1. All content in this document is copyright 2001, Gómez, Inc. Paradoxes and Progress American Bankers Association Webcast Online Banking Best Practices Christopher Musto Vice President, Research Gomez, Inc. January 31, 2002

2. Paradoxes and Progress Agenda  Research methods  How resolving four paradoxes leads us to rethink the Internet

3. Paradoxes and Progress Research Methods  Trends in consumer behavior and attitudes  Business and product strategies  The utility, usability and reliability of the Internet offering  The integration of the Internet into the overall value proposition

4. Paradoxes and Progress Four paradoxes that lead us to rethink the Internet Drawing from the consumer marketplace:  Financial planning  Aggregation  Advisors  Credit cards

5. Paradoxes and Progress Brokers face the paradox of investor interest in financial planning  64.6% of advisory clients using online financial planning tools in the last 6 months abandoned a tool  Most of these investors weren’t planning to abandon the tool…  …Rather, they concluded they weren’t spending their time wisely  But 51.7% of advisory clients still expect their primary investment firm to offer these tools

6. Paradoxes and Progress Resolving the financial planning paradox  Empower advisors to collaborate Advisors want to see same information client is viewing and collaborate online  Make use of email and other outreach 21.6% of advisory clients accessing investment accounts somewhere online would prefer to communicate with their advisors by email  Recognize that most consumers aren’t going to engage in involved financial planning on their own

7. Paradoxes and Progress Financial institutions face the paradox of online consumer interest in aggregation  Online Users, especially current and prospective online bankers, are interested in aggregation  They are so interested that some even sign up for it  But they are not so interested that they use it

8. Paradoxes and Progress Resolving the aggregation paradox  Integrate aggregation into existing account management interfaces Consumers express the more interest in aggregation when it is offered by their bank and integrated into existing account management  Use advisors to transform data into financial advice Yodlee’s “Quicken on Steroids” comparison inadvertently gets to the point: PFM users don’t use PFM financial planning tools

9. Paradoxes and Progress Full service brokers face the paradox of advisor attitudes towards the Web  40% of stockbrokers acknowledge online access for clients helps them do more business  But only 28% of stockbrokers use the firm’s online offering as a selling point

10. Paradoxes and Progress Resolving the advisor paradox  Market relationships, not products, to wealthier customers “Half the time clients ask about content and products you know are inappropriate and you need to spend the time explaining to them why it’s inappropriate” (stockbroker)  Build offerings that stand up to scrutiny Fully 50% of advisors report that site performance alone has caused client complaints about the Internet offering  Don’t try to ape discount brokerage model Full service is a different market and not trade-driven

11. Paradoxes and Progress Full-service banks face the paradox of online banker interest in credit cards  11.3% of Online Bankers plan to apply for a card within 6 months  Fully 51.7% of Online Bankers planning to apply for a card in the next 6 months are open to applying where they bank  But only 8.5% of Online Bankers applying for a card in the last 2 years applied at their bank

12. Paradoxes and Progress Resolving the credit card paradox  Promote credit card pre-approvals within account management interface or by email 28.7% of online bankers about to apply for another account say a targeted email from their bank would be highly effective  Stress online applications Fully 69.7% of Online Bankers planning to apply for a card in the next 6 months plan to apply for the card online  Pre-populate credit card applications Only 40% of Scorecard banks pre-fill customer data for any online account applications

13. Paradoxes and Progress Resolving paradoxes takes next-generation thinking throughout your markets Static functionality has become too broad and too complex to be useful or used Your customers are creatures of habit First generation worries about channel conflict don’t address the real challenge Being more means being proactive

14. All content in this document is copyright 2001, Gómez, Inc. Paradoxes and Progress American Bankers Association Webcast Online Banking Best Practices Christopher Musto Vice President, Research Gomez, Inc. January 31, 2002