1. Optimizing Your Internet Channel Ron Bergamesca EVP and General Manager Community Bank & Credit Union Services

2. Agenda • Consumer Update • Internet Channel Profitability • Where is the Revenue? • Integration—A Path to Optimization

3. Consumer Update

4. Adoption of Online Banking and Bill Pay Continues to Grow Consumer Update: Adoption Trends Rate of Transaction Adoption is Unchanged Source: Javelin Strategy & Research

5. Adoption at Top 10 Banks Continues to Grow Consumer Update: Adoption Trends Source: comScore

6. Consumer Update: Segmentation is Maturing Mobile PFM 7x24 Member Care Check Metaphor Risk-Based BP Trans Source: McKinsey & Company

7. Consumer Update: Segmentation is Maturing Implications • One Size Fits All is Becoming a Liability • “Cohortization” of: • Information—Home Page is Key • Navigation—Quick Links Facilitate • Transactions: Simple or Complete—Give Choice • Increased Marketing Opportunities—Consumers are Self Segmenting

8. Consumer Update: Attributes of an Optimal Experience • Immediacy – when you want it • Personalization – what works for you • Interpretation – meaning making - relevance • Authenticity – real deal or knockoff? • Accessibility – easily stored and found • Embodiment – real experiences • Findability – navigation help Source: Kevin Kelly, The Technium: What technology wants from us. Compliments of Pew Internet and American Life Project

9. Internet Channel Profitability

10. Profitability Increased 31% Internet Channel Profitability:Bill Payers Are More Profitable Source: Bank of America 2002 time series analysis compared offline customers with online customers. Groups matched with 40 ‘pre-online’ characteristics (e.g. age, income, account balance, transaction activity, VRU/CSR usage). Analysis spanned 31 months and included over 300,000 customers

11. Profitability Increased 31% Internet Channel Profitability:Bill Payers Are More Profitable Source: Bank of America 2002 time series analysis compared offline customers with online customers. Groups matched with 40 ‘pre-online’ characteristics (e.g. age, income, account balance, transaction activity, VRU/CSR usage). Analysis spanned 31 months and included over 300,000 customers

12. Profitability Increased 40% Internet Channel Profitability:Bill Payers Are More Profitable Source: Boston Consulting Group, 2003

13. Churn Index Profitability Index Internet Channel Profitability: Lower Churn/Higher Profits Source: Aspen Analytics classified all customers of a Top 10 Financial Institution as of 11/30/07, and then measured their subsequent churn probability and profitability over the subsequent 6 months.

14. Where is the Revenue?

15. Where Is the Revenue: Acquiring New Accounts What is Your Cost of Acquisition? Source: Forrester Research, February 2008

16. Where Is the Revenue: Acquiring New Accounts What is Your Cost of Acquisition? Source: Forrester Research, February 2008

17. Where Is the Revenue:Fee Income Opportunities • Need To Be High Value • Expedited Payments • Next Day Transfers • Enhanced Mobile Experience (Downloaded Application)?? • Security Tokens?? • Quid Pro Quo Rewards—Twist on Relationship Pricing • High Yield Interest, if you pay 5 bills online • Three Next Day transfers, if you have 10 debit trans • And so on…

18. Where Is the Revenue:Leveraging The Data

19. Where Is the Revenue:Leveraging The Data

20. Where Is the Revenue:Leveraging The Data

21. Where Is the Revenue:Leveraging The Data

22. Where Is the Revenue:Leveraging The Data React To Bill Payments—Both Online and Offline

23. Where Is the Revenue:Leveraging The Data One Individual Line of Statement Has Value $ave

24. Integration—A Path To Optimization

25. Integration: The Channel Has Gotten Complex Service Acquire Retain 25|

26. Integration: From The Member’s Perspective

27. Integration: From The Member’s Perspective

28. Integration: From Your Prospective

29. Balance Vendors’ Value Proposition vs. Your Needs Integration: Key Purchase Decision Factors

30. Integration: Key Purchase Decision Factors What You Need To Look For In Your Vendors • Scale and Flexibility • Scale Drives Costs • Flexibility Drives Responsiveness and Innovation • Integration as a Skill Set • This Will Become Increasingly Important Because No Provider Can Do It All • Focus • Where Does the Vendor Invest Its R&D Dollars • Is the Vendor Too Broad/Narrow • Relationship with Your Core Processor

31. Summary • Consumer Adoption Continues at a Good Clip • Consumer Segmentation is Maturing • Causal Effect of Online Bill Pay on Profitability is Proven (again) • Leverage Your Online Activity and Transaction Data • Understand the Importance of Integration from • Your Members’ Perspective—Richer and More Seamless Experience • Your Perspective—Increased Control and Lower Costs

32. Optimizing Your Internet Channel Ron Bergamesca, EVP/GM, Credit Union Services Dave Benning, VP, Strategic Integration