GfK - Lessons Learned…From FinTech’s Impact Across Financial Services

© GfK October 11, 2016 | Lessons Learned From FinTech’s Impact Across Financial Services

Lessons Learned……From FinTech’s Impact

Across Financial Services

© GfK | Innovation In Insurance | October 12, 2016


Tom NeriHead of

Financial Services

GfK North America

…service providers

must reimagine the

entire customer

engagement to occur

on a smartphone.

2


A

Convergenceof

Phenomena

Capital

Smart-phones

Millennials &Underserved

Big Data/Algorithms

Technology

Regulations

© GfK October 11, 2016 | Lessons Learned From FinTech’s Impact Across Financial Services 3


The challenge

Common struggle to reimagine

personal financial management for

mobile and determine whether

consumers want to do anything

that complicated on their

small screens

Traditional players

are turning to FinTech

companies to help

solve their issues.



FinTech

Nearly

1,400 firmswith $33 billion in

capital, working across

16 financial services

categories



Financially underserved

The Underserved:a geographically, economically and demographically diverse group of people who, by choice or circumstance, operate partially or completely outside the traditional banking system.

The Unbanked:

have no checking or savings account

The Underbanked:have a bank account but also used at least one non-bank financial service during the past year

Theunderserved

consists primarily of two main groups:

25%

68%

7%

Check cashing

Moneyorders

Payday loansvcs.

Pawn shops

Wage paymts.

Prepaid cards

6


Dave Melnick

Smartphone for Everything Everywhere



C2. Which of the following best describes your mobile phone( the one you use the most)?

68% 71% 72% 69% 69%

88%

Smart-

phone

ownership

8


State of US Retail

E-Commerce Growth Fueled by Mobile

• Forrester Research projects mobile commerce sales to generate a 17% CAGR through 2020, accounting for half of all online sales.

• According to GfK’s Future of Retail reporting, 75% of Americans say their mobile device is becoming their most important shopping tool.

U.S. E-Commerce Sales

Source: GfK FutureBuy

Advantage Online

9


State of Consumer Engagement

Industry Outlook

EXPERIENCE MARKETING

BIG DATA

EMOTIONAL ENGAGEMENT

OMNI-CHANNEL INTEGRATION

OMNI-CHANNEL COMPONENT DEVELOPMENT



A Tale of Innovation in the Age of Millennials

Emergence of Gen Z, Establishment of Gen Y

* Age in 2014

Source: GfK Consumer Trends, 2013

GEN Z18-24*

GEN Y25-34*

Social natives

Book smart & savvy

Fun & frugal

Fun first, work next

Connected Confidence

Global minder

“Both / and” stress

Friends = family

Close todoting parents



2229 33

39 434554

63 6067

2937

43

54 58

1221 25

32 34

510 9 13 18

0

10

20

30

40

50

60

70

80

90

100

2011 2012 2013 2014 2015

Total 18-29 30-44 45-59 60+% of Respondents

Mobile banking

usage continues to climb…

Base: n=1000

Source: Consumers and Mobile Financial Services 2016 – The Fed

12


Upward trend in smartphone shopping among Gen Z

13% 14%8%

3%21%

25%

15%7%

32%25%

18%

7%

7% 10%5%

2%9% 10% 11% 10%12% 11% 9%12%

Share of All Online Shopping Activity on

Smartphone (US)

Share of All Online Shopping Activity on

Tablet (US)

2013 2014 2015

18-24 25-34 35-54 55+

13


Generational Divide Evident

In Perceptions of Mobile Payment Utility

Source: GfK FutureBuy®

Mobile payments are:

39% 44% 24% 22%

44% 46% 30% 26%

40% 46% 25% 18%

33% 34%18% 14%

“Easier”

“Faster”

“More Efficient”

“How I Pay When-ever Possible”

% US Shoppers Agreeing(completely / somewhat)

14


Millennials & Their Boomer Parents

Influence Each Other

My mom helped me

open my first checking

account when I was 13.

I’ve always had a great

relationship with my bank.



Lesson 1 for Insurance industry …

Ways to engage consumers

EducationAccessible Experiences

PersonalizationFinancialFitness

Trust & Authenticity

16


Financial Innovations Solutions

Broader Industry Perspective

What’s

working???

Retail

banking

app

17



FinTech Evolution

18



FinTech Evolution

19


Source: GfK FutureBuy® 2016 – Thinking of the last time you used your Smart Phone to Shop- Was it in-store or Online?

Smart Phone

for In-Store Shopping

Europe

APAC

LATAM

Middle East

28%

24%

23%

22%

Percentage of IN-STORE use of MOBILE

PHONE to SHOP GLOBALLY is 26%

US –

37% used their

Smart Phone In-

Store the Last

time they

Shopped

20


Source: GfK FutureBuy® 2015, 25 markets

The global MOBILE PAYMENTS

MARKET is COMPLEX

Europe

APAC

LATAM

Middle East

9%

3%

6%

7%

Percentage of PAYMENTS conducted

by mobile phones in-storeUS market: 3% estimated

share of all PAYMENT TRANSACTIONS in 2015

Other

Credit

Card

Cash

Mobile

Device

Debit

Card

3%

38%

29%

4%

27%

21


Financial Innovation Solutions

Payments

Contactless, smartphone wallet based on QSR code

• A “pro-retailer” solution

• Merchants have the advantage of a network that includes no network/processing fees & no merchant fraud liability

• But they’re also getting shoppers’ data – something that today’s more privacy-minded consumers are fighting back against, but often are willing to make tradeoff for benefits

22


Beacon-triggered mobile games

create two-way interactions in-store

Via the Macy’s mobile app and beacon-technology, customers shopping at more than 700 Macy’s locations nationwide who have signed up to participate in the game will have the chance to instantly win $1 million in Macy’s gift codes and prizes, just by walking in to their local store

23

http://mms.businesswire.com/media/20151029005934/en/493697/5/BlackFriday_Walk_In_&_Win.jpg?download=1






FinTech Evolution

24


Financial innovation solutions

Saving

Pioneered a smart phone banking app that helps users track their money and improve their

savings by tracking spending and telling customers how much they can safely spend without running

out of money at the end of the month.

