Seven Trends That Are Shaping Consumer Expectations of Financial Institutions

1. Christina Sommer, MasterCard Global Insights Seven Trends That Are Shaping Consumer Expectations of Financial Institutions

2. 6 Global Drivers impacting consumers are beyond their control but impact behavior and over time underlying values Financial Change Technological Change Population & Demographics Environment, Sustainability Resources Globalization Changing Business Models Source: GfK Consulting Roper 2012

3. In a digital age, the path to purchase and loyalty is now complex, iterative and dynamic 1.8 B 5 B 4.6 B 10 B 800 exabytes 53 zettabytes Source: Google, Gfk Roper Consulting, 2012

4. Increasingly, developments in consumer behaviors and attitudes are precipitated by technological advances z All third party trademarks used herein belong to their respective owners.

5. Understanding and embracing these trends is imperative for financial institutions • Technology has done its fair share of shaping consumer trends across all segments • So has the economic downturn and the uncertainty it has created • The two groups that act as a bell weather for consumer trends are the Youth and Affluent segments • Other demographic groups eventually follow suit • Many banks focus heavily on Affluent but tend to ignore the Youth market; this segment does not offer the same level of profitability, but may provide a different value

6. Attitude and behavior vary by segment Youth • Age 15-19 Gen Y • Age 20-29 Gen X • Age 30-39 • 61.4 Million Boomers • Age 40-59 Pre-Boomers • Age 60 and above Affluent • HHI $135k+ Source: US Census.gov Page 6

7. Consumer trends with greatest potential impact on United States banking today Source: GfK Roper Consulting, Mood of the World – United States, June 2012

8. 1. Finances @ the FoundationWomen, boomers, and Gen Y households feel more financial pressure than other groups Key Takeaways Percent Citing as Obstacle to Achieving the American Dream (All Segments) • Consumers’ financial situation is the top obstacle to the American Dream • Consumers have become more risk-averse; “living within their means” has become an important goal • Many consumers constantly evaluate the state of their finances • 50 percent of Americans “plan or manage finances” at least weekly or more often” • Financial institutions can aid customers in managing risk in their portfolios and spending habits • Financial institutions can offer suggestions as to how consumers can best manage their financial situations Source: GfK Roper Consulting, Mood of the World – United States, June 2012

9. 2. IdentityIgnoring social norms, expressing individuality, and playing a role in the larger community are key Key Takeaways “I don’t feel constrained by social expectations of what is or is not appropriate for someone of my age and gender” 48% of Americans agree … led by Boomers • Don’t automatically resort to traditional age and gender stereotypes; appeal to interests and personal values beyond demographics • Demonstrate knowledge of customers as unique individuals • Allow consumers to customize product offerings and bundles “just for them” • Leverage communities by offering visibility into how consumers’ peers are using your products “My individuality is reflected in how I look and what I buy” 31% agree…led by Gen Y and Affluent “I feel it is important to be an active part of the wider community” 25% of Americans agree … led by Affluent Source: GfK Roper Consulting, Mood of the World – United States, June 2012

10. 3. Experiences trump PossessionsMany Americans feel experiences are more important than possessions Percent Who Strongly Agree with the Following Statements Key Takeaways • Consumers seek (small) indulgences and pleasures to lift their mood – especially in times of economic uncertainty • 52 percent of Americans agree that “Experiences are more important than possessions” • Consumers will respond favorably to reward programs that enable them to attain “indulgences” quickly • Offer reward programs that provide experiences rather than “more stuff” • Provide access to events that are experience-based Shopping is fun because it gives you an opportunity to socialize with your friends Shopping in stores is fun because you can browse to see what is new and different Source: GfK Roper Consulting , Mood of the World – United States, June 2012

11. 4. More for Less Consumers increasingly realize that it’s not just about best price; it’s about best value Pragmatic Consumers Percent of Total U.S. Population (Online) Key Takeaways • Price is not the only issue that consumers consider when purchasing goods and services • 34 percent of Americans agree, “I prefer to own fewer, but higher quality items (clothes, technology items, etc.)” • Factors like customer service and relationship value matter more • Only four percent of consumers decide to deepen banking relationships based on rates and fees* • Consumers who are deal-driven, value seeking and tend to experiment with brands to find best options • More likely to be 30-44 (39% age 30-44, +4pts from Total U.S.) • More affluent than the average population (51% with Household Income $75K+, +5pts from Total US) • Source: GfK Roper, Consulting Mood of the World – United States, June 2011 • *Source: MasterCard study conducted by TNS, Relationship Banking Research, December 2010

12. 5. Power to the PeopleSocial networks are creating new brand conversations Key Takeaways 48% of users of social networking websites say they use the sites to “post comments or read what other users have said about a brand, product, or company” …that translates to 65 million Americans • Consumers will talk about your products and services; be where they are and join in the conversation • Ensure your brand is visible with something new or different to say; authenticity is key • Be aware that financial institutions no longer controls all the messaging around their brands • Use consumer reviews as an opportunity to have a dialogue with customers about likes and dislikes; amend your offerings accordingly • Those most likely to use social networking sites in this way: • $200k+ households, 63% • Moms with kids <6 years old, 59% • Gen X and Gen Y, 55% each Source: GfK Roper Consulting, Mood of the World – United States, June 2011

13. 6. Less is MoreConsumers feel the amount of choice is “just right” and that “too much” is preferable to “not enough” The Goldilocks Effect Consumer Perceptions of the Amount of Choice They Have in Making Various Purchase Decisions Key Takeaways • Some consumers will pay a premium for goods and services that offer a hassle-free experience • Make products and services intuitive; “i” products have reset expectations and the speed of engagement • Based on your knowledge of individual customers, filter product choices to provide a limited number that are right for them • Make product offerings simple so that customers can easily digest them Too much (30% average) Just right (50%) Not enough (16%) Source: GfK Roper Consulting, Mood of the World – United States, June 2011

14. 7. At Your Finger TipsAll about convenience at any given hour Percent Who Agree that “It is important to always be reachable wherever I am” (top 2 box) Key Takeaways • Fit your service offerings into consumers’ changing lifestyles • Provide 24/7 access to your institution by using technology such as mobile banking applications that are easy and interactive • Leverage customer information to provide instant approval when possible • Stress convenience and speed in channel communications Gen Y Gen X Boomers Affluent Source: GfK Roper Consulting , Mood of the World – United States, June 2012

15. So what does all this mean for banks and credit unions?

16. So what does all this mean for banks and credit unions?(continued)

17. Financial well-being is the leading trend for all demographic groups except Youth Rankings derived from averages of each trend’s individual statements Source: GfK Roper Consulting , Mood of the World – United States, June 2011, MasterCard analysis • October 20, 2011 Page 17

18. All these insights lead to one key recommendation for financial institutions Know your customers and manage relationships, not products