A 2011 report on digital banking trends originally presented to the CMO of Ally Bank.

1. Future Trends in Banking
MAY 2011

2. The History of Banking
SMS banking is introduced
in the late 2000s and mobile
banking takes off in 2010
with the advent of both the
Internet or “online banking” iPhone and Android
becomes a popular
The 21st Century saw the enhanced feature offered by
influx of various services many banks to its
being introduced by banks customers around 2005
including insurance,
pensions and money market
The 1990s saw the rise of
In 1973 the electronic funds
the “Universal Bank”
payment system was
created. As a result, In 1960 the first ATM was
telephone banking was invented
introduced
In 1959 the first check
sorting machines were
invented based on a
In the 19th Century the rise universal agreement of
of trade and industry in the check design
U.S. led to the creation of
merchant banks by
In the 12th Century, powerbrokers such as J.P.
merchant banks were Morgan
invented and included the
In 2BC, Babylon recorded creation of checks
loans between monks and
merchants

3. Primary Objectives in Banking
Attracting New Customers Keeping Existing Customers Increasing Revenue Per Customer

4. Bank Marketing in 2011: Broadcast, OOH, Online, Email, Mobile, Tablet
Amount of dollars spent on advertising by banks in 2010:
• Citibank = $1.6 billion
• Bank of America = $1.9 billion
*On average most banks are spending 2% of revenue on advertising
• Percentage of this spent on digital = 15%
• Percentage Bank of America plans to spend in digital in
2011 = 30% (double the amount of 2010)

5. Bank Marketing in 2011: Social Communities
Several banks are
now moving into the
territory of social
communities to
connect with
customers.
However, many are
using caution and
not offering
promotions. Most
are using the
platforms to launch
unique applications
like a “virtual bank”
from ASB in New
Zealand or an
advisory board that
doles out grants for
charities from
Chase in New York

6. Banking in 2011
Currently bank customers can use the following
four outlets to carry out banking activities:
1. Branch Locations
2. ATMs
3. Online
4. Mobile
5. Social Communities

7. Future Banking Trends: Handset Users by 2020
Mobile Financial
Services or “MFS”
currently
accounts for:
• 150 million users
globally in 2010
• Projected to be
400 million
users globally by
2013
• Estimates are
predicting over 2
billion users
globally by 2020
• 1233% growth in
less than 10
years time

8. Future Banking Trends: Emerging Technology
Already we are seeing bank
customers using new
technologies to make their
lives more convenient:
• Chase offers a mobile app with
check scanning for deposits
and person-to-person
“quickpay”
• Less emphasis on “paper
statements” and more
emphasis on digital-only or
“green” electronic technologies
• The ability to reach customer
service via phone, email or SMS
24 hours a day is shifting to
social communities, e.g., Bank
of America is using Twitter for
dedicated CRM

9. Future Banking Trends: Mobile Payments and Tracking

10. Future Banking Trends: Mobile Payments and Tracking

11. Future Banking Trends: Mobile Payments and Tracking
http://www.youtube.com/watch?v=Lb_Ae4lwxaA

12. Future Banking Trends: P2P Payments
Bitcoin is a digital currency
created in 2009.
• It is used by programmers,
developers and small business
persons as a form of “digital
cash”
• Payments can be made P2P with http://www.youtube.com/watch?v=Um63OQz3bjo
no need for central authorities
or issuers
• Transactions are based on
public-key cryptography
keeping users identities
anonymous

13. Future Banking Trends: Global Money Transfers
New services allow for money
transfers without the use of a
bank
• Xoom.com and
RevolutionMoneyExchange
allow users to register and wire
money worldwide by linking
their U.S. bank account to
payment to foreign companies
• Fees are lower than regular
bank wire transfer fees
• Xoom was cited by the Wall
Street Journal in 2011 as one of
the “50 most promising
companies”

