaccounts, most consumers wouldn't be able to differentiate.

* In The Art of Profitability' by Adrian Slywotzky, he calls this the 'Pyramid Profit Model'. Thisis slightly different but similar in concept.

Created with Haiku Deck, presentation software that'ssimple, beautiful and fun.By Drew Wolff

Photo by Salvador Moreira

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Time for a new chassis...

However, profit dynamics in the base product are not uniform.

The lowest decile was profitable due to a lot of 'bad' fees. The highest decile was profitabledue to large deposit balances or a significant lending relationship. (up to $700 per accountprofitability)

The 80% of accounts in the middle lost $60 per year on average.

The crux: The current checking account chassis with free access, checks, and float is tooexpensive for a large portion of consumers. Mass-market retail banks will need to ‘lower thebase layer’ to compete more effectively.

Created with Haiku Deck, presentation software that's simple,beautiful and fun.By Drew Wolff

Photo by Mark Fischer

page 4 of 7

Time for a new chassis...

How should banks do this? Adjust the account structure to go after big sources of cost in achecking account and make the mass middle accounts break even or have smaller losses peraccount. The current state adds extra pressure to management to continue to move upmarket where all the national banks are competing. Once a bank stops the bleeding on alarge percentage of accounts, the institution has a much more solid competitive position andopens up a whole new customer base.

Created with Haiku Deck, presentation software that's simple,beautiful and fun.By Drew Wolff

Photo by Harsha K R

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Time for a new chassis...

A new product would need to change the paradigm on the the biggest cost drivers. Ultimatelyit saves about $60 per account per year:• Fraud ($15)- shift to a prepaid model• Physical distribution ($15) – digital first, downloadable• Checks ($5)– still necessary but a consumer will pay for the convenience• Statements ($15)– Paper statements are costly: why bother?• Opening and fulfillment costs ($25-$50 amortized over 3 years) – digital first• Brick and mortar acquisition costs –($ ?) a truly convenient product, sticky paymentsolutions, social media, and a better UI will reverse the traditional marketing funnel

Additionally, the industry has a platform and a mislabeled, misunderstood product (prepaid)as an opportunity

Created with Haiku Deck, presentation software that'ssimple, beautiful and fun.By Drew Wolff

Photo by Ken Teegardin

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Time for a new chassis...

The new core offering is basically prepaid plus a phone without the punitive fees.......but don'tuse the word prepaid.

Its a loaded term because the history of prepaid is full of load fees and inactivity fees....for noreason. DDA - lite doesn't work because that, too, carries with it a specific definition.

Consumers are happy to pay fees where they get real value - especially convenience. ForeignATM usage, pre-authorized paper check issuing, and a small monthly fee are places wherefees could be charged. However, the mentality should not be trying to make money on theservice but rather to recover costs to make the service break even and build an baseecosystem. Amex Bluebird is a good example of this. It is not clear why they need to crowdthe field with Amex Serve.

Created with Haiku Deck, presentation software that's simple, beautiful and fun.By Drew Wolff

page 7 of 7

Time for a new chassis...