This document discusses the disruption of traditional financial services by new technologies and business models. Key points: - Consumer expectations and behaviors are changing, driven by new offerings from financial technology (Fintech) startups. Younger consumers especially expect more digital and personalized services. - Most components of traditional banking value propositions are being disrupted, including payments, lending, wealth management, and core banking services. Niche Fintech players are targeting these areas. - Banks are responding by incubating new business models, partnering with Fintech firms, and integrating new technologies into their own offerings like mobile payments. However, some see technology reducing banks' role to "dumb pipes." - Large

1. A new paradigm for Financial Services
Craig Konieczko
Marketing Strategy and Insights
2017

2. What does changing customer
behavior mean for businesses that
haven’t also changed?
What happened to Telecom in the 1990s, Music and Media in the 2000s and
CPGs in the early 2010s is now happening to FS.
“Mortal locks” that previously held customers’ wallets, checkbooks and portfolios
are springing open, due to new business models from FinTech disruptors, and
highly receptive younger consumers.
Our clients businesses are stuck, and our clients are confused and lack marketing
and product direction. They need recommendations and solutions that are highly
specific to the FS industry and its particular disruption, and point to pathways to
growth.

3. 71%
IF FS CLIENTS ARE UNSURE OF WHAT’S NEXT, IT’S BECAUSE OF A PERFECT
STORM OF CUSTOMER AND DISRUPTOR SHIFTS
51%
72%
67%
Consumer expectations for the role banks serve are evolving, and upstart FinTech
competitors are quickly foraying into financial services.
Consumers are not engaged in banking status
quo
consider their banking
relationship to be
transactional rather than
relationship driven1
71%
of millennials would rather
go to the dentist than listen
to what a bank has to say2
Evolving consumer expectations suggest
disruption
want their bank to proactively
recommend products and services
for their financial needs1
of millennials are interested in
their bank providing tools and
services which help them create
and monitor a budget (compared
to 31% for those over 55)1
of millennials would be likely to
bank with non-financial services
companies with which they do
business (compared to 27% for
those over 55)1
17%of consumers are highly
engaged with their credit card3
Sources:
1. http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-2014-NA-Consumer-Digital-Banking-Survey.pdf
2. http://www.nextbank.org/technology/the-time-is-ripe-for-disruption-in-banking/
3. Rosetta Consulting Customer Engagement Study

4. DISRUPTION IS REAL AND WILL IMPACT BANKS’ TOP-LINE

5. CARDS, TRADITIONALLY REVENUE ENGINES, ARE NOT IMMUNE

6. WHERE DISRUPTION MOST CONCERNS BANKS AND CARD
ISSUERS
PAYMENTS – mobile wallets, POS payments, Bitcoin, Blockchain
CORE BANKING – all-digital offerings from Voya, Simple, Hello, etc.
LENDING – marketplace lenders and aggregators, e.g. Kabbage and Prosper
WEALTH MANAGEMENT – A.I., crowdsourced and algo-driven advisors, e.g. Wealthfront, Pefin, Motif
6

7. Drivers of Fintech development
Further information regarding this statistic can be found on page 50.
9
Likelihood of new financial market participants posing threat to existing retail banks in Europe in
2014, by product
Threat to retail banks from new financial companies in Europe 2014, by product
Note: Europe; 2014; 60 Respondents; banks from 15 countries
Source: Deutsche Bank Research; ID 411804
61
25
22
10
5
3
34
53
42
44
30
20
2
10
27
39
48
52
3
12
10
7
17
25
0 20 40 60 80 100 120
Payments
Simple savings products
Current account
Consumer credit
Structured savings products
Home loan business
Share of respondents
Very likely Likely Unlikely Very unlikely

8. NICHE FINTECH PLAYERS ARE DISRUPTING MOST
COMPONENTS OF THE BANKING VALUE PROPOSITIONS
FinTech is “what’s next” – it
seeks to own the customer
relationship, by automating or
aggregating ‘intelligence’ –
through AI, Blockchain, etc.
There’s a risk the technology
could reduce banks to just
“dumb pipes” — simply
infrastructure providers who
let more nimble FinTechs
funnel money around, deal
with clients, and, as a result,
take home the bulk of fees.
Source: CB Insights, 2015

9. THREE APPROACHES BANKS ARE
TAKING V. FINTECH
INCUBATE –
Foster and steward new
business models within
the bank, to prepare for
the changing landscape
PARTNER –
Don’t fight FinTech, but
reach out with
customer base, brand
and regulatory
adeptness
INTEGRATE –
Open your own apps and
tools to work with other
platforms, to build
network effects for your
users

10. Miscellaneous
Further information regarding this statistic can be found on page 79.
42
Reaction of banks to development of Fintech companies worldwide as of February 2015
Reaction of banks to Fintech companies 2015
Note: Worldwide; February 2015
Source: Various sources (The Finanser); ID 379497
43%
20%
20%
10%
7%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
Startup programs to incubate Fintech companies
Set up venture funds to fund Fintech companies
Partnering with Fintech companies
Acquired Fintech companies
Launched own Fintech subsidiaries
Share of banks

