FINTECHS, NEOBANKS, AND BEER GARAGES

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1 FINTECHS, NEOBANKS, AND BEER GARAGES March 17, 2017 Fear, fight or join them to grow your bank?

2 SERVICE JUST GOT TRUMPED J.D. Power 2016 U.S. Retail Banking Satisfaction Study, where the biggest banks had significantly improved in overall customer satisfaction, primarily due to digital offerings. 2

3 TODAY S CUSTOMERS NEED BANKING BUT DO THEY NEED A BANK? 3

4 THE ECONOMICS OF Creative Destruction 4

5 5 THE TRADITIONAL BANK IS BECOMING UNBUNDLED

6 DOES YOUR BANK NEED A BEER GARAGE? Budweiser s Beer Garage partners with startups for marketing. 6

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8 BEER GARAGE NeoBanks Fintechs 8 8

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10 NEOBANKS An institution that provides checking, a prepaid debit card and some form of savings without a brick-and-mortar building Mobile deposits P2P or even SM identities Mobile budgeting tools Real-time digital receipts - Jim Marous SVP New Control They show you via s and text messages exactly how you re safe to spend your money and if your spending patterns are putting you in danger of overspending - JP Nicols 10 CEO Clientific

11 NEOBANKS - MasterCard - BBVA - American Express - Green Dot Bank 11

12 NEOBANKS Moven uses the Apple Watch to deliver real-time alerts to customers, and makes a game out of turning an impulse spend into an impulse opportunity to save. 12

13 SIMPLE 13 See your budgeting, saving, and spending all in one place; your account.

14 NEOBANKS: How they differ Easy access Relevant information Low cost No branches Payments only 14

15 NEOBANKS Targets: 28% Unbanked 8% Nonbanked 15

16 FINTECHS Financial technology, also known as fintech, is an economic industry composed of companies that use technology to make financial services more efficient. 16

17 17 THE TRADITIONAL BANK IS BECOMING UNBUNDLED

18 AT A GLANCE Lower lending operating costs Risk-based pricing models: only the most creditworthy get rates better than what they d get at a traditional bank Average rate example: 16.97% Lending Club 19.31% Prosper 18

19 Radius Bank 1 Location: Boston $790 Million 19

20 RADIUS BANK Through partnerships with LevelUp and Bottomline Technologies, they can complete the entire application and approval process in just under 6 minutes. No branch visit or print out and mail an application needed. Customers snap a picture of the barcode on the back of their driver s license and the ID data automatically populates the form. 20

21 RADIUS BANK A partnership with the NYCE shared deposit ATM network allows customers to make deposits and withdrawals at non-radius banks across the country. There are zero ATM fees. With Pay-a-Friend, the process of sending money to a friend is instantaneous. 21

22 RADIUS BANK Radius has also been able to offer a high-yield checking account (dubbed Hybrid) through a partnership with startup online investment firm Aspiration, and personal loans between $2,000 and $35,000 through the Prosper platform. 22

23 REALITY CHECK Remember your first website? Did you do it yourself? Was there any reward for being the last one to market? 23

24 TO DO LIST # 1. Improve your mobile and online user experience - Audit and update your website according to a rolling plan - Expedite account opening - Simplify account funding 24

25 TO DO LIST # 2. Find a fintech partnership for at least small business micro loans - Invest or purchase loans - Refer or facilitate - Buy the technology or white label 41% Annual Sales Size 22% 28% 6% 3% 25 Less Than $100K $100K - $499K $500K - $1.99M $2M - $4.99M $5M - $10M Suorce: Raddon Financial Group Small Business National Research 2015

26 TO DO LIST # 3. Be open to possibilities -Maybe you re someone s beer garage -Create your post-it note 26

27 27 Why we should think like Suresh Ramamurthi

28 CITIZENS BANK OF WEIR $17 million in assets, 10 employees Hosts accounts for Moven and insurance companies Offers real-time payments for these customers leveraging the infrastructure of the major debit card networks ROE 46.88% 28

29 29 MillsMarketing.com