Cloud Industry Points of View Institute for Business

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Cloud Industry Points of View Institute for Business Value 1 © 2016 IBM Corporation

To access the cloud banking POV, please go to… ibm. biz/Bd. EHz. D To

IBV Cloud Industry Banking POV Today Your presenters: Anthony Marshall Research Director IBM Institute for Business Value anthony 2@us. ibm. com Surendra Ramaiah Nicholas Drury Leader of IBV Cloud POV Program Global Banking and FM Leader surendra@sa. ibm. com IBM Institute for Business Value Nickd@sg. ibm. com ibm. biz/ibvonw 3 3 © 2016 IBM Corporation 3/19/2018

Agenda today IBV Cloud industry program Cloud banking industry POV Using cloud banking industry

Cloud industry POV decks § Deck format § Designed to use as – A standalone deck – A set of slide resources to include in other presentations, pitch presentations, proposals or deliverables – A resource document with resources and key contacts § Designed to be used by IBMers with clients, not to be sent externally as a deck (documents published externally go through additional reviews and approvals) § Only available internally on W 3, not available externally 5 © 2016 IBM Corporation 3/19/2018 Download materials: ibm. biz/Bd. HLa. T

Complete list of IBV Cloud industry POV materials, by industry Industry URL Banking Chemicals & Petroleum ibm. biz/Bd. Hnb. M Financial Markets ibm. biz/Bd. XBLw Industrial Products ibm. biz/Bd. Xk. Tz Insurance ibm. biz/Bd. XBL 6 Media & Entertainment ibm. biz/Bd. Xk. T 4 Retail ibm. biz/Bd. EHz. F Automotive ibm. biz/Bd. Xd. Dt Consumer Products ibm. biz/Bd. Xk. Tj Healthcare ibm. biz/Bd. EHz. X Consumer Electronics ibm. biz/Bd. EHz. H Life Sciences ibm. biz/Bd. Eg 5 H Telecommunications ibm. biz/Bd. EHz. E Government ibm. biz/Bd. EHz 4 Travel ibm. biz/Bd. Xk. T 2 Education ibm. biz/Bd. XJEU Transportation 6 ibm. biz/Bd. EHz. D ibm. biz/Bd. Fv 6 J Energy & Utilities ibm. biz/Bd. Xk. TR © 2016 IBM Corporation 3/19/2018 Download materials: ibm. biz/Bd. HLa. T

All materials are available in English and also some other languages Cloud industry POV decks Cloud industry POV Executive Summaries Join the IBV Connections Community for regular updates on new cloud materials and other research ibm. biz/Bd. HLHR To right corner – click Join Community 7 © 2016 IBM Corporation 3/19/2018 Download materials: ibm. biz/Bd. HLa. T

Cloud University will run through the year with presentations on each of the industries § This is the second in a series of sessions that will run through 2016 § Every two weeks approximately, we will cover a different industry § Led by the IBV industry leader § Will walk through the POV and discuss how it can be used with clients § Watch for invitations – forward to colleagues who might also be interested 8 © 2016 IBM Corporation 3/19/2018 Download materials: ibm. biz/Bd. HLa. T

To access the banking deck, please go to… ibm. biz/Bd. EHz. D 10 ©

Cloud Consumer Banking Point of View Institute for Business Value Presenter’s Name | Optional presenter’s title/credentials 11 © 2016 IBM Corporation 3/19/2018 Optional presentation location | Optional presentation date

Executive summary § Cloud computing offers potential to redefine customer relationships, transform banking operations and expand business potential and capabilities § Although slow to initially embrace cloud computing due to privacy and security concerns, banking industry has now adopted cloud starting with private clouds based on its requirements § Leading banks have leveraged cloud for – Business model / ecosystem innovation – Revenue model innovation – Operational innovation § A structured risk assessment and mitigation strategy will help address security and data privacy concerns as well as compliance issues that may arise due to cloud adoption. Regulatory authorities, recognizing cloud’s potential in banking transformation and enhancing operational efficiencies, are providing guidance to banks in many countries for cloud adoption § Banks should have a clear business-linked Cloud strategy that not only transforms its IT function but evaluates new business opportunities leveraging cloud’s potential § IBM, with significant experience in helping several banking clients to adopt cloud, is uniquely positioned to help you with innovative cloud based solutions 12 © 2016 IBM Corporation 3/19/2018

