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RDC Trailblazers Leveraging new technologies while minimizing
risk and maximizing results.
Bob Hedges Managing Director, AlixPartners
Chris Chaten
Vice President, Product Management JPMorgan Chase & Co.
September 29, 2011
MOBILE RDC Changing How Consumers Bank
and How Banks Compete
Bob Hedges Managing Director, AlixPartners
September 29, 2011
Four Key Themes
• Aggressive Smartphone Adoption by Consumers Is Driving the ‘Mobilizing’ of Financial Services
• Mobile RDC Is Becoming Critical to Consumer Choice
• Significant Growth Is Forecast
• Mobile RDC Is an Important Strategic and Economic Opportunity
3 The 2011 RDC Simmit - RDC Trailblazers
Mobile Has Become the Dominant Personal Connectivity Tool
4 The 2011 RDC Simmit - RDC Trailblazers
Global Unit Shipments of PCs vs. Smartphones + Tablets 2005 - 2011 Q1, 2011E - 2013E
Note: PCs Include Desktop, Notebook, and Netbook Computers Source: Gartner Research Annual Press Releases; Canalys Annual Press Releases; 2010, “Smartphone Markets and Technologies,” Berg Insight; IHS iSuppli Market Intelligence Press Releases
0
200
400
600
800
1,000
1,200
2005 2006 2007 2008 2009 2010 2011 2012E 2013E
Glo
bal U
nit S
hipm
ents
(MM
)
Projected Tablets
Projected Smartphones
Tablets
Smartphones
Projected PCs
PCs
Projected
Actual
5
Smartphone Ownership
Source: AlixPartners Mobile Financial Services Tracking Study: October 2009, May 2010, December 2010.
68% 65% 55%
32% 35% 45%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 Q4 2010 Q2 2010 Q4
Conventional phone Smartphone
AlixPartners Mobile Financial Services Tracking Study: May 2011
Mobile Phone Users, 26-34 Age Segment, Q2 2011
45% 45%
4% 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Conventional Smartphone Tablet
Mobile Phone Users, 26-34 Age Segment, Q4 2009 - Q4 2010
Mobile Devices Used Daily
Aggressive Smartphone Ownership Is Fueling Adoption of Mobile Services
Mobile Is Driving High Levels of Consumer Engagement
6 The 2011 RDC Simmit - RDC Trailblazers
80%
61%
55%
47%
14%
19% 19% 19%
6%
25%
74%
67%
54% 51%
10%
17% 17%
23%
7%
32%
72%
65%
54%
49%
10%
21%
16%
23%
32%
7% 7%
0%
20%
40%
60%
80%
100%
Make andreceive phone
calls
Send an receivetext messages
Check and sendemail
Access theInternet
Use GPSfeatures
Use instantmessaging (IM)
Take photos Play games Purchase digitalcontent (such as
applications,ring tones, or
wallpaper)
Access socialnetworking sites
(such asMySpace,Facebook,Twitter)
Downloadmusic
Watch moviesor videos
Q2 2010
Q4 2010
Q2 2011
Source: AlixPartners Mobile Financial Services Tracking Study: October 2009, May 2010, December 2010.
Consumer Use of Mobile Phone Features on a Daily Basis Smartphone Users, Q2 2010 – Q2 2011
7
Purchased the item I was interested in from a nearby store with a lower price
Purchased the item I was interested in from a cheaper online alternative
They did not impact my shopping decisions
Impact of Using Mobile Shopping Apps on Shopping Behavior Smartphone Users By Age, Q2 2011
Used product reviews to buy a different item
Requested a price match from the retailer
15%
16%
20%
27%
40%
19%
27%
25%
39%
31%
31%
19%
31%
35%
35%
6%
20%
48%
26%
28%
6%
11%
44%
33%
28%
11%
17%
67%
6%
17%
0% 10% 20% 30% 40% 50% 60% 70%
65+55-6445-5435-4426-3418-25
Source: AlixPartners Mobile Financial Services Tracking Study: May 2011.
Mobile Shopping Apps Are Changing What We Buy and With Whom We Shop
8
75%
46% 39%
5%
5% 11%
0%
13% 15%
5%
14% 24%
15% 22%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q2 2010 Q4 2010 Q2 2011
Importance of Mobile in the Decision to Switch Primary Banks Q2 2010 – Q2 2011
Extremely important
Important
Somewhat important
Slightly important
Not at all important
Source: AlixPartners Mobile Financial Services Tracking Study: May 2010, December 2010, May 2011.
