March 30, 2020

FUTURE OF FINTECH WHAT TO EXPECT IN 2020Sanjay Ponnaiya

Chris Palmer

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Agenda01.

02.

03.

Introductions

Trends we’ve been watchingWhat to expect in 2020

What’s next

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Who we are

Global Leader in Market Research

Consumer Testing Proof of Concept

Financial Services and Fintech Specialty

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2019 was another banner year in Fintech

$60B Fintech Funding (US)

Not Just Global Anymore

Consumer Adoption Steadily Increasing

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Source: KPMG

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What to Expect in 2020

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01.

Changing what a bank really is

02.

Expecting the unexpected

04.

Going beyond the underserved

05.

Tech, but not for its own sake

03.

Broadening definition of trust

Partnering with merchants

06.

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Changing what a bank really is:The explosion of Banking as a Service (BaaS)

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At the start of the century regional players held a significant share of consumer deposits

Currently large banks (JPMC, BAC, Wells Fargo) now hold a significant majority of markets.

BaaS was developed based on two key factors.

Consolidation of deposits The Opportunity

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Prior to the financial crisis• Hundreds of new FDIC reporters a year

2010-2018• 25 new reportersSource: FDIC

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Back office now offered through Banking as a Service (BaaS)

Banking-as-a-service allows challengers to sit atop regulation with the backing of a traditional institution

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Regional banks and similar players are placing their bets here

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Growing specific underserved customer bases and balances

$5.8 billion valuation

5 million users

Focused ONLY on middle incomes: $35K-$70K

• No fees• Overdraft loan• Paycheck early• Automatic savings• Capitalizes on poor experiences

with big banks

‘If you make $150,000, you may not love your bank, but you probably don’t hate it,’ Britt said. ‘I’m not going after that consumer, the credit card rewards seeking person who wants to travel to Europe for free on points.’ – Chris Britt CEO

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Chime: Niche/Targeted… and Sticky

Concept Tested

Archetype Niche/Targeted

Seek informationCommitmentBroad appealLikingValueUniquenessBelievabilityNeed fulfillment

Best Worst

• No monthly fees• No minimum balance

requirements• No overdraft fees• No hidden fees• No transfer fees

• No overdraft fees• No monthly fees• Set up direct deposit and get paid

2 days before your coworkers

• No overdraft fees• No monthly fees• Set up direct deposit and get paid 2

days before your coworkers• No minimum balance requirements • No foreign transaction fees

• No foreign transaction fees• Set up direct deposit and get paid 2

days before your coworkers• Mobile banking app

Messaging Elements

Most Relevant Least Relevant

Most Unique Hard to Believe

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Strong emotional resonance

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Some Fintechsare trying to build a full stack

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Prior to the financial crisis• Hundreds of new FDIC reporters

a year

2010-2018• 25 new reporters

Source: FDIC

The Opportunity

2019• 13 new reports

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Expecting the Unexpected

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Any organization with a large user base can technically now offer banking services

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Uber Money provides basic banking services to its 4MM partners and enables unbanked to participate in financial system

• Immediate access to earnings

• Free $100 overdraft provides credit and capital

• Cash back on gas purchases on Uber Debit

• Top 20% riders will get credit if unable to pay

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Big Tech is close behind, looking to build on its advantages to deliver frictionless experiences

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“Start up with 150 years of experience”

Even investment banks are moving into the consumer deposit space to take share

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Apple’s foray into financial services

Putting the voice of consumer at the heart of innovation is important, even for big tech brands.

Apple launches Apple Pay, facing mixed reviews and executional hurdles

S E P T E M B E R

2014

Apple launches titanium card, receiving positive consumer feedback

S E P T E M B E R

2019

Despite Apple Pay’s push, a majority of consumers continue swiping or inserting traditional cards

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September 2019 | Apple Card Launch

Need Fulfillment

Believability

Uniqueness

Value

Liking

Usage Intent

Apple card, has very strong performance in our test. People like the dailycash that the card offers along with no fee, simplicity & transparency.

Vertically integrated value chain – everything within the Apple ecosystem.Apply within app, approval within minutes. Virtually no friction in the entireprocess.

“When you buy things with the Apple-designed titanium card, you get Daily Cash on everything you buy.”

Worst Best

Key Measure Scorecard

We tested the Apple Card with consumers...

