technology trends in 2004 wednesday, october 1 mark condon, svp research & advice
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Technology Trends in 2004 Wednesday, October 1 Mark Condon, SVP Research & Advice. Technology & Delivery Channels. The Cloudy Crystal Ball. “Never make forecasts, especially about the future.”. --Samuel Goldwyn. “I think there is a world market for maybe 5 computers.”. - PowerPoint PPT PresentationTRANSCRIPT
Technology Trends in 2004Wednesday, October 1
Mark Condon, SVPResearch & Advice
Technology & Delivery Channels
The Cloudy Crystal BallThe Cloudy Crystal Ball
“Never make forecasts, especially about the future.”
“I think there is a world market for maybe 5 computers.”
“640K of memory ought to be enough for anyone.”
“I never worry about the future. It comes soon enough.”
“The best thing about the future is that it only comes one day at a time.”
--Samuel Goldwyn
--Thomas Watson, 1943
--Albert Einstein
--Abraham Lincoln
--Bill Gates, 1981
Take AwaysTake Aways
Technology is of tactical value.Strategic value is understanding what members value and why.Convenience and trust are value drivers.Risk management is critical.Electronic payment volume will grow.Authentication and verification eases fears.9/11 accelerated desire for greater security.Your value proposition supports lifestyles, choices, goals, aspirations and dreams.
What, me worry?What, me worry?
Today’s AgendaToday’s Agenda
Current Trends
The Changing Value Proposition
The Need to Localize
The Reality of Technology TodayThe Reality of Technology Today
It’s the muscle behind member service.
It shapes a credit union’s interaction with members.
It’s tactical, not strategic.
It drives product and service development and delivery.
Industry TrendsIndustry Trends
Focus shift from products to consumers
Rapid technology developmentExpanding communication channelsGeographically dispersed marketsLimited resources
Members’ ExpectationsMembers’ Expectations
Consistent experience across touch points
Anytime, anywhere convenience
Personalized and seamless service
Accurate information
Focus on security and privacy
Credit UnionCredit Union Technology Offerings Technology Offerings
2%
2%
5%
7%
7%
8%
9%
16%
30%
45%
0% 10% 20% 30% 40% 50%
Account aggregation
Bill presentment
Automated online loan application & approval
E-Newsletters
E-Statements
Internet access
Permission-based emails to members
eBill payment
Internet banking
Web site
Source: CUNA’s 2002/2003 Technology/E-Commerce Survey
Top Three TechnologiesTop Three Technologies
Multi-channel delivery
Source: TowerGroup
Customer relationship management
Security and privacy
Multi-Channel DeliveryMulti-Channel Delivery
Number of channels used:
One – 17%Two – 21%Three – 22%Four – 20%Five – 14%
Source: TowerGroup Primary Market Research
Channel IntegrationChannel Integration
US Annual “Customer Interaction” Volume (in Billions)
0
10
20
30
40
50
2001 2002 2003 2004 2005
Online Banking Call Center Branch ATM
Online Activities, 2000-2002Online Activities, 2000-2002
2000 2002Growth (millions of (millions of2002 rate Americans) Americans) (%)
Bank online 164% 14M 37M 32%Buy/make a reservation for travel 90% 31M 59M 50%Buy a product 78% 41M 73M 62%Participate in online auction 69% 13M 22M 20%Play a game 45% 29M 42M 37%Buy or sell stocks 40% 10M 14M 12%Get hobby information 38% 65M 90M 77%Get financial information 32% 37M 49M 42%
Banking has outpaced other activities when it comes to rate of growth among Internet users.
