Guiding Principles for Mobile Payment Readiness

October 3, 2012

What We Will Cover

A b o u t U s P e r s p e c t i v e s

B u s i n e s s C a s eM o b i l e Tr e n d s

C u s t o m e rE x p e r i e n c e

L e v e r a g e I T I n v e s t m e n t s Q & A

F u t u r e o f P a y m e n t s

S e c u r i t y

About Perficient

Perficient is a leading information technology consulting firm serving clients

throughout North America.

We help clients implement business-driven technology solutions that integrate

business processes, improve worker productivity, increase customer loyalty and create

a more agile enterprise to better respond to new business opportunities.

Perficient Profile

Founded in 1997

Public, NASDAQ: PRFT

2011 Revenue of $260 million

Major market locations throughout North America— Atlanta, Austin, Charlotte, Chicago, Cincinnati, Cleveland,

Columbus, Dallas, Denver, Detroit, Fairfax, Houston, Indianapolis, Los Angeles, Minneapolis, New Orleans, Philadelphia, San Francisco, San Jose, Southern California,St. Louis and Toronto

Global delivery centers in China, Europe and India

2,000+ colleagues

Dedicated solution practices

87% repeat business rate

Alliance partnerships with major technology vendors

Multiple vendor/industry technology and growth awards

Perficient brings deep solutions expertise and offers a complete set of flexible services to help clients implement business-driven IT solutions

Our Solutions Expertise & Services

Business-Driven Solutions• Enterprise Portals• SOA and Business Process Mgmt• Business Intelligence• User-Centered Custom Applications• Interactive Design• CRM Solutions• Enterprise Performance Management• Customer Self-Service• eCommerce & Product Information

Management• Enterprise Content Management• Enterprise Resource Planning• Management Consulting• Industry-Specific Solutions• Mobile Technology• Security Assessments

Perficient Services End-to-End Solution Delivery IT Strategic Consulting IT Architecture Planning Business Process & Workflow

Consulting Usability and UI Consulting Custom Application Development Offshore Development Package Selection, Implementation

and Integration Architecture & Application Migrations Education Interactive Design

Our Speakers

Mike Panzarella, Director, Financial Services Practice

With 20 years of experience with Big Four consulting and commercial banking, Mike has expertise in BI platform architectures for Fortune 100 financial service firms with a focus on social media and mobile convergence.

Jeff Fisher, Director, FS Practice Operations & Advisory Services

With over 20 years of experience as a technology leader with global enterprise organizations, Jeff has a proven track record of success leading technology teams in financial services organizations.

P e r s p e c t i v e s o n

M o b i l e P a y m e n t s

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Evolution of Mobile Payments

In 2008: $71 Billion and 43.1 Million Users

In 2011: $105.9 Billion in transactions

In 2012: $172 Billion in transactions (61.9% increase)

By 2016: $617 Billion and 448 Million Users (359% increase)

Source: Gartner May 2012

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The Future of Mobile Payments

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The Future of Mobile Banking

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Banking Challenges

1. Balancing Consumer Retail Channels

2. Non-Bank Providers

3. Levers for Customer Retention

4. Merchant Pricing Issues

5. Selecting Investments

Strategic Factors

Customer Value Proposition• Personal Financial Management

• Mobile Banking

Internal Operations

Balancing Priorities

Customer Perspective (Consumer)

Financial Perspective

Information Technology

• Compliance

• Self-Service

• Efficiency & Scalability

• Performance Management

Market Share

Revenue Capitalization

Increase Shareholder ROI

Targeted Investments

• Business Process Management

• Self Service Analytics

• ImprovedWorkflow

• Efficient Queue Management

• Third-Party Processing

• Data Quality

• Information Security

• Mortgage/ Foreclosures

• Commercial / Institutional

• Innovative Product Development

• Consumer Services

• Customer Service• Marketing

• Vendor Management

• Risk Management

Performing Loans

Net Income

• Consumer Lending

Prioritize investments to balance customers, regulators, employees and shareholder needs

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Prioritizing Initiatives

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Gartner: Gartner Report Market Insight: Technology Opens Up Opportunities in SMB Vertical Markets - September 2012

Growth of mobile is tracking comparable to Big Data as a strategic initiative

Prioritizing Initiatives

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The Business Case

27%

15.7%1 ROI*

Customer Service Efficiencies

69%

*ROI varies depending on bank size and other industry variables.[1] Average provided by Forrester’s “The ROI of Mobile Banking” model.

