1. Copyright 2008 IDC. Reproduction is forbidden unless authorized. All rights reserved. From IT Initiative to Business Strategy Ricardo Villate Research and Consulting Vice President IDC Latin America IT Trends in the LA Financial Services Industry

2. © 2008 IDC Financial Insights  IDC company  Established in 2002, from the merge of Meridien Research and IDC's Financial Services Advisory Business A Global Financial Services Research and Advisory Firm

3. © 2008 IDC Agenda Finance industry in LA Top 10 Strategic Initiatives in banks Innovation Security Virtualization Customer Centricity Conclusions

4. © 2008 IDC Latin America Financial Services Spending Cycle 2001-2006: Growth at all costs 2006-2009: Growth but rationalized Investment and improve efficiency and security 2009 - : Customer centric initiatives and improve efficiency

5. © 2008 IDC Finance Industry in Latin America

6. © 2008 IDC Finance industry proportion in Latin America IT investments in the region will reach US$8.6 B in 2008 54% 17% 5% 4% 6% 1% 5% RLA = 7% 2008 Latin America IT Market = $ 54 Billion Projected Growth 2008= 10.7% 2008 Total IT Market in FSI = $ 8,6 Billions Projected Growth 2008 = 9,6% 16% of total IT Market Source: Worldwide Black Book v. Q3 2007 Source: IDC LA 2008

7. © 2008 IDC Typical FSI in Latin America Average IT investment grows 9,6% in ’08 vs ’07 Up 55% Down 25% Same 20% IT budget is going PC 75% PC penetration internally: 1.33 Employees per PC server 1 server for every 17 PCs or 22 employees data stored 500 to750 GB of data stored per employee IP telephony 1 in every 2 has deployed IP telephony email On average, 65% of employees have supported email CEO 75% COO 12% CFO 13% CIO reports into Growth 55% Cost red. 24% Reengin. 21% Agile 13% Strategic focus on Sources: IDC Latin America IT Spending Trends, 2008: IDC Latin America CIO Priorities, 2008;: Latin America Unified Communications Research, 2008

8. © 2008 IDC FSI Spending in Latin America 2008 Total IT Spending in Finance Industry = $ 8,6 Bn Sources: Latin America Vertical Market Spending Patterns; Latin America Semiannual IT Services Tracker

9. © 2008 IDC Sources: Latin America Vertical Market Spending Patterns; Latin America Semiannual IT Services Tracker Finance Industry IT market Growth in Latin America

10. © 2008 IDC Build vs. Buy in Latin America FSI  46% of all Latin American financial companies in Latin America prefer to buy point technologies ‘off-the- shelf’ rather than integrated solutions  Likewise, from 36% to 65% prefer to develop their software rather than buy or hire an expert  This is because Latin America idiosyncrasy is one of ‘do-it- yourself’  It is higher for southern countries like Brazil, Argentina, Chile Note: N = 107; single response – respondents are companies that say they will invest in said solution during 2008 QUESTION: Of the following IT solutions [you said you would invest in during 2008], please specify what type of IT Investments your organization will make:

11. © 2008 IDC CEO´s opinion of overall impact of IT on their company Source: IDC LA Feb 2008 CEO Priorities Survey n= 29

12. © 2008 IDC CIOs may be Underestimating how Strategic IT is for the CEO Q: On a scale of 1 to 4, where 1 is 'no impact at all' and 4 is 'significant impact', to what degree is IT supporting the Top Business Initiative for your CEO?

13. © 2008 IDC Business initiatives that are leading the CEO's agenda in 2008 Source: IDC LA Feb 2008 CEO Priorities Survey n= 29

14. © 2008 IDC Top 10 Strategic Initiatives in banks

15. © 2008 IDC Global top 10 strategic priorities in banking – WW and Latin America 1. Information management: moving to information life-cycle management 2. Technology refresh: quest for dynamic IT 3. Data security 4. Business process management (BPM) 5. Credit risk management: back to basics 6. Predictive analytics: building on a strong foundation 7. Mobility: the next big thing? 8. Core banking renewal: gaining momentum 9. Green: conservation as competitive advantage 10. Channels: getting to customer centricity 1. Contingency, security and fraud 2. Architecture revision: dynamic IT 3. Risk management and compliance 4. Infra-structure consolidation and improvement 5. IT governance 6. Customer centricity, channels, increase loyalty 7. Operation centralization: global processes 8. Consumer credit/credit card/mortgage 9. Selective sourcing 10. Workflow-BPM - Digitalization

16. © 2008 IDC LA banks major drivers for IT spending in 2008 Source: IDC LA Feb 2008 IT Investment Trends n= 56

