Digital trends in the financial services industry are driving changes in how consumers access and use financial services. Consumers are increasingly using online and mobile channels, adopting a multi-channel approach. This has led financial institutions to focus on digital innovation, personalization, convenience, and self-service options. Emerging technologies like mobile payments and digital wallets are also transforming how consumers pay for goods and services. Peer-to-peer lending and crowdfunding are becoming alternatives to traditional lending models. Social media is also playing a larger role through features like social investing and group payments.

1. Digital-Inspired Trends in the Financial
Services Industry
Executive Summary
Hamutal Schieber | May 2014

2. Introduction
• The purpose of this presentation is to present the major industry and consumer trends affecting
the Financial Services industry, including;
• We have focused on in the USA and Europe, reviewing industry sources, market research, and
the activities of prominent competitors per each sector.
• Main subjects that are covered are:
1. Market trends & Innovations – especially with regards to digital tools, online / mobile
solutions and self service innovation
2. Competitor activity on the digital sphere
banks and
investment
companies
Insurance
companies
Cards and
processing
companies

3. Consumer Trends | Digital Adoption
• The increase in internet and mobile adoption provides new ways for consumers
to access financial services.
• New channels include websites, social media, mobile apps and others.
• Banks, credit card companies and insurance companies are using digital
channels for various purposes, including sales & marketing, consumer service
and CRM. They are adopting an omni-channel strategy following consumers’
behaviors, as consumers shift between devices and screens.
• At the same time, new competitors emerge as pure-play digital financial services
providers, whether mobile or online.

4. Utilizing Digital for Growth
• Financial Services brands must provide the following advantages in order to
attract new clients and cross-sell new services to new clients:
– Building Trust through: Personal connection (utilizing social platforms),
content ownership / expertise (utilizing blogs, micro sites etc.) and targeting
niches.
– Offering Convenience. On time / on place (utilizing mobile devices). Self
service (utilizing mobile, online and tablet).
– Providing Personalization. Online / mobile customizable tools, device-
specific presentation (such as tablets).
– Offering Simplicity. The industry is perceived as complicated and
confusing. Digital channels are enabling new strategies such as
gamification and simple analysis tools.
According to a Timetric Research (Dec. 2013), financial services worldwide digital
advertising expenditure rose from US$53.7 billion in 2008 to US$95.7 billion in 2012, at a
CAGR of 15.52%. It is expected to nearly double between 2012 and 2017 to reach
US$168.4 billion between 2013–2017.

5. Mobile Trends
• According to an Adobe research (November, 2013),
mobile financial apps take the top spot for the one
consumers open most frequently.
• New banking and investment apps are more secure
and make logging in and use much easier than the
website. Consumers use these apps 30% more fre-
quently than any other app type.
• The main challenge in mobile financial
services is keeping them simple and
intuitive, as financial services can be
complex.
The Citibank tablet app replaces lists of transactions
with interactive financial graphs to make the most of
the device’s capabilities.

6. Mobile Trends
A.T. Kearney, Dec. 2013
• Over a third of customers at major US
banks currently use mobile banking,
with 43 percent of them in the 18-29 age
group.
• According to Javelin Strategy &
Research, around half of the top 25
financial institutions in the US are now
also offering more advanced features,
including p2p transfers and remote
deposit services.

7. Trend Map
Near FutureHappening NowSubject
GamificationNiche Targeting, Personalization
/ Customization, Loyalty,
Location-Based offers
Content & Consumer
Centricity
Comparisons, ReviewsVideo & Chat functions for
advisory services, Online
Account Management
Online Advisory
Services
QR Codes, Crowdfunding /
Group Payments, hands-free
P2P, immediate transfers, NFC,
Mobile Wallets & Couponing
Online & Mobile
Payments
Pure-Play MobileOmni-Channel, Direct ServiceMulti Channels &
Devices
E-VaultsExpedited Payments,
Configurable alerts
Self Services
Social Investment for banks,
reviews, social media P2P
payments, Community
Banking model
Benchmarking, social log-in,
social investments, marketing
Social Media

