“Bank for One”

2

The Discovery Group

Members4.5 million

Earnings per share growth25% p.a. since 2000

Market cap$6 billion

Employees10 000

Revenue flow$7 billion

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Operating profit, $m

0%

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30%

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Risk-free ROC

Return on capital, %

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Revenue flow, $m

7 000 450

Introduction to the Discovery Group

3

US (2015)Canada (2016)

Germany (2016)France (2017)Austria (tbd)

China (2009)SA (1997)UK (2004)

Malaysia (2016)Thailand (tbd)

Totalling 15 markets and 4 million Vitality clients

NETWORK TODAY

Japan (2016)Singapore (2013)Australia (2014)

Hong Kong (2015) Philippines (2015)

4

THE NATURE OF RISK HAS CHANGED

Source: CDC

Source: WHO

Source: Oxford Alliance Group

Physical inactivity,

poor nutrition, smoking, alcohol

Cancer, diabetes, heart and lung diseases

60% of deaths worldwide

4

460

Physical inactivity,

poor nutrition, smoking

Cancer, diabetes, heart and lung diseases

50% of deaths worldwide

3

450

Pneumonia& tuberculosis

Diarrhoeaand enteritisDiptheria

1

2

3

Together caused

30% of all

deaths

1900

2003

2016

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Benefits are immediate,

price is hidden

Benefits arehidden, price is

immediate

Over optimism Hyperbolic discounting

HUMAN BEHAVIOR IS IRRATIONALPrevention and health promotion are undervalued

HEALTHCARE WELLNESS

How would you rate your health?

49%33%

23%15%

7%

49%

60%

65%

61%

52%

0%

20%

40%

60%

80%

100%

0 1 2 3 4+

Correlation between perception of health and risk

factor prevalence

Excellent Good Fair Poor/very poor

Source: BHC

6

THE TRADITIONAL UNDERWRITING MODEL

Risk evaluated only at policy inception based on pre-existing conditions

Premium remains static over time

Relationship is transactional

Age

Mo

rta

lity

rate

Traditional mortality curve

Premium

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TRADITIONAL UNDERWRITING IS VULNERABLE

“healthy – lifestyle” mortality curve

“unhealthy – lifestyle” mortality curve

Premium

Members with poor lifestyle

behavior

More likely to fall ill and claim

No incentive to improve health

Members with good lifestyle

behavior

Less likely to fall ill and claim

No incentive to maintain

appropriate cover

Age

Mo

rta

lity

rate

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MATHEMATICS OF THE VITALITY SHARED-VALUE INSURANCE MODEL

=∆ Behaviour

Incentive

Incentive

Member

Bent (qx)

∆ Behaviour× × ×

Value

Bent (qx)

Vitality chassisEngagement

Make people

healthier

Surplus sharing=

Screening

Exercise

Nutrition

Weight Loss

Vitality Age

Vitality Points

Vitality Status

Rewards

Morbidity & mortality

Accidents

Defaults

Health insurance

Life insurance

Short-term insurance

Banking

35m years health data; >5 years mortality data; over 4.5bn km of telematics linked driving

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TRADITIONAL RELATIONSHIP MODELS

1010

MEMBER REACTION

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Unique asset: VitalityPromotes better health behaviour for its members

Shared value per excellence

Our big question: Can we leverage these insights in banking?

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Consumer preferences are changing

Key findings of EY’s Customer Centricity Survey1

More demanding: Increased expectations: convenience,

flexibility and personalisation are a given

More diverse: more people are accessing financial services with

distinctly unique needs

More sophisticated: Cost and other barriers to

technology are dissipating

More hedonistic:It’s all about me

KPMG survey key drivers transforming retail banks2

Executives’ views, % of respondents, in descending order

29%37%

43%47%Changes in customer behaviour

Domestic competition

Coping with changes in technology

Regulatory changes

1

2

3

4

Source: 1. EY, The journey toward greater customer centricity, 2013 | 2. KPMG, 2014 Banking Industry Outlook Survey

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65

198019701960 20001990 2010

Average company lifespan on the S&P 500(Years, Seven-year rolling average, Standard & Poor’s)

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As a result, retail banks are separating into one of three archetypes of modern banking

The Multichannel Bank

The Engagement Bank

Customer Centric Bank

• The first step into modern banking involves the bank becoming a multichannel organisation with the development of web-and mobile-based sales and servicing portals

• The next archetypal modern bank evolves because a multichannel bank can only get so far without an overhaul of the way they collect, analyse, and use data

• The bank builds the ability to see a “single customer view”, begins collecting customer data in a useful and insightful way, and possibly becomes responsive in its treatment of customers

• After experiencing some of the quick wins related to having a single customer view, the bank begins to take customer feedback seriously, using it to initiate projects that manifest in a better customer experience

• The internal organisation of the bank begins to adapt to better understand and meet customer needs. Forums such as a “Customer Committee” and roles such as a “Chief Customer Officer” are created

• Finally, with a continued focus on the customer the way the bank has run existing systems, channels, products, and more, begins to change. This is manifest in, for example, changes to the way the physical branch network is run

Three archetypes of modern retail banking have emerged because of increasing competitive pressures

• Banks typically evolve from one archetype to the next given the dynamics involved

• We are bypassing the first two steps

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Discovery Bank will treat clients as individuals

You understand me, my circumstances and my needs

You stay out of my wayuntil I need your help

You remember what I have told you

You are always working for me

You fit with my lifestyle

I do not need to tell you everything; you work out

my needs

You recognise my loyalty I Trust Your Advice

Segment specific Customer specific

Segmentation based on homogenous attributes only

Segmentation based on individual’s aspirations, attitudes and behaviours

Aim is cross-sell/up-sellbased on campaign calendar

Takes customer lifecycle view to ensure “right-sell”

VS

Product oriented customer communication contact

Customer tailored dialogue

Usage of campaigns and CRM

Usage of analytics and predictive modelling

Reactive decision process Real-time decision process

Customers’ “ideal” engagement experience

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Service Processing CostsLow High

Digital Assistant

Digital Self Service

Smart Chat

Live Chat

Service Centre

Visit to Customer

Voice Call

We will provide brilliant service, affordably

▪ Customer centric design; simple and intuitive

▪ Cost efficient service model, with an on-demand high-touch service

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Service Processing CostsLow High

Digital Assistant

Digital Self Service

Smart Chat

Live Chat

Service Centre

Visit to Customer

Voice Call

Thoughts on service ladder..

How does mobile automation intersect with IVR?

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Service Processing CostsLow High

Digital Assistant

Digital Self Service

Smart Chat

Live Chat

Service Centre

Visit to Customer

Voice Call

Thoughts on service ladder..

How does the telephony routing strategy play with routing tools?

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Service Processing CostsLow High

Digital Assistant

Digital Self Service

Smart Chat

Live Chat

Service Centre

Visit to Customer

Voice Call

Thoughts on service ladder..

How is the depth of experience distilled?