14. Future Banking Trends: P2P Lending
Lending money predates
financial institutions but in its
modern form it is a byproduct of
Web 2.0 technologies
• Zopa.com was the first lending
company founded in the UK
• Prosper.com was the first
lending company founded in
the US
• Both networks leverage
existing social network
communities to connect
potential lenders to borrowers
• The network acts as a
“connector” and is not a
“lender”
• Usually offer better rates than
can be offered by traditional
banks (less than 10%)

15. Future Banking Trends: Investments and Savings
Move money from a bank
checking or savings account to
a hyper-yield interest rate
online bank to save for goals
and large ticket items
• Smartypig.com
• Chipin.com
• The premise goes against the
credit card mentality of
“purchase now, pay later” and
reverts back to layaway
planning where the customer
“saves now, buys when ready”
• Involves a social amplification
element to the savings process
• Virtual piggybanks
• Requires an existing funding
source

16. Future Banking Trends: Money Management

17. Future Banking Trends: The end of cash?
- “The End of Cash” by James Gleick, Published in The New York Times Magazine, 1996

18. Future Banking Trends: The end of cash?
• The question is not if, it is only of when
• Cash has no real value in itself
• With digital payment methods, you can always have the right
amount on hand
• Forgery is rampant with cash
• Mobile money is a viable alternative - every phone is a
payment terminal and every phone has the ability to be a
payment processing device
• Virtual money is being used to trade for real goods in games
such as ‘World of Warcraft,’ and on communities such as
‘Second Life’ and ‘Habbo Hotel.’
• Cash attracts criminals. Rid of cash, help decrease the crime
rate around certain activities
• In 2010, the Swedish Parliament became the first official
entity to commence discussions about the timing of the
ending of cash
• The feeling is it’s wasteful (printing, shipping and destroying)
and a health hazard (bacteria)

19. Future Banking Trends: Alternatives to paper currency aka Digital Cash
Digital Cash is a system that allows a
person to pay for goods or services by
transmitting a number from one
computer to another. Like the serial
numbers on real dollar bills, the
digital cash numbers are unique. Each
one is issued by a bank that
represents a specified sum of real
money. One of the key features of
digital cash is that, like real cash, it is
anonymous and reusable. That is,
when a digital cash amount is sent
from a buyer to a vendor, there is no
way to obtain information about the
buyer. This is one key difference
between credit cards and digital cash

20. Future Banking Trends: Complementary Currency
CC’s are usually issued to address
specific issues or problems. They are
useful for adjusting the public’s
spending behavior. The most notable
complementary currency in usage is
the Toronto dollar. This currency can
be exchanged 1-to-1 from Canadian
dollars and be spent at specific
merchants in downtown Toronto.
Merchants who accept the dollars are
free to exchange Toronto dollars for
Canadian dollars twice a month at the
rate of 90 cents. The other 10 cents is
put into a reserve fund for local
community organizations to tap into

21. Future Banking Trends: Digital Gold Currency
DGC is a form of currency based on
ounces of gold. Proponents claim it
offers a truly global and borderless
world currency system, free from
exchange rates and political
manipulation. Proponents say the
value is protected as it is backed by
the gold standard and not at
inflationary risk like fiat currencies

22. Future Banking Trends: Virtual Currency
Virtual currencies exist within a
variety of social network games
including World of Warcraft, Farmville,
Cyworld, Second Life and Hub Culture.
People are spending real money for
virtual goods and services that help
them express their online personality
http://www.youtube.com/watch?v=l6HjMlCvZoY

23. Future Banking Trends: Predictions
1. Bank tellers will be accessible 24/7 through social communities
2. NFC technology will be on all mobile devices
3. The Mobile Phone is the New Wallet
4. Digital Cash will replace physical based on convenience
5. Virtual Currency will be used for payment on real goods and
services

24. Thank You

25. Contact:
Geoffrey S. Colon - Digital Strategist
Twitter: @djgeoffe
geoffreyscolon@gmail.com
+1.917.617.1194
http://www.linkedin.com/in/geoffreycolon