Cloud is transforming the business of banking

Market forces are characterized by headwinds that challenge growth Driving volatile earnings… Turbulent economic conditions Intense competition Non-traditional entrants Evolving consumer expectations $ Decreasing returns on equity Need to optimize use of capital Shrinking operating margins …and increasing operating costs Operating Expenses ($B) 1, 821. 8 1, 850 Increasing regulations and oversight Rebuild customer trust & marketplace confidence 1, 816. 5 1, 750 1, 665. 9 14 © 2016 IBM Corporation 3/19/2018 1, 710. 6 1, 660. 6 1, 550 2008 Source: Capital IQ (Top 250 banks), Banker Database, FDIC, Comments from Analyst Reports 1, 701. 0 2009 2010 2011 2012 2013

To overcome these challenges industry leaders must deliver on four key imperatives Create a customer focused enterprise Increase flexibility and streamline operations Drive innovation while managing cost Optimize enterprise risk management Optimize data and leverage analytics to adapt to new behaviors, cultivate trust, and drive profitable growth Improve operating leverage with variable cost structures that increase flexibility and reduce risk Deliver new services quickly that decrease cost per transaction and drive competitive differentiation Maximize return on equity, combat fraud and mitigate operational risk while achieving compliance objectives Cloud computing improves efficiency, expands innovation potential and drives revenue growth 15 © 2016 IBM Corporation 3/19/2018

Business is being transformed on three technology enabled dimensions Data Cloud The new natural resource Systems of Engagement Enables new business models Redefines customer relationships § Sophisticated analytics across disparate data sources will drive business outcomes § Cloud’s “game changing” attributes revolutionize industry value chains, forcing companies to embrace new business models § Mobile connectivity, access and participation are growing rapidly § Time value of data will enable “speed of insight” and “speed of action” as core differentiators § Cloud is enabling transformation of IT and business processes into digital services § Data is the new basis of competitive advantage 16 © 2016 IBM Corporation 3/19/2018 § Social media is quickly becoming the primary communication & collaboration format § Mobile and social enhance speed of responsiveness and personalization

There are numerous examples across the industry where cloud has enabled business and operating model innovation • Barclays 1 “Pingit” cloud based mobile payment platform and service launched in seven months • A private cloud helps Pingit deploy features 12 x faster • Pingit puts Barclays 2 years ahead of other UK bank cashless capabilities with 2. 5 M downloads and a rich set of features and functions for consumers, small business and corporate clients Source: See speaker notes 17 © 2016 IBM Corporation 3/19/2018 • Fidor 2 is a “cloud native” bank built on a cloud ecosystem of financial product providers • The bank built it’s own API centric core bank platform • Social media is used exclusively for acquisition, retention, cross sell, R&D • Fidor has a community of 300 k+ users and 65 k+ customers (Aug 2014) • IT cost per user is $15 US, average Cp. C is $32 US (Aug 2014) • Crédit Agricole 3 created a platform that allows 3 rd parties to co-create apps with CA customers. • Customers that want to use the apps are charged $1 a month to secure their data. • There are 20+ apps and the majority of fees go to the developers. • Customers are getting the latest technology and the bank is tapping into open innovation.

Cloud fosters capabilities that traditional computing can’t… Cloud characteristics and technologies Essential characteristics of cloud 1 § Broad network access § Rapid elasticity § On-demand self service § Measured service § Resource pooling Technologies enabling cloud § Virtualization § Provisioning and Orchestration § Service automation § Usage tracking § Web 2. 0 / SOA Source: [1] National Institute for Standards and Technology, US 18 © 2016 IBM Corporation 3/19/2018 Expands business capabilities Cost flexibility Business Scalability Market adaptability Masked complexity Context-driven variability Ecosystem connectivity Enabling Industry / Business model innovation – create new industry ecosystem or disintermediate an existing value chain Revenue model innovation – create new products and services or utilize new channels or payment models Operational innovation – maintain competitive parity and place in existing value chain