Reduced Attrition

3%Revenue from Cross-sell

2%Reduction in Marketing Spend

ROI Model

Investments in the Digital Channel

M o b i l e B a n k i n g

Tr e n d s

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Mobile Banking Trends

M o b i l e i s h e r e t o s t a y

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Mobile Payment Trends

Multi-tender: Enabling the capture of all payment types to include credit, debit, PIN Debit, eCheck, pre-paid, as well as, splitting payments between each type.

Real-time Offers: Influence and direct consumer shopping behavior based on past purchasing trends using location aware technologies with QRS couponing capability with consumers (i.e., Retailix).

Loyalty & Rewards: Earning loyalty credits real-time and provide for immediate redemption with location aware technologies on the mobile phone.

Banks must expand awareness to incorporate the overall payments ecosystem into their mobile strategy

Enhancements to consumer experiences that will effect payments in retail and other channels.

Contactless Payments: POS technologies have yielded tablets as registers - emerging mobile technologies will supersede traditional terminal devices (i.e. PayPass, PayPal, and others).

Social Payments: Generation M will influence adoption of future payment schemes. Services cover mobile payments, ‘split the bill’, and pay a friend features, plus enable social sharing, management and check-in updates.

Banks need to bridge Mobile Banking with Traditional Wholesale Banking Channels!

Person2Person: Going beyond payment transfers, capabilities to enable one person paying with another person buying are essential and will require enhanced payments infrastructure.

Virtual Currencies: Service may include cash/credits /points which can be stored value in a mobile wallet. Good option for micropayments, but subject to legal laws banks must address. Appeals to youth and under-banked (i.e. Zynga, Facebook, Lindens).

Be on the Lookout for…

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Aggregator Wallet Trendsetter

Time and Location-based Offers

Gift Cards, Coupons, Tickets and Loyalty

Passbook = Hype Reality = More than 120 Known Wallets

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E-Commerce Wallet Trendsetters

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Other Wallet Trends

Retailer Wallet

Strengthen existing customer bonds

Targeted marketing

Merchant coupons and discounts

Suggestions based on purchases

Gatekeeper & Single Feature Wallet

Wave a mobile phone in front of reader to process payment

Requires NFC technology (unclear)

Focused functionality

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Banking Mobile Wallet Trend

Existing Functions

Bird’s eye view of personal finances

Online bill payment

Alerts and notifications

Remote deposit capture

Person-to-person payments (P2P)(intrabank)

Merchant offers and discounts

Access to other services

“Top of Wallet” Preferences

Personal financial management

P2P payments (interbank)

Integrated loyalty and rewards

Augmented reality integration

PNC Mobile App

Mobile Banking Trends

Balance.

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Recommendations

Banking Mobile Payment Success

Determine what role to play in digital channel strategy (consumer perceived value)

Leverage the bank’s key strengths

Defined strategy and deploy core payment offerings

Continue to expand mobile banking services

Evolve cross-sell capability

Business Intelligence

Analytics (Social, Predictive, Business)

Decide where strategic partnerships make sense

Reduce merchant and customer obstacles for adoption

The Customer Experience

Perficient XD provides demonstrated user experience excellence in four core market competencies:

• Strategy & Ideation

• User Research & Analysis

• Creative & Interaction Design

• Innovation & Implementation

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The Customer Experience

C o n v e n i e n c e

S p e e d o f U s e

S i m p l i c i t y

E a s e o f U s e

S e n s e o f S e c u r i t y

A c c u r a c y & T i m e l y U p d a t e s

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360° Customer Solutions

Customer Service Features

Pay for Products Email Receipt

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360° Customer Solutions

Strategic Partnership

On-the-fly shopping options through online rewards store

Scan item barcodes

Redeem AMEX reward points and purchase

Takeaway: Can Banks Strengthen Merchant Relationships to Optimize Loyalty & Rewards?

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360° Customer Solutions

Raising the Bar with Payments

Mini-app “card monitoring dashboard” to align with iPhone 5 & Passbook

Personal finance management (Mint.com)

Turn mobile devices into remote kiosks

Enhanced targeted mobile offers for in-store customers

Contactless ATMs

FaceTime chat with advisors

Takeaway: Draw Parallels to Existing Capabilities with a Mobile Perspective

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Customer Experience Trendsetters

Mobile & Payment Features

Merchant cash back deals

Credited to card account

Testing QR mobile payments solution

Augmented reality for location-based merchant offers

VS.

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L e v e r a g e I T

I n v e s t m e n t s

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Secure Customer Data

Digital Advertising Alliance: Extending beyond current opt-out policies, the government is looking at giving consumer’s the ability to create their own Privacy preferences.

