Mobile Banking

Presented by:Cindi Lieblich

Vice President – Product DevelopmentFirst Data Corp.

Agenda

• The Market

• The Models

• The Future of Mobile

The Market

Mobile phones are pervasive

– 254+ million mobile U.S. subscribers; 84% penetration

– 1 billion+ SMS messages exchanged per month (Aberdeen Group)

Consumers want mobile banking

– 73% of consumers want to see account balance information on mobile phones

– 61% of 25-34 year-olds would make purchases using mobile phones

– 53% of consumers want to see transaction history on mobile phones (Celent)

– 50% of 18-25 year-olds say mobile banking is important in choosing FI

– 49% of customers would use a mobile banking/payment application

Strong analyst forecasts for mobile banking

– 11 million U.S. households will use mobile banking by 2010; 32 million by 2016.

– By end of 2010, 30% of all online banking households will engage in mobile banking

– 204 million users will generate mobile payment transactions worth ~$22B by 2011.

Mobile Banking Demand

(CTIA)

(Celent)

((VISA)

(MQA Research)

(OnlineBanking Report)

(Juniper Research)))

(Celent)

(Celent)

Mobile Usage is Growing

Mobile Banking Affects Bank Selection

50% of Generation Y respondents say mobile banking is somewhat/very important in choosing their bank. (Celent)

Source: mFoundry research

Bank Customers Already Using Mobile

54+% of incoming calls to bank call centers made from mobile phones

Over half of incoming calls relate to basic account inquiries

Celent Predicts: Calls to bank call centers will be displaced by mobile banking

Smart Phone Users Dominate• Device characteristics improve usability

• Data Plans/Usage of other mobile applications

Active Online Banking User

Consumer Profile- Commuter, Shopper, Traveler

Mobile Banking User Profile

(CTIA)

(Celent)

(Aberdeen Group)

(Visa)

27% 18-24 years old37% 25-34 years old29% 35-44 years old

9

US Market Opportunity• Mobile banking has been successful in Europe and Asia• Similar adoption expected in the US:

Tower Group forecasts 16% adoption by 2012

US Mobile Banking Adoption Forecast Europe Mobile Banking Experience

mill

ions

of u

sers

The Models

Mobile Models

Mobile Model Deployment

• Available from any mobile device with Secure Sockets Layer (SSL) Internet access

• Streamlined Internet banking functions designed for mobile browser access– Balances– History– Transfers– Alerts– Bill Pay

Research In Motion, the RIM logo, BlackBerry, the BlackBerry logo and SureType are registered with the U.S. Patent and Trademark Office and may be pending or registered in other countries – these and other marks of Research In Motion Limited are used under license

WAP Model

Push Account Alerts

SMS Model

Pull Account Information

45%

35%

35%

33%

33%

32%

29%

24%

14%

9%

8%

2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Any unusual transaction that you specify (overseas transfer, large w ithdrawal)

Notification when a bill is due or has been paid

Changes to personal information (password, phone number, email and physical addresses)

Confirmation of a deposit

Notification when balances fall below a pre-set level

Change in credit rating

Notification when an account has been accessed online

Notification of transfers from or to account

Notification of application of credit

Addition or subtraction of registered users

Notification when dormant account is activated

Other, please specify

March 2007; n = 1,972Base: Online bankers

© 2007 Javelin Strategy & Research

Q21: If you were given the ability to receive alert messages on your immediate financial status, which of the following would be of value to you? (Select up to three)

Fraud-related alertsFinancial management alertsBoth

Mobile AlertsPerceived value of mobile alerts

Source: Javelin Strategy & Research, March 2007

Both

Financial management alerts

Fraud-related alerts

Download Application from institution’s website

Account Information View Balance View/Search Transactions

Transfers Bill payment One Time PIN for high risk

transactions Find a branch/ATM Virtual wallet (future)

Application Model

Download Application from institution’s website

Account Information View Balance View/Search Transactions

Transfers Bill payment One Time PIN for high risk

transactions Find a branch/ATM Virtual wallet (future)

Application Model

Mobile Vendors

VENDOR EXPERIENCE RANGES FROM 8 YEARS TO 6 MONTHS

Source: Company data as of November 2008, Aite Group

Mobile Models by Vendor

TEXT MESSAGING IS THE MOST COMMON COMPONENT OF MOBILE BANKING SOLUTIONS

Source: Company data as of November 2008, Aite Group

The Future of Mobile

The Future of MobileTrends

• IFM 2-way SMS Alerts• P2P Payments• Mobile Commerce/Virtual Wallet• Mobile Marketing

Mobile Alerts – Next Phase

• Interactive Financial Messaging (IFM)– Two way SMS alerts– Fraud Prevention tool– Out of Band

Authentication– Bill Pay, Cash

Management transaction approval

Mobile Alerts

Person to Person (P2P) Payments

Person-to-person transferspermit consumers to

conduct financial transactionswith their most trusted

relationships, friends and family.

Mobile Commerce TrendsFive trends are enabling mobile commerce to evolve

Technology for delivering data over a

wireless network has become sophisticated

Near field communications has become the

standard for payments

Consumers are viewing their

mobile device as more than a phone

Contactless POS readers and cards

are poised for critical mass

Mobile phone ownership is high

TrendsTrends

500K retail locations enabled

by 2008

Evolution of 3G networks enables

mCommerce

92% of adults use a mobile phone

84% of handsets are Internet ready

As opposed to bar code, Bluetooth,

etc.

Mobile Commerce: The Consumer View• Convenience

– Access to account information and funds via handset– According to Gartner, mobile banking can appeal to

customers whose lifestyles or occupations keep them away from the computer

• Speed– Faster checkout

• Value– Reduce the number of items a consumer must carry– Handset now replaces the wallet

• Security– McAfee finds that 72% of mobile consumers are

concerned about security1

– Mobile handset can provided added security features

1Mobile Payments World, Feb ’08,

Wireless Users

The Consumer Experience

1 2

The consumer can register their card

online and can enroll for automated reload

Consumer has a mobile device with an NFC chip,

enroll for the mobile wallet, and stores the partner card in their wallet or at home for

safe-keeping

Consumer uses the personal device with

the NFC chip to make purchases or reload at

a retail location

3

Mobile Marketing:

mMarketing may consist of a consumer choosing to receive a promotion while they are at the POS, in the subway, anywhere….

Mobile user taps phone to smart poster

to acquire coupon

Smart poster in the subway station

Text message (with permission) with offer

Taps phone

OfferReceived

OnMobilePhone

YOUR PHONE

The Future of Mobile CommerceEncompasses banking, payments, and marketing activities conducted over a mobile device

Mobile Banking and Account Services

Mobile Payments

Mobile Marketing

Balance inquiries, transaction history,

intra-account funds transfer, bill pay, etc.

Advertising, location-based promotions, loyalty, rewards, CRM, etc.

Purchase of goods or services remotely, via remittances or at the POS

using a mobile device

Lays the foundation of consumer acceptance

Improves business models,

convenience and secure solutions

Tightens FI and merchant

connections to their customers

The Mobile OpportunityWhat Customers Want

Help me stay in control of my

finances!

Keep it Secure!Keep it Secure!

Must be easy to use!

Must be easy to use!

I need low balance alerts and the ability to transfer money

The Mobile Opportunity What Customers Want

Can I afford it?

What is my Balance?

Have I been paid?

Questions?