The Future of On-Line Banking Global Trends and Local Prospects Presented by Sanjay Kao - Cards Business Manager & Marketing Head Global Consumer Bank - Egypt

AGENDA 4Defining On-line Banking äThe difference between PC banking and Internet Banking 4The Importance of Online banking äPro’s & Con’s 4Past, Present & Future ä Services Offered äUsage Rates äFaced Problems, and problems solved 4Citibank äGlobal Presence and Role äFuture Works äLocal aspirations 4Egypt The Future of Online Banking

What is On-line Banking CONVENIENT FASTCHEAPINNEVITABLE The Future of Online Banking

Why is it Important For Customers:For Customers: There’s a seemingly receptive audience out there waiting Most don’t feel the need to have a face-to-face conversation with tellers or think its important to have a checking account with a local branch office. For Banks:For Banks: The most important reason being ECONOMICS. Each Internet transaction typically costs the bank one cent Compare that with 27 cents for each ATM transaction USD 1.07 every time you go up to a tellers window !!! The Future of Online Banking

PC vs. Internet Banking PC Banking (also known as Home Banking):PC Banking (also known as Home Banking): The use of proprietary financial software running on a computer in the home. Direct dial-in into the banks servers. Internet Banking:Internet Banking: Similar in functionality to PC Banking Allows access through a browser eliminating the need for proprietary software Can be accessed through a regular Internet connection, through the sites public web site. The Future of Online Banking

Past, Present & Future Past: –No automated services, simple brochureware (1-7 pages of simple brochure ware) –This further developed into Detailed brochureware (5 or more pages of information; attractive branding) Present: –Interactive Bank (Includes formatted service, online calculator) –Intermediate Cyberbank (Lets customers consult accounts online) –Advanced Cyberbank (Fully transactional for transfers, payments, sales)Future: –Interfaced Services (Banking services streamlined into other services, not limiting online banking to the computer) The Future of Online Banking [a] Services Offered

Past, Present & Future The Future of Online Banking Past Present Future SimpleBrochure InterfacedServicesAdvancedCyberbankIntermediateCyberbankInteractiveBankAdvancedBrochure [A] Services Offered

Services Presently Available The Future of Online Banking Product / Function Standard Services Advanced Services ATMs Checking Credit Cards Customer Services Home Equity Loans ATM locator with addressesLocator, Mapping and Pricing Balance & transaction history Download to OFX enabled software Animated report generation Archival searches Bill payment & presentment Available credit & Tn. History Tn. History reports Skip-pay & balance transfer Bill payment and cash adv. FAQs and s/contacts Customer query forms Real time chat with CSR Immediate mail response Rates & pay. Calculators Balance & Trans. History Balance Transfer & Loan Advance forms Rate History Investments (non FDIC) Yields, Prospectus & Sign-up Forms Portfolio tracking News Alerts

Services Presently Available The Future of Online Banking Product / Function Standard Services Advanced Services Loan Applications Mortgages Privacy/Security Sales Savings/ CDs Standard Online applicationInteractive Loan application Instant approval Application status tracking Rates & Calculators Extra Principle payment form Quick home equity loan Escrow account analysis Refinance analysis Home value reports Info. On how to order credit reports Credit Report access Bank branded cybercash wallets Zero liability for e-commerce Online applicationsRemembered data inputs Rates; Savings/Retirement calculators Automatic savings plans that can be fine-tuned on the Web

Services of the Future PUSH services -PUSH services - alerts, s, webcasting, outbound messaging »BILL Presentment & AUTOMATED PAYMENT PROCESSING AUTOMATED PAYMENT PROCESSING –Privacy Protection & Fraud-prevention services The Future of Online Banking

Services of the Future WebTVWebTV set-top boxes & built-in capabilities » Phones, Voice recognition for the web & Out - of - home Users Out - of - home Users –Cellular Financial Processors Linking Banking with GSM The Future of Online Banking

Past, Present & Future [b]On-line Banking Penetration in U.S Households [b] On-line Banking Penetration in U.S Households The Future of Online Banking 5 MM MM MM MM MM 2001

Past, Present & Future [b] Usage Rates in Europe Europe’s Top Web Markets CountryInternet Population Germany7.6 million U.K.5.5 million France2.3 million Netherlands1.5 million Spain1.1 million Italy1.0 million Belgium660, 908 The Future of Online Banking 52% of the 863 European Bank Internet sites are “Advanced Cyberbanks”52% of the 863 European Bank Internet sites are “Advanced Cyberbanks” 16% of the 1, 676 US sites are “Advanced”16% of the 1, 676 US sites are “Advanced”

Past, Present & Future [c] On-line Banking Problems The Future of Online Banking On-line bankers need & want the following 5 features: [a] A sophisticated security system Security is probably one thing that holds potential customers from signing up It is also the main concern of current e-bank customers [b] Low fees Generally speaking, Internet Banking is cheap, with an average fee of $5 When it comes to PC banking, its FEES GALORE!! [c] Real-time information & detailed account info. E-Banking customers expect transactions to happen instantly, but with most banks a transaction would take a full day to clear [d] 24 Hour customer service features & duplicated branch banking Quick responses to / chats with CRS & FAQ’s are a challenge [e] Wide array of products Many banking products can’t be bought online without having to pick up the phone, walk to the nearest branch, or wait for a sales associate to call.

Past, Present & Future [c] Problem Solutions The Future of Online Banking [a] A sophisticated security system A password to log in; A Firewall; 75 or 128-bit encryption technology [b] Low fees Removal of monthly/ subscription fees, and shrinking transaction fees [c] Real-time information & detailed account info. Real time update of account balances and transaction logs Unlimited number of preset bill payments - automatic at specific day of every month Automatic transfers on preset dates, instant cheque book balancing [d] Wide array of products Instant on-line approvals to applications Fully automating internal fulfillment processes to further allow additions of online products

Citibank on Online Banking CASE STUDY The Future of Online Banking Started e-banking in 1984 It was a PC banking service offered by dial-ins to Bank server Started Internet banking 2 years ago Major Project “Direct Access” Internet sites for 33 countries, 11 of which have Internet Banking 5 - 7% of all US customers are using the Internet Banking service Maintain higher balances Higher Loyalty Better overall relationship with the bank By September ‘98, Asia region acquired 7000 new customers through the Internet Within a couple of months of the launch of “Direct Access” in the UK, new customers acquired through the new service.

Egypt’s Reverie The Future of Online Banking Dramatic reduction in access costs should attract more people online The service will be surprisingly welcomed… A quote from John L. Campbell, CEO of First Community Bank of East Tennessee, and his reaction of the town’s 4,800 residents banking habits: “ “ I thought in rural Tennessee we would not be confronted with Internet banking in my lifetime. I was wrong.”

The Future of Online Banking On-Line Banking is the kind of breakthrough service, like ATMs, that will have the users reminiscing in the Year 2005… “Wow, how did I ever manage without it?” without it?”