8. Content & Consumer Centricity
Personalization / Customization
• location-based offers, e.g. with mobile
wallets
• Personalized presentation and tools
• Niche targeting
Loyalty
• Mobile clubs / couponing
• rewards
Consumer Centricity
• Content management
• gamification
• Geico’s Content collaboration
with BuzzFeed
• The Google
Wallet mobile
app

9. Consumer Centricity | Content & Gamification
• A December 2012 survey by IMN found that 75% of financial services marketers had separate content
strategies in place for each marketing channel, the highest percentage of all industries polled. The key is
to deliver true value to an engaged audience.
• In the US, gamification in banking is still nascent, but globally the concept is already gaining ground
according to a study on innovation and gamification in banking by Infosys.
TradeHero is a mobile stock market game where you can subscribe to the stock tips of
Heroes, or be a Hero and make money from the followers who subscribe to you. A further
step in the gamification of “social investing”.

10. Online Advisory Services
Online Video & Chats
• Video & Chat functions for advisory services
(in the US, less for Europe)
• Online virtual chat
Comparisons & Reviews
• Competitors start to feature reviews on their
products & services, especially in insurance.
Online Account Management
• Consumers can apply for banking account,
insurance services etc. online
• Mobile signature and data retention
• Aviva partnered with an independent
review company, to collect, collate and
publish insurance product reviews
from Aviva customers.

11. Advisory Services
• A research by A.T. Kearney suggests that financial
services players are embracing the digital trend
with a combined advisory model.
• For general advisory needs, they proactively
create transparency about customer satisfaction
and recommendations via portals, professional
research tools, social networks, and peer chat
functions.
• According to InfoSys, video banking is no longer a
novelty. Video can be integrated with most
banking channels to enable a personalized
banking experience for remote and branch
banking customers. Branch banking, phone
banking, self-service banking, and online banking
have already seen video-enabled services such
as web conferencing, and online chat.

12. Online & Mobile Payments
Peer 2 Peer / Group payments
• Immediate transfers
• Crowdfunding
• Mobile & Social Media p2p payments: Social media
enables instant money transfer among members of
the family and friends. This is especially beneficial
to Gen Y consumers.
Technology
• NFC
• Hands Free
• QR Codes
Convenience Solutions
• Mobile Wallets & Couponing
• Check deposits & mailing
• Citi’s Popmoney payment service - "Pay
Other People" directly from your Citibank
account.
• Tap & Go - MasterCard contactless
technology

13. Mobile Payments
• Regulatory pressure to promote competition in the payments industry, and the technological
advancements which enable convenient and secure solutions, are shifting the structure of the payments
industry. Banks continue to control the segment along with card companies, but they will have to find a
way to compete with innovative internet and payment companies, including Google, Apple and Paypal –
as well as innovative newcomers such as iZettle and Square.
• According to a Capgemini and RBS report
(2013), global m-payments market
continues to grow rapidly, powered by
innovation and demand. In line with industry
estimates, the global m-payments value
reached $256 billion in 2012, and is
expected to grow three-fold by 2014 to a
total of $796 billion. P2P m-payments in
developing markets, and C2B m-payments
in developed markets are the main drivers
of growth.
World Payments Report (WPR) from Capgemini and The Royal Bank of Scotland (RBS), 2013

14. Mobile Payments | Online & Offline
Traditional payment players focus on
digital
Payment networks, acquirers, issuer
processors and card issuers are
expanding their offerings into mobile
payments.
Visa and MasterCard are building on their
payments expertise, issuer relationships,
ubiquitous merchant acceptance and
brand recognition, and leveraging
strategic acquisitions to build mobile
payment capabilities (Visa’s V.me,
Mastercard’s Paypass-enabled wallet
network).
Internet & Mobile Players focus on
expanding into the physical world
PayPal and Google are aggressively
working on mobile payments and
expanding their online presence into the
physical world.
PayPal’s partnership with Discover to
enable wallet acceptance at retail
locations, leverage cheaper funding
alternatives (e.g., ACH, Automated
Clearing House) and pursue a credit
option (Bill Me Later) positions it well for
the next wave of mobile payments.
Google continues to partner with existing
payment players.
Source: Deutsche Bank (Dec. 2012)