Cloud adoption by banks delivers efficiencies, growth and competitive advantage Business model innovation Revenue model innovation § Third-party services can be extended into bank ecosystem § Open collaboration and sharing can be expanded § Innovation can be introduced across systemically Operational innovation § Customer relationships can be more readily monetized § Simple and faster processes drive internal efficiency § Time to market can be enhanced § Reduced complexity enables more data to manage risk § Value-added services from partners can be more easily introduced § IT capacity can be readily aligned to business volumes Cloud enables individual bank integrated, compelling customer experiences……. in so doing, first mover banks are more likely to lock-in customers impeding foothold for new entrants 19 © 2016 IBM Corporation 3/19/2018

Cost reduction, improving data access and demand generation are top business drivers for cloud adoption by banks Primary business drivers behind cloud adoption Source: Economist Intelligence Unit Cloud survey commissioned by IBM, unpublished industry data, 2015, Question: 11 a. What have been the primary business drivers behind cloud adoption at your organization during the last two years? , n=127 20 © 2016 IBM Corporation 3/19/2018

IBM helps leading banks capture the benefits of cloud Business model innovation 180 Countries connected enabling trade Eurobank 1, a large Greek bank created a Cloud-based multi-lateral trade offering between Greek businesses & their international trading counterparts across 180 countries. Source: See speaker notes 21 © 2016 IBM Corporation 3/19/2018 Revenue model innovation 34 % US$30 k and more volume per month Signature Mortgage Corporation 2 implemented a cloud-based integrated collaboration mortgage solution, so customers can apply and complete loans electronically. Operational innovation 35 reduction % Costfaster time and to market A large bank implemented a cloud environment that delivers personalized product offers across multiple channels to customers in real-time.

Banks have also realized financial benefits through cloud adoption Cloud has enabled banks to tackle specific Financial gains by cloud implementation business problems and improve financial performance § By drastically reducing operational expenditure and by operational expense avoidance, cloud has helped banks to meet their business objectives § Cloud also supported banks to deliver both revenue and profit growth § Reduced capital requirements for banks by eliminating capital expense Source: Economist Intelligence Unit Cloud survey commissioned by IBM, unpublished industry data, 2015, Question: 13. Which of the following financial benefits has your organization realized because of cloud technologies during the last two years? , n=132 22 © 2016 IBM Corporation 3/19/2018

Cloud accelerates time to market, enhancing customer experience Using a combination of cloud delivered services, can create “as a service” components to analyze data from social media Saa. S: Enterprisegrade business apps to accelerate innovation Iaa. S: Self-service configurable IT infrastructure resources 1. Define development environment The bank partnered with IBM to quickly develop, test and deploy applications using IBM Pure. Application System, Mobile. First, Bluemix and API catalog 2. Add database service Bank was able to § Reduce development provisioning from days to less than 30 minutes § Shorten development cycles from 6 weeks to 2 § Deliver innovative customer service tools 3. Extract & feed social media data into database 4. Add social analytics service 5. Add Monitoring service instance 6. Provision resources and secure the service © 2016 IBM Corporation We give our customers what they need and are challenging the status quo And we’re challenging the banking industry through our innovation and technology Peter Aceto, Chief Executive, Tangerine Bank Source: See speaker notes 23 Iterate Paa. S: Rapid app development through composable services and APIs IBM is helping Tangerine Bank, the leading digital bank in Canada operate a device agnostic Mobile Bank, allowing freedom of choice for their customers 3/19/2018

As banks evolve with cloud adoption, business users will be able to design and prototype applications quickly § § § Organizations are benefiting from new user-driven, mobile and cloud-centric IT Cloud is transforming Enterprise IT functions, roles and responsibilities Business Managers are increasingly using cloud for application development to enhance agility § IT departments need to • be “Managers” of Corporate information assets spread across different suppliers and multi-tenant ecosystem • facilitate and broker the sources of IT resources that enhance business value without loss of control § § § Cloud enables collaboration with business users, developers, architects, and designers Vendors / CSPs provide no-code or low-code alternatives to compose / build apps Cloud speeds up prototyping and testing the application with internal business users or a select set of customers Business Manager Finalize requirements Design Develop / compose application Test application Cloud service provider (CSP) Source: See speaker notes 24 © 2016 IBM Corporation 3/19/2018 Deploy application

