1. What Does The Future Hold for Credit Unions?
Mark Sievewright
President, Credit Union Solutions
Fiserv, Inc.
June 9, 2012

2. Game Changers
Business Modelers
• Demographic Shifts
• Social Change
• Channels
• Payments
• Regulatory Change
• Lending Patterns
• Talent management
Macroeconomic & Geopolitical Risks
• Interest rates/inflation
• Unemployment
• U.S. housing market
• Sovereign Debt/EU instability
• Energy and commodity prices
2

3. Business and Technology Trends Reshaping our Industry
Digital Era
Payments Social Change/
Demographic Shifts
“Mobiliti”
3

7. 7

8. Eastman Kodak’s “Moment”
Then Now

10. Blockbuster’s Kodak Moment

11. The Evolution of Netflix –
A Very Different “Kodak Moment”

15. Consumers take control…….
Consumer Preference is Evolving
(Percentage of Population)
Bank Online 60%
Purchase Online 61%
Prefer Internet for Financial
66%
Information
Pay Bills Online 41%

16. Untethered Interactions with Consumers and Businesses
425,000
ATMs 3,000,000,000
Devices
114,000
Branches
16,000
FIs

17. Location, Location, Location
Technology, Technology, Technology

18. Barnes & Noble’s – an “Almost Kodak Moment”?

20. Key Insights on the Branch of the Future
Branches will remain a relationship cornerstone for acquiring and
retaining deposits and growing profitably.
Fewer transactions in branches - focus shifts to advice, loans and small
business services.
The implementation of self-service technology in branches will free branch
staff to spend more time with members.
Branches must be tightly integrated with other delivery channels, giving
members channel choice that best meets their needs.
Credit unions must focus on providing an outstanding experience in each
branch, by phone and on-line (including mobile)

21. 21

22. 22

23. Business and Technology Trends Reshaping our Industry
Digital Era
Payments Social Change/
Demographic Shifts
“Mobiliti”
23

24. Social & Demographic Change

25. Age Demographic Shifts in the U.S.A.
25

26. The U.S. is undergoing rapid population aging
Number of people
(millions)
90 25%
80 20.46%
70 20%
16.53%
60
12.71% 15%
50
11.31%
40 9.24%
10%
30 6.81%
20 5%
10
9.0 16.7 25.7 35.0 53.7 77.2
0 0%
1940 1960 1980 2000 2020 2040
US Population 65+ (left axis) Percentage of US Population 65+ (right axis)
Source: Government reports

27. We’re Living in the Age of Aging……..

30. By 2020, nearly half of the U.S. adult population
will have been born after 1981………
WW II Gen: Up to 1945 Baby Boom: 1946 to 1964 Gen X: 1965 to 1980 Gen Y: 1981 to 2001 Gen Z: After 2001
100% Gen Z 4%
Gen Y
26% Gen Y
80% Gen Y
37%
43%
60% Gen X
34% Gen X
40% 33% Gen X
32%
Baby Boom
20% Baby Boom
39% Baby Boom
WW II Gen. 1% 30%
20%
0%
2010 2015 2020
Total: 197.4 MM 0.7% CAGR Total: 204.0 MM 0.5% CAGR Total: 208.8 MM
Generational Cohort Share of Population 18 - 65 by Year
Source: 2008 National Population Projections.

31. 31

32. Generation Next: These Guys are Different!

33. 33

34. TMI SIG2R N2M MTF
459 ATEOD
34

36. Important Millennial Behavior
• 39% Use debit card 15+ times/month
• 60% Bank and pay bills online
• 76% Use instant messaging
• 97% Have a Facebook profile or other social profile

37. We Share.
Post.
Comment.
Like.
Download.
IM.
Text.
Blog.
eVite.
Tweet.
And re-Tweet.

38. U.S. Social Network Usage

39. Social Change
1 in 8 couples married last year met online
39

40. The Business of Social Networking…..
Blockbuster News Today!
www.YouTwitFace.com

41. Meet Ray’s Virtual Watercooler!
“With so much misinformation out there about where food
comes from and how it's produced, farmers have a responsibility
to speak up and set the record straight. And with social media,
they now have a tool to help them reach virtually anybody, anywhere.
”
41

42. Meet Jeff Fowle, Cattle Rancher and Twitter Guru!
“When I installed pivot sprinklers on my
farm, I posted a tweet about it because
I felt it was important to show how
farmers and ranchers are continually
trying to improve water efficiency.”
42

43. 43

44. Bank of America
44

45. Wells Fargo: Sample of Customer Service
1) Direct message (DM) sent from user to @Ask_WellsFargo. DM makes
private message only seen by Wells.
2) Wells Fargo rep responds directly to user within 20 minutes with
a number (direct to live person) and case #.
3) Wells Fargo rep follows up with user to ensure issue was addressed.