In Banking, Mobile Is Becoming Increasingly Important in Consumer Bank Selection
9
Mobile RDC Is the Number-One Feature For Which Consumers Switch Banks
Source: AlixPartners Mobile Financial Services Tracking Study: December 2010, May 2011.
Mobile Banking Adopters Somewhat or More Likely to Switch Primary Banks
for Mobile Banking, Q4 2010 – Q2 2011
4%
4%
5%
4%
7%
9%
10%
9%
10%
14%
14%
14%
16%
15%
19%
18%
3%
4%
6%
6%
8%
11%
11%
12%
13%
14%
19%
19%
20%
20%
23%
23%
28%
28%
43%
0% 10% 20% 30% 40% 50%
Peer to peer paymentsChanging PINs
Access to investment accountsAccess to loan accounts
Monitoring of term depositsAccess to card statements
Status on check, stop payment on checkFind location of nearest ATM along with maps and directions
Take pictures of financial documentsDue date of payment
Alerts on account activity or passing of set thresholdsRecent transactions
Take pictures of check or billsTransfer funds
Check balances on savings, checking or credit cardsStatements of account history
Pay bills wherever you areCheck account balances
Make a deposit with a camera-equipped smartphone
Q2 2011
Q4 2010
Source: AlixPartners Mobile Financial Services Tracking Study: December 2010, May 2011.
10
Consumer Interest in Mobile RDC Continues to Build
18% 19%
10%
6%
4% 3%
9%
28%
21%
18%
10%
6%
3%
14%
31% 30%
18%
11%
8%
4%
16%
26% 28%
22%
14%
9%
6%
18%
0%
5%
10%
15%
20%
25%
30%
35%
18-25 26-34 35-44 45-54 55-64 65+ All Consumers
2009 Q4
2010 Q2
2010 Q4
2011 Q2
Top-Two Box Scores Consumer Willingness to Adopt Mobile RDC By Age Segment, Q4 2009 – Q2 2011
Source: AlixPartners Mobile Financial Services Tracking Study: October 2009, May 2010, December 2010, May 2011.
11
Consumers Recognize and Embrace the Convenience Delivered by Mobile RDC
Source: AlixPartners Mobile Financial Services Tracking Study: May 2011
Factors That Would Cause Consumers to Use Mobile RDC Q2 2011
7%
15%
16%
17%
19%
29%
41%
43%
43%
0% 10% 20% 30% 40% 50%
The urgency to have the check deposited for safe keeping
The urgency to have the check deposited due to a need for cash
The ease of using the service
The low cost of the service
Having one or more large checks
Having one or more small checks
The inconvenient location of the nearest ATM
The inconvenient location of the nearest branch of my primary bank
I would never use this service
12
Among Mobile Banking Adopters, Mobile RDC Increases Retention
14.4%
14.0%
12.9%
12.6%
12.5%
11.3%
8.0%
7.7%
6.5%
5.6%
5.4%
4.9%
4.7%
3.8%
0.0%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Overdraft protection
Email and/or mobile alerts for account balances or fraud
Direct deposit of paycheck
ATM access
Phone banking/through bank call center
Paper checks
Safety deposit box
Online banking
In-branch services (teller, customer service, product specialist,…
Online bill pay
Automated withdrawals (rent, mortgage payments, etc.)
Mobile payments
Mobile banking
Other direct deposits (social security, pensions, etc.)
Deposit checks via taking picture with a mobile device
Source: AlixPartners Mobile Financial Services Tracking Study: May 2011.
Bank Switching Rate of Mobile Banking Adopters By Services Used a Year Ago
Q2 2011
13
Mobile Banking Adoption Rates Q2 2008 – Q2 2011
Source: AlixPartners Mobile Financial Services Tracking Study: May 2008, October 2008, May 2009, October 2009, May 2010, December 2010, May 2011.