11. INCUBATE – PREPPING FOR A MOBILE-FIRST WORLD
Financial technology unit to ready Citi for a mobile-first future. “CitiFinTech” will be headed by Heather
Cox, and plans to launch mobile experience by Q4 2016.
The unit is charged with building a smartphone-centric “bank of tomorrow.”
11
WSJ “Citi adds new unit w/ mobile focus” October 16, 2015

12. Drivers of Fintech development
Further information regarding this statistic can be found on page 48.
7
Leading areas of planned bank spending on financial technologies in the United States in 2015
Main areas of bank spending on financial technologies in the U.S. 2015
Note: United States; 2014; survey was carried out among bank executives.
Source: American Bankers Association; Various sources (Source Media); ID 380983
43%
38.7%
35%
31.2%
27.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Mobile payments Online and mobile account opening Risk management Fraud management Document management
Shareofrespondents

13. INTEGRATE – PARTICIPATING IN THE MOBILE PAYMENT
EXPLOSION
Capital One became the first U.S. bank to release tap-to-pay functionality in its Android app, giving in-
store shoppers a way to pay with their phones that’s powered by a financial institution they trust.
Industry insiders believe other U.S. banks will follow suit, using a technology newly built into Android’s
operating system.
Shoppers will have more choices for mobile payments, and Android Pay and Samsung Pay mobile
payment services may lose out on attracting users who trust their bank’s app for payments more than
one made by a big tech company.
13
Recode “the next big competitors to Apple Pay and Samsung Pay? Banks” October 16, 2015

14. While Card revenue (and transactions) have plateaued, mobile wallets
will grow rapidly
14

15. PARTNER –
Chase has made Freedom the ideal card for online shoppers, offering 5% cash back on all Amazon
purchases and other e-commerce related shopping perks
Citi will become a partner w/ LendingTree, funneling certain loan applicants from the fintech partner to
the bank and vice versa
15

16. Banks and other financial services providers
Further information regarding this statistic can be found on page 39.
15
United States: Is your overall opinion of JPMorgan Chase as a provider of financial services
positive, neutral or negative?
JPMorgan Chase evaluation in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433003
40%
48%
13%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Positive Neutral Negative
Shareofrespondents

17. Online providers of financial services
Further information regarding this statistic can be found on page 48.
25
United States: Is your overall opinion of Amazon as a provider of financial services positive,
neutral or negative?
Evaluation of Amazon as a financial services provider in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433037
71%
25%
5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Positive Neutral Negative
Shareofrespondents

18. BANKS MUST LEVERAGE THREE KEY ASSETS TO PREPARE FOR
THE NEXT PARADIGM
18
Large identifiable customer-bases –
It’s harder to win new customers than to keep those you have, so banks will have a
leg up on FinTech if they use customer data wisely
Unmatched experience with burdensome regulation –
FinTech will face a day of reckoning when it must face regulation, and banks can
help
A strong track record of safekeeping assets and earning trust –
Category trust and credibility have been tested, but this will always be a
differentiator for the best brands, e.g. Wells Fargo
CITI GPS “Digital Banking: Blockchain” January 2016

19. ADDITIONAL DATA POINTS
19

20. Banks and other financial services providers
Further information regarding this statistic can be found on page 47.
23
United States: Is your overall opinion of Wells Fargo as a provider of financial services positive,
neutral or negative?
Wells Fargo evaluation in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433034
44%
38%
18%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Positive Neutral Negative
Shareofrespondents

21. Online providers of financial services
Further information regarding this statistic can be found on page 48.
25
United States: Is your overall opinion of Amazon as a provider of financial services positive,
neutral or negative?
Evaluation of Amazon as a financial services provider in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433037
71%
25%
5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Positive Neutral Negative
Shareofrespondents

22. Banks and other financial services providers
Further information regarding this statistic can be found on page 34.
10
United States: Is your overall opinion of Citi Bank as a provider of financial services positive,
neutral or negative?
Citi Bank evaluation in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 432986
37%
49%
15%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Positive Neutral Negative
Shareofrespondents

23. Online providers of financial services
Further information regarding this statistic can be found on page 49.
26
United States: Is your overall opinion of Apple as a provider of financial services positive, neutral
or negative?
Evaluation of Apple as a financial services provider in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433039
57%
32%
11%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Positive Neutral Negative
Shareofrespondents

24. Banks and other financial services providers
Further information regarding this statistic can be found on page 35.
11
United States: Is your overall opinion of the Citizens Bank as a provider of financial services
positive, neutral or negative?
Citizens Bank evaluation in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 432988
22%
73%
5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Positive Neutral Negative
Shareofrespondents

25. Online providers of financial services
Further information regarding this statistic can be found on page 50.
27
United States: Is your overall opinion of Google as a provider of financial services positive, neutral
or negative?
Evaluation of Google as a financial services provider in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433041
64%
31%
5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Positive Neutral Negative
Shareofrespondents

