Ada Guan Senior Director, Global Client Advisor Jan 2015

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2 Oracle Financial Services Banking Strategy and Case Studies Ada Guan Senior Director, Global Client Advisor Jan 2015

3 Safe Harbor Statement The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle s products remains at the sole discretion of Oracle. 3

4 Business Impact Of Digital Disruption Today 50 Years 6 800, Properties 40x 2.1x Valuation, as a multiple of revenue 4

5 Revenue Up For Grabs For New Digital Players 27B$ 500B$..in revenue up for grabs in Australia by new estimate digital of revenues players at risk in banks in the G7 countries Source: Research published by Macquarie Bank,

6 In October Alone,76 Fintech Companies Worldwide Attracted $1 Billion In New Equity Investments Fintech Best of Breed Digital First The Millennials Agile Barriers of Entry Regulatory Brand equity and Trust Financial Institutions Holistic Offers All Channels All Generations Legacy Systems

7 The Imperative For Change 402B$ Estimate of Global Non-Cash Transaction Volumes in M Registered users on PayPal and AliPay 10M Active Users on Starbucks app 72% Of the Millennials likely to bank with non-fs banks 4.8B$ Peer-to-peer lending in 2013 (US & UK) 25% Market share grab by Square in two years! 7

8 Singularity Of Digital Change Digital Natives and Digital Immigrants The Millennials 8

9 The Millennials Are The New Customer! 1980 Born after 30% Of the world population 60% Of the global workforce by 2025 Living in the US Aggregate net worth 90m 2T$+ 85% Have enough money or expect to in the future Sources: E&Y, Wealth Front, PewResearch, World Bank 9

10 Who Do Millennials Trust? #2 of 8 Source: Edelman Trust Barometer, 2014 Global Results #8 of 8 10

11 Who Do Millennials Trust? Friends Online Search Engines Person like me A regular employee 11

12 Resulting In A Different Level Of Expectations Know me Empower me WOW me Requiring You To Think Customer In 12

13 Customer In Changes The Way Banks Engage Customers Checking Mortgage Insurance Product Out 13

14 Learning From Other FS Organizations Data as an asset Leverage rich reserve of customer behaviour data from both within and outside the four walls of the bank Two speed delivery Agile delivery of new capabilities, especially around customer touch points Modernize the business and technology architecture of the bank, progressively thinning down legacy systems Collaborate to become a Fintech Bring in innovation and agility via partnerships with technology companies Get in on the ground floor through incubation of target technologies 14

15 Exploring 3 different transformation strategies Vertical Slice Channels Processes Core Processor -Deliver a top to bottom slice of the business and technology architecture - Deliver a subset of the solution to prove out end-to-end capability - For example, start with unsecured lending then expand to secured lending followed by deposits Horizontal Slice Channels Processes Core Processor - Modernize channels and business processes without changing the core systems - Improve customer experience and increase cross sell -For example, start with digital services, expand to assisted channels followed by enterprise originations New Target State Channels Processes Core Processor - Build new target business and technology architecture for a new business brand - Enable business growth by tapping new markets - For example, start with new brand, New market and then expand into main franchise 15

16 Case Study: National Australia Bank, an early adopter of Oracle Banking Platform, executing full retail transformation National Australia Bank Facts & Figures Global Top 50 Bank, head-quartered in Melbourne Australia Fundamentally a Retail Bank, with Retail Banking operations in Australia, New Zealand, the UK, US and international offices in Asia Total Assets $883B Net Profit (Income) $5.3B Return on Equity 10.9% Cost Income (Business Efficiency) Ratio 53% Total FTE 42,853 Strategy: Initial launch of green-field direct banking business, UBank, initially to build deposits & reduce reliance on wholesale funding Full build-out of platform capability sets up transformation of NAB s Australian Retail franchise Most transformational project currently being undertaken in Banking, in any market Annual cost savings of approximately $800M expected by the end of the 5 year program Source: NAB Annual Review 2014

17 NAB and UBank One of Australia s large banks Top 50 globally AA rated senior debt 4 million customers ~$81AUD Billion market cap $5.3 Billion net profit (2014) Banking, Wealth Management, Insurance Operates in Australia, New Zealand, USA Hong Kong, Singapore, Japan, UK NAB s Direct Bank Launched Oct 2008 Operates branchless/ standalone from NAB channels Limited product set Targeting specific customer segment Taking leadership position in service and useability Has raised significant deposits since launch First user of new enterprise technology platform

18 What is UBank?

19 Evolution of UBank Launching the fighter brand October Launch Attract new retail customers Customer advocacy and satisfaction levels rise Amongst the highest of any institution in Australia $500 million deposits in one month. UBank is recognized for innovation Effective use of nontraditional marketing 10K customers in a month! UBank is acknowledged as the driver of NAB's fast growth in deposit market share compared to other major banks.