7% 7%
10%
4%
5%
3%
7%
13%
12% 11%
11%
7%
5%
10%
16% 16%
10%
12%
6%
4%
10%
18%
20%
11%
7%
5%
2%
10%
21% 22%
10%
7%
5%
1%
10%
22%
23%
13%
8%
6%
2%
12%
23%
21%
14%
6%
5%
1%
12%
0%
5%
10%
15%
20%
25%
18-25 26-34 35-44 45-54 55-64 65+ All Consumers
2008 Q2
2008 Q4
2009 Q2
2009 Q4
2010 Q2
2010 Q4
2011 Q2
Mobile Banking Adoption Will Drive Adoption of Compelling Mobile Banking Apps
14
Mobile Banking Adoption Is Expected to Reach Nearly 50% by 2016
20% 25%
33%
43%
52%
61%
69%
76%
17% 18% 22%
29%
40%
51%
59%
68%
7% 6% 8% 11%
16% 23%
31%
39%
1% 1% 1% 2% 3% 3% 4% 5% 11% 12%
15% 19%
26%
33% 39%
46%
2010 Q2 2011 2011 2012 2013 2014 2015 20160%
10%
20%
30%
40%
50%
60%
70%
80%
90%
18-25
26-44
45-64
65+
Average
Mobile Banking Adoption Forecast by Age Segment By Age, 2010 - 2016
Source: AlixPartners Mobile Financial Services Tracking Study: May 2011; AlixPartners analysis.
15
Mobile RDC Adoption Is Expected to Reach 38% by 2016
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2010 2011 2012 2013 2014 2015 2016
2010 - 2016
Source: AlixPartners Mobile Financial Services Tracking Study: October 2009, May 2010, December 2010, May 2011; AlixPartners analysis.
Mobile RDC Adoption Forecast
16
2.1 Billion Checks Are Expected to Migrate to the Mobile RDC Channel
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016
2010 - 2016
Source: AlixPartners Mobile Financial Services Tracking Study: October 2009, May 2010, December 2010, May 2011; Federal Reserve; AlixPartners analysis.
Number of Checks Forecasted to Migrate to Mobile RDC Channel (mm)
A Solid Business Case Supports the Deployment of Mobile and Mobile RDC
17 The 2011 RDC Simmit - RDC Trailblazers
Mobile banking adopters are attractive customers Higher average incomes ($73,000 versus $60,000) Higher average assets ($450,000 versus $225,000) Higher average savings and DDA balances ($15,000 versus $11,200) More products and services held with their bank (3.5 versus 3)
Mobile banking adopters drive superior channel economics Mobile banking adopters disproportionately frequent low-cost channels Cost to serve mobile banking adopters is 18% lower annually Channel savings and the impact of higher average savings and DDA balances drives a
67 bp decrease in the overall cost to serve
Mobile RDC is a compelling driver of acquisition and retention Mobile RDC is the number-one mobile feature for which consumers, who would
switch banks for mobile, will switch Mobile banking adopters who use Mobile RDC have lower attrition rates; as Mobile
RDC is the mobile banking feature associated with zero switching
Mobile RDC Is Changing How We Bank and How Banks Compete
The market for Mobile RDC will be driven by Aggressive adoption of smartphones Growing consumer perception that Mobile RDC is a must-have mobile
banking feature
The outlook for Mobile RDC is strong 38% of U.S. adults are projected to adopt Mobile RDC by 2016 2.1 billion checks expected to migrate to the Mobile RDC channel $1.6 billion in potential banking industry savings
The consumer marketplace opportunity is compelling. In parallel, the banking industry’s infrastructure “overhaul opportunity” is imperative. Mobile RDC can empower banks to move forward.
18 The 2011 RDC Simmit - RDC Trailblazers
Remote Deposit Capture:
Getting to Mobile
Chris Chaten Vice President, Product Management
JPMorgan Chase & Co.
September 29, 2011
Agenda
• Topics – The Evolution of RDC at JPMorgan Chase – Common Questions and Concerns – What’s Next?
• Themes – Evolved Technology is Simple – Consumer mRDC is a primary deposit channel – Corporate mRDC is on the way
20 The 2011 RDC Simmit - RDC Trailblazers
Where We Are
Image Deposit Direct
Chase QuickDeposit (desktop)
Chase QuickDeposit (mobile)
The 2011 RDC Simmit - RDC Trailblazers 21
Pre-2008 – Setting the Stage
• Introduced Image Deposit Direct in 2006 • “One Size Fits All” Solution • Features / Functions:
– Coupon Scanning – Franking – Endorsement / Virtual Endorsement – Remittance Fields – Standard Forms – Custom Forms – Standard Reports – Custom Reports
The 2011 RDC Simmit - RDC Trailblazers 22
Pre-2008 – Challenges
• Manual Implementation Process – After the sale, each “feature” required implementations to
ask clients how to set it up – Manual Process Invited Setup Errors – Clients didn’t typically know what we were talking about
• Cluttered User Interface • Vendor Driven
– Little Opportunity for Differentiation – “Pace-of-Play” – Commoditization
• No Integration with Online Banking
The 2011 RDC Simmit - RDC Trailblazers 23
Pre-2008 - Who We Served
• Served the Needs of Large, Complex Clients – Clients with treasury expertise – Substitute for lockbox – Integration on AR systems – Large scale deployments to multiple sites – High-volume with many accounts
• “The RFP requires XYZ feature!” – Sales loved it. – Kind of.