15. Mobile Payments | Digital Wallets
• Forrester Research (Dec. 2013) concludes that digital wallets are poised to
transform the way consumers shop and pay retailers, restaurants, and service
providers. Early wallets are enabling the convergence of offers, coupons,
loyalty, and payments.
• The company says that successful wallets will enhance the consumer's
commerce experience by delivering more value, greater convenience, and a
contextually relevant, compelling experience.
• A report by Deutsche Bank (Dec. 2012) states that companies are increasingly
moving the wallet to the cloud to support retailers’ omni-channel strategies,
streamline the payment process to add cards and support offers and loyalty
programs, and most importantly overcome adoption hurdles for NFC (nearfield
communication) based payments.
• According to the Deutsche Bank report, software-based technologies such as
QR codes, geo-fencing, and line-skipping apps are driven by cloud-based
wallets and the ability to deliver better value propositions such as hands-free
payment (no physical interaction with point-of-sale devices to complete
transactions). Also, line-skipping apps eliminate checkout lines and improve
response times and customer experiences.
Garanti Turkish bank’s iGaranti app aims
to provide a convenient mobile
experience, with real-time offers from
partners.

16. Mobile | Insurance
• According to Bain research, addressing the digital
challenge is a matter of survival for insurance companies,
as insurance companies that act too late or stumble
through the transition will lose customers and remain
saddled with a relatively high cost base.
• Gartner estimates that by the end of 2015, personal lines
property and casualty (P&C) insurers that do not offer
online and mobile transactions will lose one-quarter of
their current market share.
• Oscar is a new insurance firm that launched in late 2013. Oscar offers a web-
and mobile-friendly aesthetic designed to make the insurance experience
smoother for plan members.

17. Multi Channels & Devices
Omni-Channels
• Services are available seamlessly on any
platform
• Online / offline convergence
Direct Service
• Online channel for offline competitors
Pure Play
• Online / Mobile only
• Mint brings all your financial accounts
together online or on your mobile
device, automatically categorizes your
transactions, lets you set budgets, etc.

18. Omni-Channel vs. Pure-Play
• The traditional branch-based model is being replaced by an integrated channel approach that allows
customers to conduct banking seamlessly across various channels, such as initiating a transaction in a
branch and finalizing it in a mobile app.
• According to research by A.T. Kearney, Omni-channel integration poses a significant IT challenge for banks.
Thus, some banks are setting up new digital banking entities with quick processes, integrated systems,
and agile organizations.
• These digital banks promise a new customer experience with quicker processing, greater convenience, and
anytime, anywhere availability, and they embrace social networks, mobile banking, and customer insights to
better meet customers' needs.
Image source: The Financial Brand
They rethink the way mobile banking is done
by designing a bank for the smartphone as
opposed to simply providing access to banking
products through a mobile device.

19. Self Services
Digital ATMs
• Smartphone-enabled ATMs
• Video Tellers
Online / Mobile Services
• Configurable alerts now span a variety of needs,
such as bill payment reminder, incoming payment
alert, etc.
• Expedited payments
E-Vaults
• E-vaults enable clients to store important and
critical documents in the secure folders that are
provided along with their online accounts.
• Bank of America Health - take a picture
of your receipt and upload it to a claim,
submit a claim while you’re still at the
doctor’s office

20. Self Service
• Capgemini report maps insurance industry tools
enabled by mobile devices
Infosys maps mobile
/ online banking
services