46. Payments Feature Prominently for Social Media Users
Among all respondents using at least one social networking site.
46

47. Business and Technology Trends Reshaping our Industry
Digital Era
Payments Social Change/
Demographic Shifts
“Mobiliti”
47

48. Mobile Change
48

49. Mobile Has Impacted Consumers’ Daily Habits
More Deeply and More Quickly Than Most Expected
Voice Organizer
SMS/Alerts Budgets Banking Payment
Commerce
Email/MMS
Communicate Control
Ticketing
Transit
IM/chat Social Maps
Create Consume
Search
Blogs
Mobile web
Pictures
Video Games News
TV Music
49

50. The evolution of computing changes everything…….
©2012 Ja velin Strategy & Research
50

51. Mobile Warming
U.S. Adults With Smart
Phones
66%
Smartphone
adoption
by 2014
Mobile Devices Enable
Ubiquitous Access

52. Mobile Goes Mainstream – “Touch Banking”
52

53. Evolution of Mobile Financial Services
Mobile Banking Mobile Transactions Mobile Commerce
Creates the foundation Gain consumer
to expose transaction confidence and
services build behavior
patterns
• Info services • Bill payments, ebills • Point of sale
• Balances • Account transfers • Remote
• Transaction history • Person to person • Offers and coupons
• Alerts • Deposit capture • Loyalty and rewards
• Small business • Stored-value cards
User Adoption/Time
53

54. 54

55. 55

57. Thought for the Day
Within 10 years, service quality will
be measured – to a large degree -
by how much self-service you
provide your members
57

58. Business and Technology Trends Reshaping our Industry
Digital Era
Payments Social Change/
Demographic Shifts
“Mobiliti”
58

59. Digital Transformation Is Fueling Electronic Payments
11 Billion
transactions shifting from
paper to electronic in the
next five years
39% 34%
46% 54%
61% 66%
2004 2009 2014
Cash and check Electronic
Source: First Annapolis Consulting 2009.

61. The Durbin Affect
61

62. The Durbin Affect
• Bank of America:
• Interchange revenue fell from $1.494Bn in 3Q11 to $1.052Bn in 4Q11
• Wells Fargo:
• Interchange revenue fell from $948M in 3Q11 to $611M in 4Q11.
• JPMC:
• Interchange revenue fell by $263M on a sequential basis in 4Q11
• BB&T:
• Interchange revenue fell from $208.4M in 3Q11 to $63.2M in 4Q11

64. 64

65. Thought for the Day
Within 10 years, the companies that
comprise our competition will be
radically different from those of today
65

66. Non-Traditional Players are Proliferating

67. 67

68. 68

69. $865 billion in P2P payments

70. Consumer-to-consumer
check payments
grow by 3% a year

71. 44 million U.S. children
$5 Billion industry

72. Mobile and Website Payments = Revenue Opportunity
Revenue Monetise gets $5 for an expedited
Opportunity mobile phone payment in the UK

73. Paper or plastic?
That's only part of the question.

75. The Future of the Plastic Card?

76. The Future of the Plastic Card?

77. The Future of the Plastic Card?
77

79. The Future of the Plastic Card?
79

81. Mobile
Payments
Innovation
81

83. 83

84. Insight to action

85. Thought for the Day
In the future, the information associated
with a transaction could be more
valuable than the transaction itself
85

86. 86

87. 87

89. What are the critical challenges facing Credit Unions?
Business Model
Change
Non-Traditional Capital Preservation
Players/ New Entrants & Creation
Technological
A New Economy
Advances
- Slower Growth
Shifting Regulatory
Demographics Change
Payments Risk & Fraud
Transformation Management
Empowered
Consumers

90. 90

91. Twin Strategies in the Digital Era
Develop & Optimize Win in
Channels Electronic Payments
91

93. What Does The Future Hold for Credit Unions?
Mark Sievewright
President, Credit Union Solutions
Fiserv, Inc.
June 9, 2012