Source: Pew Internet & American Life Project Surveys, March 2000, January 2002, May-June 2002, June-July 2002, September 2002
Projected Use of Online BankingProjected Use of Online Banking
21.5%23.5%
26.2%28.6%
31.2%
0%
5%
10%
15%
20%
25%
30%
35%
2002 2003 2004 2005 2006
Source: TowerGroup Primary Market Research
US Households
Average Percentage of Members Average Percentage of Members That Are Active Users* of That Are Active Users* of
EBP (by asset size)EBP (by asset size)
3.0%
2.3%
2.2%
1.5%
1.3%
1.3%
0.9%
1.2%
1.7%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
$500M+
$300M-$500M
$200M-$300M
$100M-$200M
$50M-$100M
$20M-$50M
$10M-$20M
$5M-$10M
All CUs
Note: Limited to credit unions that offer PC-based electronic bill payment (EBP) services. Source: CUNA’s 2002 National Member Survey
* Pay at least one bill per month
Consumers use PFIs forConsumers use PFIs forDeposit ProductsDeposit Products
76%
80%
86%
86%
95%
96%
99%
0% 20% 40% 60% 80% 100% 120%
Certificate of deposit
Safe Deposit Box
Phone/Online Bill Pay
Savings Account
Online Banking
Debit/ATM/Check Card
Checking Account
Source: TowerGroup—Primary Market Research
……but Not Their Investment Dollarsbut Not Their Investment Dollars
2%
11%
3%
4%
9%
16%
18%
36%
0% 5% 10% 15% 20% 25% 30% 35% 40%
No response
Other
Insurance Company
Credit Union
Discount Brokerage Firm
Bank
Mutual Fund Company
Full-service Brokerage Firm
Source: TowerGroup—Primary Market Research
Institution Type Holding Majority of Investment Dollars
……Nor Their Loan ProductsNor Their Loan Products
20%
21%
25%
30%
31%
31%
33%
38%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Individual Stock
Mutual Funds
Annuity
Mortgage
Investment Management Account
Asset Management Account
Individual Retirement Account
Automobile Loan
Source: TowerGroup—Primary Market Research
Products Least Commonly Owned at Primary Institution(Percentage of Owners Owning at Primary Institution)
Payment Trends & Check Payment Trends & Check Electronification Impact Electronification Impact
on Transaction Processingon Transaction Processing
0
20
40
60
80
100
120
2002 2007
Transactions (Billions)
Sources: Federal Reserve System; TowerGroup estimates
Check ElectronificationElectronicCheck
E-Transactions are Steadily E-Transactions are Steadily Reducing Paper VolumesReducing Paper Volumes
41.2
10.1
16
0.76.3 1.1
32.8
35
25.6
8
11.52.1
200175.4 billion
2007115 billion
U.S. Non-Cash RetailTransaction Volumes
Checks
Debit Card
Credit Card
Emerging POS*
Retail ACH
Stored Value (Swipe) *Contactless and Mobile ($5 and up only)
Source: TowerGroup
Loyalty MetricsLoyalty Metrics
53%
41%48%
21%
14%18%
0%
10%
20%
30%
40%
50%
60%
Grocery Casual Apparel
Enrolled in a Loyalty Program (Any Retailer in Category)
Enrolled in a Loyalty Program (Favorite Retailer in Category)
Spending More As a Result of Loyalty Program
Source: McKinsey, TowerGroup
% of U.S. Retail Consumers Who Are…
0
500
1,000
1,500
2,000
2,500
1997 1999 2001 2003 2005 2007
By 2004, total mobile subscriptions surpass cards issued by any individual brand
Source: TowerGroup estimates
Total American Express Cards
Total MasterCard Cards
Total Visa Cards
Total Mobile Subscribers
Mobile Cellular Devices vs. Plastic Payment Cards (1997–2007)
# of customers(millions)
““I feel it is currently unsafe to perform I feel it is currently unsafe to perform any kind of Online transacting any kind of Online transacting
involving my money”involving my money”
0%
10%
20%
30%
40%
50%
60%
70%
StronglyAgree/Somewhat
Agree
Neither Agree NorDisagree
StronglyDisagree/Somewhat
Disagree
No Response
All Households Online Households Online Banking Households
Source: TowerGroup—Primary Market Research
% of US Households
Costs Incurred by U.S. Financial Costs Incurred by U.S. Financial Institutions Due to Identity Institutions Due to Identity
Theft, 2001-2006Theft, 2001-2006
$3.68
$3.33
$2.78
$2.15
$1.36
$1.04
2006
2005
2004
2003
2002
2001
in billions
Source: Celent Communications, August 2002
Credit Union Use of NetworkCredit Union Use of NetworkSecurity MeasuresSecurity Measures
5%
2%
19%
20%
29%
48%
58%
86%
89%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Biometrics
Dual-firewall systems (DMZ)
Virtual private network (VPN)
Intrusion-detection system
Network components in secured area
Encryption
Firewall
Anti-virus protection
Note: Limited to credit unions with a Web site that have some network security measures in place. Multiple responses were allowed.
Source: CUNA’s 2002/2003 Technology & E-Commerce Survey
The Value PropositionThe Value Proposition
ConvenienceAccessFlexibility
TrustSecurityPolicy
Determine Your Value PropositionDetermine Your Value Proposition
Understand Members’ Needs and GoalsObservationsQuantifiable
Channel PreferencesCurrent3 to 5 Years
Payment MethodsFee ImpactCore Processor
Security & PrivacyPoliciesProceduresAuthenticationVerification
2003/2004 Credit Union Environmental Scan Resources
Report PowerPoint Presentation Video
Order by phone: 800/356-8010, ext. 4157
Order online: http://advice.cuna.org and click on “Reports”
#20583 #23507 #30006
2003/2004 Credit Union Environmental Scan Resources
Order these reports by phone: 800/356-8010, ext. 4157
Order online: http://advice.cuna.organd click on “Reports”
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