Slide 1

Mobile Consumer Financial Services

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Slide 2

Mobile Definitions - ABC's and More

Slide 3

Mobile Platforms and Finance Industry Impact

SMS Text , WAP/Browser-based, Downloadable and Embedded Applications Features Comparison

SMS/Text WAP/Browser-based Downloadable application Embedded application
100% of phones sold today 95% of phones sold today WAP-enabled; but many require difficult activation 18% have smartphones-best for viewing 95% of phones sold today WAP-enabled; but many require difficult activation Not widely available yet
FI-carrier-independent FI-carrier-independent Requires FI partnerships with wireless carriers - mobile banking vendors can facilitate partnerships Requires FI partnerships with wireless cariers and mobile handset vendors - mobile banking vendors facilitate
Relatively less expensive (depending on plan) or approx. $0.20 per message Requires expensive data plan Requires expensive data plan Requires expensive data plan and new phone
Easy to set up and use for most consumers Fairly easy to set up and use for most consumers More difficult; downloading application can be challenging for many Easiest to set up and use for consumers, but availability is limited

©2009 Javelin Strategy & Research

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Mobile Banking Ecosystem Has its own Complexities

Figure 2. Mobile Banking Ecosystem shows a Brand, Company, or Financial Institution transmitting information to a authentication vendor, aggregator, mobile banking vendor, handset manaufacturer and operating system. It is then transmitted to a SMS/MMS, WAP/MOBI, or a downloadable or preloaded application. It is then transmitted to the mobile network operators and the mobile subscriber receives information on their mobile device.

Slide 5

NFC/Countactless and M-Payments: Where's the Value? (And for Whom?)

Contactless and Mobile Payments Ecosystem

Consumer Usages

Merchant Acceptance

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Compared to Other Finance Channels, Mobile Currently Has More Security Upside

Mobile can have a positive or negative impact on institution and consumer safety

Mobile (Bank access via handheld mobile device with an over-the-air or mobile Internet connection)

Mobile negative impacts are:

Mobile postive impacts are:

Fixed Online (bank access via desktop or laptop computer with an Internet connection)

Fixed Online negatives are:

Fixed Online postives are:

Voice (access via voice call to customer service center)

Voice negatives are:

Voice positives are:

Slide 7

Mobile Finance Apps: Another Perspective

Banking, payments, commerce and more

M-Finance App. Market Impact Security Impact Players US Adoption
Marketing Low = FIs, Telcos Moderate
Alert notices Low + FIs, ? Growth slowing
Authentication Low + FIs, Telcos Nascent
Review-and-release alerts Medium ++ FIs Urban legend
Bank account management Medium - FIs Growing fast
Payment Transfers High -- FIs, Telcos Low
In-mobile or EC purchases Low -- FIs, Telcos Moderate
In-store purchases High ? FIs, Telcos, merchants, chips, networks No, high in long-term

©2009 Javelin Strategy & Research. All rights reserved.

Slide 8

Javelin's Five-Year Forecast for Mobile Banking Adoption in the United States

Chart entitled Millions of Mobile Banking Users and Percentage of Users

Vertical bar chart which shows the actual and projected numbers of U.S. adults with mobile phones. The number of U.S. adults using mobile banking last 12 months rises from the actual 24 million in 2008 to the projected 99 million in 2014. The percentage of U.S. adults with mobile phones from the actual 20% in 2008 to the projected 55% in 2014. The percentage of U.S. adults using mobile banking in the last 12 months rises from about 12% in 2008 to 45% in 2014.

Base: U.S. adults with mobile phones. ©2009 Javelin Strategy & Research. All rights reserved.

Slide 9

Unclear Value, Security Fears Remain Biggest Obstacles for Mobile Banking

Question 6: You indicated you do not use mobile banking. For what reasons do you not use mobile banking? (select up to three)

Chart entitled Primary Reasons Consumers Do Not Use Mobile Banking

Horizontal bar chart shows primary reasons consumers do not use mobile banking on the y-axis and percentages from 0% to 50% on the x-axis. X-axis: I don't see the value of mobile banking at 44%, Security of mobile banking at 42%, The cost of data access on my wireless plan at 34%, Cost or hidden fees from my bank for using the service at 10%, Dropped or lost telecommunications connections at 9%, It is not offered by my bank or credit union at 8%, Potential limitations in wireless plans at 6%, New technology, it may not work correctly at 5%, My bank offers it but i don't have access to it at 4%, Setup process to register accounts at 3%, I don't have a formal banking relationship at 1%, Other, please specify at 14%

July 2009, n = 2,396
Base: All consumers with mobile who do not use mobile banking. ©2009 Javelin Strategy & Research.

Slide 10

Underserved and Less Affluent: Real-time Notification and Access Resonates

Chart entitled Essential Features to Spur Mobile P2P Usage, Affluent vs. Less Affluent

Question 35: Which of the following features do you believe are essentialin order for you to begin using mobile person-to-person (P2P) transfers?

Horizontal bar chart shows on the y-axis the essential features to spur mobile P2P (person-to-person) Usage, Affluent vs. Less Affluent and on the x-axis the percentage from 0% to 50% showing consumers likely to use mobile P2P. The affluent goes from 100K to 149K and less affluent from 25K to 34K. For affluent, 72% consumers are likely to use mobile P2P for the enhanced security (so only I can make transfers) feature and 63% less affluent. Real-time access to fund (45% affluent, 50% less affluent). Real-time notification of funds transfer (text message sent to sender and receiver of funds transfer): 44% vs. 53%. Straightforward registration process (20% vs 27%). Simple user interface (display only important features) 37% vs 24%. Other, please specify is 7% vs. 5%.

Sept. 2008 n = 92, 60
Base: Consumers likely to use mobile P2P. ©2009 Javelin Strategy & Research.

Slide 11

What M-Features are Top FI's Offering?

Chart entitled Leaders among 18: Citi, USAA, Chase, Bank of America, Capitol 1, Wells Fargo

Horizontal bar chart on the x-axis shows the Mobile Monitoring, Money Movement, and Advanced Capabilities with the list of what financial institutions reviewed. The y-axis shows the percentages of 0% to 120% for features being offerred in the three categories. Following is the features being offerred, with their percentages.

Mobile Monitoring Money Movement Advanced Capabilities

September 2009, n=18
Base: All financial institutions reviewed. ©2009 Javelin Strategy & Research.

Slide 12

M-Finance Outlook: How We Get From Alerts to Wallets

Chart entitled Potential Evolution and Key Catalysts for US Mobile Wallet shows the evolution of mobile banking from years 2009 to 2014.

Slide 13

How well do we understand the problem we're working to solve?

Thank You

Javelin provides superior direction on key facts and forces that materially determine the success of customer-facing financial services, payments and security initiatives. Our advantages are rigorous process, independent position, and expert people.

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