26. Online providers of financial services
Further information regarding this statistic can be found on page 51.
28
United States: Is your overall opinion of Paypal as a provider of financial services positive, neutral
or negative?
Evaluation of Paypal as a financial services provider in the United States in 2015
Note: United States; May 6 to10, 2015; 18 years and older; 519 Respondents; Includes only respondents who are familiar with the brand.
Source: Statista; Instantly; ID 433042
73%
23%
4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Positive Neutral Negative
Shareofrespondents

30. Investments in Fintech
Further information regarding this statistic can be found on page 61.
21
Value of investment in Financial Technology ventures in the United States in 2013 and 2018 (in
billion U.S. dollars)
Value of investment in Fintech companies in the U.S. 2013-2018
Note: United States; 2013
Source: Accenture; ID 412374
2.4
4.7
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2013 2018*
ValueinbillionU.S.dollars

31. The disruptors
Millennials who don’t use branches, won’t pay fees, and mistrust banks in general (turn away)
Entrepreneurs with Business Models that don’t rely on deposits and loans to drive profitability (go around)
Regulators who are politically compelled to extract capital from bank balance sheets (cut)
Technologists who seek to gain leverage over financial transaction fees through network effects and aggregation
(suck) [apple pay, mint – note Chase and others who cut off mint end of 2015]
Legacy thinking – banks themselves that persist with silos
31

32. Millennials don’t use branches
* No Elders (75+) were recruited for research; findings based on subjects who were oldest among the Senior group e.g. aged 75-80.

33. Leading Fintech companies
Further information regarding this statistic can be found on page 66.
27
Largest investments in Fintech companies worldwide in 2014 (in million U.S. dollars)
Leading Fintech deals globally 2014
Note: Worldwide
Source: Various sources (StrategyEye); ID 412636
160
150
150
130
99
80
80
77
75
65
0 20 40 60 80 100 120 140 160 180
Credit Karma
Stripe
Square
Renrendai
Wealthfront
Powa Technologies
SoFi
OnDeck
AvantCredit
Funding Circle
Value in million U.S. dollars

34. Leading Fintech companies
Further information regarding this statistic can be found on page 69.
30
Largest investments in Fintech companies operating in the area of wealth management worldwide
in 2014 (in million U.S. dollars)
Leading Fintech deals in the wealth management sector globally 2014
Note: Worldwide
Source: Various sources (StrategyEye); ID 412655
99
50
50
32
32
15.5
0 20 40 60 80 100 120
Wealthfront
Personal Capital
Addepar
Nutmeg
Betterment
FutureAdvisor
Value in million U.S. dollars

35. Leading Fintech companies
Further information regarding this statistic can be found on page 70.
31
Largest investments in Fintech companies operating in the Bitcoin segment worldwide in 2014 (in
million U.S. dollars)
Leading Fintech deals in the Bitcoin area globally 2014
Note: Worldwide
Source: Various sources (StrategyEye); ID 412657
40
40
30.5
20
20
17
0 5 10 15 20 25 30 35 40 45
Xapo
BitFury
Blockchain
Blockstream
BitPay
CiRCLE
Value in million U.S. dollars

36. Leading Fintech companies
Further information regarding this statistic can be found on page 71.
32
Largest investments in Fintech companies operating in the area of lending worldwide in 2014 (in
million U.S. dollars)
Leading Fintech deals in the lending sector globally 2014
Note: Worldwide
Source: Various sources (StrategyEye); ID 412740
130
80
77
65
50
45
16
15
0 20 40 60 80 100 120 140
Renrendai
SoFi
On Deck
Funding Circle
Kabbage
Affirm
Auxmoney
Earnest
Value in million U.S. dollars

37. Leading Fintech locations
Further information regarding this statistic can be found on page 77.
39
Leading financial technology locations worldwide in 2014, by value of investment (in million U.S.
dollars)
Leading Fintech locations worldwide 2014, by value of investment
Note: Worldwide
Source: KPMG; ID 412541
1,500
600
66
0
200
400
600
800
1000
1200
1400
1600
Silicon Valley New York London
InvestmentsinmillionU.S.dollars

38. Legacy thinking
38
NOT A BANK
NO ATM
NO ACCESS TO BANK ACCOUNTS OR MONEY

39. Mobile wallets growth will come from a broad
demographic swath
39

40. Technology ‘partners’ are also well positioned to gain
leverage by own the pipes and charging economic
‘rents’
40
99.8
112.3
62.8
77.85
28.6
46
48.61
37.2
33.87
23.22
52.7
13.31
12.54
91.54
26.8
12.4
9.73
7.5
6.17
5.98
5.83
5.21
5.08
4.88
4.74
4.26
3.64
3.22
0 20 40 60 80 100 120
IBM
Hewlett-Packard
Dell Inc
Microsoft
Accenture
Fujitsu
Cisco Systems Inc
Oracle Corp
Lenovo
EMC
Intel
NTT DATA Corp
Thomson Reuters Computer
Hitachi
Revenue in billion U.S. dollars
Total revenue Revenue from financial services

41. CMOs: not alone in objective