Transferring Data in the Cloud: Privacy rules are different between the US and the European Union. The EU precludes the transfer of data to “non-adequate” jurisdictions. Where is the cloud in which you store your data?

Information Security Framework: Establishing a secure architecture foundation underlying your applications and data are essential to protecting your information assets. To achieve this, defining a security policy and architecture framework must be step one.

Start Thinking About:

Enterprise Security Management Program: An information security program provides the foundation for an effective security control structure. It establishes a framework and continuous cycle of activity for assessing risk, developing and implementing effective security procedures, and monitoring the effectiveness of these procedures. Overall policies and plans, including system and application-specific procedures and controls, implement the enterprise wide policy.

Third-Party Testing: In addition to the testing done by your internal audit team, think about leveraging a third-party to conduct security reviews and/or to conduct continuous scanning against your applications., systems and network.

Information Security Architecture: As an extension of your Bank’s information security policy, the architecture should provide for patterns that define who can access applications, data, systems, and underlying networks.

Minimum Security Controls: As a foundation to the security of your information assets, a set of minimum security controls should be set in place and continuously tested by every bank. Whether it consists of access control, information flow control, least privilege access, separation of duties, physical access, concurrent session controls, session locks, and others; these controls should be always monitored and tested.

Laptops, Mobile and Personal Devices: Key vulnerabilities to any bank’s information assets involve the security of any device outside the physical premises that can be either lost or stolen. Specific policies should be established and enforced regarding all proprietary bank information that may be stored on the device to preclude any and all customer account information.

Key Considerations:

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Credit Card Co.

Processors

ISOs/MSPs

Merchants

Call Center Recordings: Neither Bank nor Processor call centers can store recorded data that contain card verification value information if those records can be queried.

Average Cost of PCI Compliance: In their Retail Security & Compliance Survey 2011, Gartner reported different merchants spent on average – over 2.35 years: Level 2-4 retailers: $1.1 million; Level 1 Retailers: $2.1 million.

Some Key Facts:

Biggest Card Industry Data Breaches: Publicly known credit card account number data breaches include Global Payments involving as few as 50,000 credit card account numbers(1), and Heartland Payment Systems in 2009 involving the exposure of data on 130 million credit cards.

POS Terminals: Laptops, Tablets, and Smart Phones require compliance with PCI Mobile Standards.

Mobile Applications: Secure how data is acquired with application security controls – use secure coding practices.

Secure Data: Encrypt transmission and storage of data.

• Networks: Secure networks

• Third-Party Testing: Test, Accredit and Certify your application

• Strong Access Control: Eliminate un-necessary access and impose privileged access with monitoring.

• Audit Controls: Auditing on host application platform for access & change mgmt.

• Least Privilege: Restrict access to systems, applications, and sensitive data

• Back-Office: Control payment application & users

Key Controls for PCI Compliance

(1) The exact number of exposed credit card accounts is not yet fully been disclosed to the public.

P2P E

ncry

ptio

n

• Mobile Platform Provider: Is your Partner provider validated?

Reference www.PCIsecuritystandards.org for more PCI Compliance details.

Mobile Banking Trends

A l i g n i n g

C a p a b i l i t i e s

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Leverage IT Investments

Prioritize Investments to Drive Efficiency

Utilize MEAP to optimize mobile development

SOA to enable effective data acquisition and pass-through processing

Leverage Big Data to optimize cross-sell opportunities, fraud, and real-time segmentation

Agile development for enhanced product functionality

Effective scalable systems to handle increased volume

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Strategies to Get Started

Service Reusability

Expose existing web services to your banking platform for enhanced functionality

Leverage ESB coupled with your SOA web services to address increased volume

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Strategies to Get Started

Big Data & Analytics

Consolidate the customer view leveraging your transformation capabilities

Leverage data warehouses and data marts to build the customer’s “digital experience”

Extending the use of customer data for cloud-based social analytics

Exploit the mobile banking platform to test and drive cross-sell offerings

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Strategies to Get Started

Rewards

Use existing customer loyalty and rewards capabilities integrated into the mobile layer and enhance using real-time data

Banks can lease rewards capabilities to get speed-to-market solutions (Retailix, Truaxis, Destination Rewards)

Learn More

Download Our

Mobile Payments White Paper

Perficient.com/MP

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Questions?

Mike Panzarella

Jeff Fisher Sean O’Sullivan

Elizabeth Dias

W E B I N A R C O N T R I B U T O R S

Abbey Smalley

Matt Passey