17. © 2008 IDC Security in LA FSI

18. © 2008 IDC LA FSI overall level of confidence in their company's enterprise security Source: IDC LA April 08 Security Investment Priorities n= 27 How many serious IS security attacks has your company had in the last 12 months? Level of confidence in the IS security in their companies

19. © 2008 IDC Attacks that caused the main problems in the past 12 months in LA FSI Source: IDC LA April 08 Security Investment Priorities n= 27

20. © 2008 IDC Top security challenges LA FSI will face over the next 12 months Source: IDC LA April 08 Security Investment Priorities n= 27

21. © 2008 IDC Top security initiatives for 2008 Source: IDC LA April 08 Security Investment Priorities n= 27

22. © 2008 IDC Virtualization in LA FSI

23. © 2008 IDC Service- Oriented Architecture Why Blades, Virtualization, and SOA Change the Economics of Computing Virtual platform: Exploiting available physical resources and payment options to best serve a variable workload EII: Delivering meaningful information from many sources to many consumers SOA: Delivering IT functionality as reusable, interoperable, location- independent services Autonomic: Self-managing, self- healing, self-tuning, self-securing Dynamic IT: Giving users all the resources they need at the time they are needed, at a cost that is related to the business value delivered Virtual Platform/ Grid Enterprise Information Integration Autonomic Computing Dynamic IT: Enabling Deployment of Concurrent Initiatives

24. © 2008 IDC Medium and Large Companies Reported a Virtualized 22% of their Server Installed Base Source: Latin America Investment Priorities Infrastructure Virtualization, 2008 Question: Thinking of all the individual physical servers that you have installed, approximately what percent are virtualized, meaning they are partitioned into multiple physical or logical servers? N=120N=31 N=13 Question: What is the average number of partitions or virtual machines that you have on your virtualized servers? N=120 N=31 N=13 None: Means they are using physical partitioning

25. © 2008 IDC Virtualization Perceived as an “Easy to Implement” Technology implementing Question: In order of importance please rank the 3 major challenges you faced in implementing virtual servers in your organization? [MULTIPLE RESPONSE] 2008  N=1222007  N=405 Percent of Responses Source: Latin America Investment Priorities Infrastructure Virtualization, 2008 / IDC WW Virtualization Study, 2006

26. © 2008 IDC Customer Centricity in LA FSI

27. © 2008 IDC Customer Analysis/Control of the Budget Drive BI Investment What is the main driver for your organization to invest in Business Intelligence (BI) Solutions in 2007? Base=Will invest in Business Intelligence within the next 12 months, Only Financial Sector N=37 Source: IDC Latin America IT Investment Trends, Software, 2007 Latin America

28. © 2008 IDC Implement New Customer Service Processes Drive CRM Investment What is the main driver for your organization to invest in CRM Solutions in 2007? Base=Will invest in CRM within the next 12 months, Only Financial Sector N=30 Source: IDC Latin America IT Investment Trends, Software, 2007 Latin America

29. © 2008 IDC Innovation in Banks in Brazil

30. © 2008 IDC Innovation is Essential but Evasive IT should participate in innovation Innovation will be essential for our survival IT is too busy to innovate There are people dedicated to innovation Innovation is gaining momentum in the bank Innovation is widely discussed in the company IT is demanded to generate innovation We wait others to innovate first There are IT budget dedicated to innovation We use collaborative innovation Please indicate if you agree or not with the following statements: 1 = Disagree 5 = Agree Source: IDC Brasil n= 35 Aug 07 Brazil Business Needs and Its Impact on IT

31. © 2008 IDC Innovation vs investment plans 2008 – banks in Brazil Investment plans Innovation Innovation vs investment plans – banks Source: IDC Brasil n= 35 Aug 07 Brazil Business Needs and Its Impact on IT

32. © 2008 IDC Conclusions

33. © 2008 IDC Factors for FS companies to consider Risk Management More Important  2007-2010 A More Challenging Market Reduce Back Office Costs  Sourcing remains important and will continue to rise for non customer related issues. New IT-enabled revenue sources  Alternative channels showing signs of success  Clients are organizing themselves around community structures (eg MySpace, YouTube, Okurt).

34. © 2008 IDC Customer centricity initiatives: Once again, the customer is king Most FIs Still Lack a Single View of Their Customer Drive Retention and New Customer Initiatives On the Rise: Segmentation to Reach “Market of One”

35. © 2008 IDC Financial Insights opinion Although heavy IT investors Banks Vary Significantly in the Effectiveness of their IT Spend  FI s struggle to link IT investments to Business Value  Track records have not been great FI want more out of IT for the same or less spend and will continue to invest selectively in long-term strategic initiatives.

36. © 2008 IDC Two themes are really important 1.Development of New Business Strategies 2.Reducing Costs

37. © 2008 IDC Questions? Please email me at: rvillate@idc.com