Top 5 Phrases

1 You get daily cash

3 Like simplicity, transparency

2 No fees

4 Apple Card lives on your iPhone

5The first credit card that actually encourages you to pay less interest

\ Archetype: Winner

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Is an Apple bank account next?

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Cash

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Broadening the definition of trust

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Trust has eroded in all sectors

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Trust and security as a positioning

• Data security is a key positioner: Won’t sell, share, or trade your data• Always free to consumer• Free credit score = best product for which you are eligible• Minimizing rejection preserves one’s dignity and confidence, which in turn engenders loyalty• Becomes a simple place to understand one’s finances and removes angst• More than just lead generation, financial assistant and tax preparation

$7.1 billion sale to Intuit 100+ million members

A view into $6 trillion debt

10+ year old “start up”

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Tech, but not for its own sake

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Upending The Insurance Business Model Using AI

$2 billion valuation

$57 million in premium revenue

425,000 customers 75% under 3590% first time insurance buyers

• Licensed carrier (unlike Hippo, Jetty)• Applying behavioral economics• ‘Peer-to-peer insurance’• Discourage dishonest claims by

donating a portion of revenue to charity

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Consumers Want Lemonade… but Don’t Need the AI

WantLemonade’s Key Measure pattern indicates a Want archetype. This is often the observed pattern fortrend setters. With strong marketing support, Lemonadecan succeed in transforming the home insurance category.

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Market Success Score

Lemonade demonstrates a strong probability of success.

HighLow

• Simple and transparent

• Pay claims super fast• It’s your money• Flat fee

• Simple and transparent• Insurance in 90 seconds• Get paid in no time• No forms to fill out

• Give back to a cause• Insurance in 90 seconds• No forms, just speak to the camera

• Maya, our charming AI bot

• Jim, our claim AI• Just speak to the camera• Go party

Most Relevant Least Relevant

Most Unique Hard to Believe

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Strong emotional resonance

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Going Beyond the Underserved

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Digitization of financial advice democratizes investing and wealth management

5 million accountsUp from 3.5 million year ago

$860 million valuation

Traction: lead with Education

Continuing Innovation:Acorns InvestAcorns LaterAcorns SpendDifferent fee structure“We’ll be in anything that helps Americans save and invest”

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Concept Tested

Archetype Good Concept

Seek informationCommitmentBroad appealLikingValueUniquenessBelievabilityNeed fulfillment

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Acorns: Good Concept… and Super Sticky

Best Worst

• No surprise fees• Get your own portfolio for just $1,

$2, or $3 per • No minimums• No trade fees• That allows you to invest spare

change

• Until you have $1 million invested• No trade fees• No minimums• Get your own portfolio for just $1,

$2, or $3 per

• Get your own portfolio for just $1, $2, or $3 per

• No minimums• No trade fees• That allows you to invest spare

change• No surprise fees

• N/a

Messaging Elements

Most Relevant Least Relevant

Most Unique Hard to Believe

Very strong emotional resonance

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Payment fintechs providing buy now, pay later options

$3 billion valuation

3,000 merchants

2.5 million customers

Removes pain of payment for consumer

Introduced Resolve with a ‘buy now, pay later’ model aimed at businesses

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Pay over time in fixed monthly payments – no late fees, service fees, prepayment or any other hidden fees

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Partnering with Merchants

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Payment fintechs are enabling merchants to deliver exceptional experiences

$5.5 billion valuation

85 million customers

205,000 merchants

17 countries

6 million new American users/year

3,000 merchants in the USBuy now pay later removes pain of payment for consumer

Assumption of risk and smooth checkout process reducing cart abandonment benefits merchants

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Klarna expanding broadly in US

Klarna and Abercrombie & Fitch Co. Announce Expanded PartnershipYahoo Finance, July 1, 2019

H&M Is Now Letting Customers Pay for Clothes a Month LaterInStyle, July 8, 2019

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Amazon Go has completely removed payments from the shopping experience

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Payment decisions will increasingly be pre-determined

Marketing touchpoints to consumers will decrease and

shift upstream

Partnerships with merchants may become the most effective

channel

Potential partnerships with tech companies?Device manufacturers?

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What’s Next

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Recap and What’s Next

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Strong business and revenue model

Undeserved use cases

Frictionless experiences

But what makes a fintech truly resilient?

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Contributors

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Christopher Palmer Account Manager Ipsos Innovation, US

Kevin HungClient PartnerIpsos, US

Sanjay PonnaiyaSenior Vice PresidentIpsos Innovation, US

QUESTIONS