20 Evolution of UBank The 5 minute deposit account! August 2009 Usaver Launch 2 days to 5 mins online account opening! February 2011 "UBank s now well over $7 billion" Announce to become a full service retail bank. December 2009 Money Magazine's "Best of the Best" award. March 2011 UBank reaches $10 billion in deposits

21 Evolution of UBank building up to the 15min Mortgage October 2012 UBank had raises$15 16 billion in deposits". $18.5 billion in deposits is held by ING Direct and launched in 1999, 9 years earlier than UBank. October 2011 UBank won the BAI Financial Global Product Innovation Award for its refinance mortgage UHomeloan. February 2011 UBank launched its first home loan product 2012 Australian Lending Awards: Best Online Operator

22 Summary And Overview What is UBank? Branchless direct bank retail banking Limited product set - Savings, Term Deposit and Mortgages Heavy use of social media Focus on customer service and application usability Challenges Originally launched on the bank s legacy infrastructure with limited success Oracle Banking Platform CRM On Demand Oracle Financials Account Hub OFSAA IDM Suite WebLogic Portal BUSINESS RESULTS ROI realized within 12 months of go-live Reduced the Account Opening time from 2 days to 5 minutes First year customer deposits target exceeded within first two months Two year customer acquisition target exceeded within first six months NOTABLE HIGHLIGHTS Launched on budget, on time within a year Seamless Integration of application landscape through SSO and Web Services for business / data service integration Content Management SOA Suite

23 NAB Retail Transformation Plan Source: NAB Investor Presentation March 2013

24 NAB s uptake of Oracle is wholistic and transformational Oracle SAP NAB legacy 24

25 Exploring 3 different transformation strategies Vertical Slice Channels Processes Core Processor -Deliver a top to bottom slice of the business and technology architecture - Deliver a subset of the solution to prove out end-to-end capability - For example, start with unsecured lending then expand to secured lending followed by deposits Horizontal Slice Channels Processes Core Processor - Modernize channels and business processes without changing the core systems - Improve customer experience and increase cross sell -For example, start with digital services, expand to assisted channels followed by enterprise originations New Target State Channels Processes Core Processor - Build new target business and technology architecture for a new business brand - Enable business growth by tapping new markets - For example, start with new brand, New market and then expand into main franchise 25

26 Westpac Group Australia s First Bank Source: Westpac FY14 Financial Result Presentation Pack

27 Westpac Customer Centric Strategy Service Revolution Source: Westpac FY14 Financial Result Presentation Pack

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29 Ray is considering specialised design equipment for his business start-up, and tweets looking for some advice on financing

30 Ray continues his investigation while accessing his online banking and browses Ashcroft Financial s products and services. He spots the starting a business link

31 He receives a proactive pop up message from a virtual assistant while he is browsing online

32 Ray decides to chat with the specialist to hear what solutions the bank could offer. The specialist discusses options and based on the timing of the need, suggests Ray meet a banker in branch

33 The specialist arranges pushes the appointment options to Ray s screen. It prompts Ray to provide relevant documents in preparation for the meeting. The appointment is created in Ray s local calendar.

34 At the branch, the banker instantly recognises Ray via Google Glass

35 Branch Concierge In branch now Account details Next appointment 2:00 pm Appointment Mr Ray Aamos 45 years old Bentley East Melbourne, Victoria 3165 Mr Peter Weller 43 years old Julius Avenue North Ryde, NSW 2133 No Appointment Suggested actions Activity history Upcoming visitors Mrs Kira Tut 35 years old Pia Avenu Marsfield, NSW :00 pm Appointment

36 The banker is notified that Ray appears to have booked travel recently and proactively offers Ray a fee free travel card

37 Ray and the banker start the conversation about Ray s business and begin exploring his needs

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42 The banker activates the new services and advises that these are available for Ray to use immediately through any channel

43 The banker is prompted to offer Ray the option of joining a membership program with additional benefits for small businesses

44 A unique program that enables you access to unique services from Ashcroft and enables our customers to benefit more more often.

45 While still in the branch, Ray s is notified that his Flexi-Loan is available within his mobile banking app

46 Ray feels enabled, with immediate access to his new services and is excited about his getting his new business started, and is now relaxed about his upcoming holiday. The banker has provided Ray a personalized experience and a mutually agreed plan to advance his business

47 The banker walks Ray At the through end of his day, Tim the relationship options and recommends manager the can option assess his performance best suited to Ray

48 Westpac Mobile Customer Conversation

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