The 2011 RDC Simmit - RDC Trailblazers 24
2007 – Simplify, Integrate
• 75% of our clients didn’t need to be “sold” • Smaller clients had no one speaking for them • Mission – build an easy to use, no-frills solution for
the 75% – Integrate with Chase.com – Automate enrollment process
The 2011 RDC Simmit - RDC Trailblazers 26
2008 – Chase QuickDeposit
• Released to our Business Banking and Commercial Banking online platform (chase.com)
• Targeted clients <$25 MM in annual revenue • Typical profile:
– 1 or 2 scanners – 1 - 3 accounts – 200 checks per month
• Clients scan up to 3,000 checks per month from 20+ locations
The 2011 RDC Simmit - RDC Trailblazers 27
2010 – Chase QuickDeposit Mobile
• Smartphones take over the world • Built a dedicated mobile development team following
WaMu deal • Opportunity to offer an innovative product to
consumers • Led to Development of Chase QuickDeposit Mobile
– Consumers, High-Net Worth, Small Business • Launched in July of 2010
The 2011 RDC Simmit - RDC Trailblazers 29
2010 – Chase QuickDeposit Mobile
View the full demo at: https://www.chase.com/online/services/check-deposit.htm
The 2011 RDC Simmit - RDC Trailblazers 32
2010 – Chase QuickDeposit Mobile
• Key Features – Supports iOS and Android – Fully-integrated component of the Chase Mobile
applications – Various deposit limits help mitigate bank-side risk – It‘s really simple
The 2011 RDC Simmit - RDC Trailblazers 33
2010 – Chase QuickDeposit Mobile
• Challenges – Image Quality – Which Operating Systems?
• iOS • Android • Blackberry • webOS • Windows Phone 7
– Fraud • Deposit Limits
The 2011 RDC Simmit - RDC Trailblazers 34
2010 – Chase QuickDeposit Mobile
• Highlights • New York Times writer David Pogue named Chase QuickDeposit as
the “best technology idea” of 2010 • Winner of 2 Webby Awards in 2011 • Super Bowl Ad
The 2011 RDC Simmit - RDC Trailblazers 35
2011 – Going Corporate
• Extended knowledge from retail space • White-label integration ties into the desktop RDC
used at brick-and-mortar branches • JPMorgan Chase now powers large bank and
brokerage mRDC applications
The 2011 RDC Simmit - RDC Trailblazers 36
Current RDC Product Suite
• Consumer & High-Net Worth – Chase QuickDeposit Mobile
• Business Banking (<$10MM revenue)
– Chase QuickDeposit Desktop – Chase QuickDeposit Mobile
• Commercial Banking / Treasury Services (>$10MM revenue)
– Chase QuickDeposit Desktop – Image Deposit Direct
• Financial Institutions, Brokerages – Image Deposit Direct – White-label Retail mRDC through IDD
37 The 2011 RDC Simmit - RDC Trailblazers
Common Questions and Concerns
• What kind of consumer uses mRDC? • How do they use it? • What are customers biggest complaints? • What about the fraud? • Why haven’t many other large FIs followed?
38 The 2011 RDC Simmit - RDC Trailblazers
Where We Are
Image Deposit Direct
Chase QuickDeposit (desktop)
Chase QuickDeposit (mobile)
The 2011 RDC Simmit - RDC Trailblazers 39
What’s next?
• Integration with Complex Treasury Workstations • Non-FI Custom Application Development • New Hardware Optimized for Mobile Experience • Corporate mRDC via Smartphone
– Targeted at insurance agents, non-profits, and distribution companies
– An extension of the desktop solution – Coming in October 2011…
41 The 2011 RDC Simmit - RDC Trailblazers