21. Social Media & Sharing
Social Investments
• Social investments enable consumers to track
specific investors. Banks are expected to offer
similar services in the future.
• Community Banking
Social Identity
• Logging-in with the client’s social identity
provides a personalized experience
• Facebook pages provide direct & after-hour
channel to the bank
Group Payments & Peer 2 Peer Lending
• Group payment applications allow entities to
collect money from a group of people. This helps
in sharing expenses among groups like family,
friends, clubs, and teams.
• Peer 2 Peer Lending is slowly replacing existing
lending mechanisms.
• Barclays’ “Yourbank”
platform encourages
consumers to share
ideas about how it
can improve its
everyday banking
services.
• Amex by American Express allows users to make
purchases through social networks.

22. Financial Services Sharing Models
• Online crowdfunding is a relatively new
form of financing for projects. The model
allows many people to contribute small
amounts in the hope of achieving a
combined total that meets or surpasses a
predetermined funding target. From its
beginning funding music, the model
expanded into the creative industries more
broadly and into product design and
development helped by the growth of large
platforms such as Kickstarter and
indiegogo.
• In recent years, the model has been
adapted further to fund projects with a
specifically social aim and also into the
financing of businesses.
Y. Pierrakis and L. Collins, BANKING ON EACH OTHER Peer–to–Peer lending to business: evidence from funding circle, Nesta, 2013
There are few distinct models under the umbrella term of
crowdfunding such as: donation crowdfunding, crowdfunded
equity investing and crowdfunded lending. one important
distinction between these models is the motivations of the
people that provide the funding. This varies from the donation
model where the aim is purely philanthropic to some who fund
through the lending model who do so solely to attain a
financial return.

23. Peer to Peer Lending
• The term “peer–to–peer lending” has its origins in the facilitation of unsecured personal
lending between individuals (rather than a company) via online sites such as Zopa, Lending
Club and Prosper.
• There has been an explosive growth in peer–to–peer personal lending across the world in
the last decade, driven by the many–to–many communication paradigm.
• The proliferation of internet use and growth in social media has enabled those seeking
finance to reach more people with greater ease and at far less cost. the ability to securely
transfer money online allows those seeking to back a project or business to safely contribute
funds. And the increase in the quality and volume of data available on individuals and
businesses finances allow for the creation of accurate credit scores, which allow lenders to
set suitable interest rates on the finance they offer.
• A relatively new application of the peer–to–peer lending model allows the crowd (individual
lenders) to lend money to companies (instead of individuals) seeking debt finance. in most
cases, the loan is an agreement between the borrower and the lender and not with the
intermediary.

24. Peer to Peer Lending
According to crowdsourcing.org,
in 2012, $2.7 billion was raised
from the crowd (crowdfunding
and peer–to–peer lending),
mostly in the US, to finance over
a million projects.
The two biggest players
today, Lending
Club and Prosper saw 195%
growth over the year ending in
June 30, 2013, generating more
than $1.5 billion in loans
Lending platform operators have
faced significant regulatory
challenges, and analysts
anticipate continued uncertainty
through 2018.

25. Online Advisory Services
Online Video & Chats
• Video & Chat functions for advisory services (in the US,
less for Europe)
• Online virtual chat
Comparisons & Reviews
• Competitors start to feature reviews on their products &
services, especially in insurance.
Online Account Management
• Consumers can apply for banking account, insurance
services etc. online
• Mobile signature and data retention

26. Comparisons Sites
• The financial services industry
is witnessing growth in
aggregator-selected panels,
containing both insurers and
brokers. According to analysts,
industry aggregators will
continue to grow.
Ernst & Young, Bringing profitability back from the brink of extinction: a report on the UK retail motor insurance market
• In 2010 Google added a price comparison tool to its
search engine.
• The Google Compare service currently provides different
services: credit cards, mortgages, car loans, savings
accounts, and current accounts, car insurance, travel
insurance.

27. The research was conducted by:
Hamutal Schieber
Schieber Research | Market Research & Competitive Intelligence
www.researchci.com | hamutal@researchci.com
Thank You