Moven is expanding internationally with bank alliances and a partnership with Accenture.

25



Payment Transfers

Unipagos is helping the unbanked Spanish-speaking population on both sides of the US-Mexican border

make payments on their smartphones.

About 75 percent of Mexico's 100 million consumers don't have bank accounts, but 50 percent of the

country's residents wield smartphones

26



Lending

Vyze develops software for retailers to

process consumer credit at the point of sale

• Proprietary algorithm using existing credit & proxy data, such as cell phone usage, utility payments, rental history

• Software provides retailer speedy match with willing lending institution for nearly instant credit/loan approval

• Particular benefits underserved consumers, meeting regulatory requirements for not using punitive interest rates

27



FinTech Evolution

28



Robo-advisors

Claims to have more customers than all of the competition combined, thanks in part to its $0 account minimum

• Powerful combination of goal-based tools & affordable management fees, particularly for accounts over $100,000, which pay just 0.15% of assets managed.

• Like other robo-advisors, Betterment uses exchange-traded funds (ETFs), and clients pay no commissions or transaction fees.

Other well known players: Wealthfront, Motif & Folio etc.

Betterment has emerged among plenty of competition as the current leader of independent launches, with more than $3.9 billion in assets under management.

29



30



FinTech Evolution

31



Complete Insurance Coverage

To get people the insurance coverage

they need and make them feel good about it.

The easiest way to get an individual from

point A (no insurance) to point B (insured).

policygenius gained insights into the kind

of experience people would want

and built it from there.

32



Term Life Insurance

A mobile value proposition built around easier & faster access to term life insurance, using available, permissible data sources to improve the underwriting process.

Building a value proposition that redefines the traditionalnotion of an insurance ladder – a construct that lets you plan for extra coverage when you’ll need it the most and taper off coverage at other times –developing more dynamic, effective relationships with clients.

33


Emerging FinTech Applications


Smart

Home

35

© GfK October 11, 2016 | Lessons Learned From FinTech’s Impact Across Financial Services© GfK 2016 | The Connected Consumer

Rethinking our

relationship to

the home…

36


High level of familiarity

of the term “smart home” Consumers

Leading

Edge

Consumers

Mobile Payments

Smart home technology

3D Printing

Wearable Technology

Driverless cars/Autonomous driving

The Internet of Things

Connected Car

Virtual/Augmented Reality

Smart Cities

55%

50%

41%

35%

33%

29%

26%

24%

24%

74%

78%

62%

63%

51%

50%

52%

46%

48%

37


P01. Thinking about the various categories of services that can be part of a ‘smart home’, what type of company would you most expect to offer each service?

Base: All markets=7149

Types of company most expected to deliver smart home services

Electronics Manufacturer

Multinational Tech Company

High Street Retailer/ In street (US)

Utility Company

Online Retailer

Telecoms Provider

Mobile Phone Network

Financial Service Company

Other

Would not trust any company

19%

12%

12%

10%10%

8%

8%

5%

5%

12%

38


Connected

Car

39


Not a car but a travel solution. This

app will take complete responsibility

for a trip, identifying the best

transport solution

7. Home to destination

Travel Solution

A car that knows your entertainment preferences

1. Entertainment

A self-driving car that drives

completely autonomously

2. Autonomous Driving

A car that communicates

with other connected

devices in your home

5. Life Manager4. Ultra Safe

A car that makes driving as

safe as possible. Connectivity

with other cars, cruise control,

integrated cameras

3. Data TrackerA car that tracks usage , runs

diagnostics, checks repair

costs; records accident data

automatically6. Self SufficientA strong but light

electric car

‘Connected

Car’

Concepts

We asked 5,800 consumers to evaluate 7 concepts

40


General

Consumers

LEC

87%

96%

66%

81%

73%

84%

68%

90%

62%

84%

65%

84%

79%

91%

UltraSafe

DataTracker Entertainment

Life Manager

Home to Destination

SelfSufficient

Autonomous Driving

QT1. Concept appeal Scale: 5 Point. Data is Top 3 Box

Leading Edge Consumers

leaning into connected cars…

As expected Ultra Safe concept is the most appealing. As safety is a ‘hygiene’ factor, we want to focus on concepts that follow next.

41


Source: GfK FutureBuy® 2015

42


Source: GfK FutureBuy® 2015

43


Focus organization

to deliver consistent

cross-channel experience

Embrace

collaboration/

partnerships

Engage

consumers

on their needs,

terms &

benefits

Three Key Components…

to Implementing Innovation

44


Thank you.

Economy & Finance

GfK - Lessons Learned…From FinTech’s Impact Across Financial Services