Charting the path for cloud adoption

Enterprise Cloud Adoption Structured process helps banks to determine how to adopt cloud Selection – Prioritization – Quantification – Migration Cloud First New project Replace existing app / infra Business case Migrate existing workloads Select Workload analysis 26 Evaluate a blend of cloud options that best suit the project requirements © 2016 IBM Corporation 3/19/2018 Prioritize Quantify Migrate Migration Plan Wave 1 Wave 2 Wave 3

Banks can start cloud adoption with quick wins Selection – Prioritization – Quantification – Migration Total addressable market (TAM) for cloud computing software Application category TAM $ bn Collaboration $30. 7 Email & Office Productivity $20. 7 CRM $16. 4 Security $9. 9 HCM $7. 1 Travel & Expense Management $2. 7 IT Service Management $3. 0 Analytics $2. 9 Finance & Accounting $1. 4 § Deployment ease is higher § Security and data privacy issues are lower § A variety of Software as a Service (Saa. S) offerings are available in the market $8. 2 Supply chain management Banks can look at these application categories for cloud adoption where Digital Marketing $21. 0 Total Addressable Market (TAM) Source: Bof. A Merrill Lynch Global Research 2013 27 © 2016 IBM Corporation 3/19/2018 $124. 0 Banks can start realizing business benefits through these quick wins while planning for industry applications that may require significant efforts for cloud migration

Selection – Banks leverage born-on-cloud solutions to quickly realize business benefits and gain momentum in cloud adoption Customer relationship management Enterprise risk management (ERM) Sourcing and Contract Management RCI Banque Spain 1 works with IBM to implement Oracle CRM software as a Software-as-a. Service solution. Today, the company can identify customers whose loans and similar financial contracts are coming to an end, and make timely, personalized offers, greatly reducing the threat of competitors stealing their clients and increasing renewals and new business. Wind Info 2 will incorporate IBM's cloud-based risk management software, IBM Algo Risk Service on Cloud, and the locally installed IBM Algo One Risk Aggregator directly into its Trading Terminals. This hybrid solution will conduct sophisticated risk data processing in the cloud while keeping all client position data protected and confidential within the boundaries of China, an important requirement of Chinese law. A Swiss investment banking client 3 implemented IBM’s Cloud-enabled Emptoris Saa. S solution to streamline and automate their sourcing, contracting, risk & compliance processes. The client is expecting a savings of $159 M as a result of adopting Saa. S solution Source: See speaker notes 28 © 2016 IBM Corporation 3/19/2018

Selection – A bank has a set of services, functions and processes across six domains to run and manage a bank Strategy & Insight Front office and Channel Management Strategy & Governance Distribution Planning Relationship Oversight & Management Business Strategy & Resource Planning Sales & Servicing Channel Operations Strategic Change Governance Marketing Customer Insight Customer Analysis & Models Brand & Segment Management Proposition Development Product Catalogue Channel Planning & Development Common Application Processing Statements & Correspondence Product Operations Planning & Development Reconciliation Collections & recovery Cash Inventory Transaction Execution Merchant Operations Underlying Asset Procurement & Management Payments Transaction Authorization Treasury back office Trade Finance specific Processing Billing Fraud / AML Detection Cash Managmnt Clearing & Settlement Product Accounting Complaint & Exception Handling Contact / Event History Customer Maint Ops Mgmnt Custody & Other specific processing Systems Development & Operations 3/19/2018 Helpdesk Services Human Resource Management Risk Portfolio Management Lending Policy & Planning Finance Financial Control & Consolidation Performance Management & Reporting Finance Policies Fixed Asset Register Accounting / GL Treasury Compliance Support Services Source: IBM’s Component Business Model for Banking © 2016 IBM Corporation Specific Card Processing Document Management Customer Fulfilment Transactions Cheque Processing Market Info Risk & Financial Management Asset / Liability Policy & Planning Processing / Back office Customer Profile 29 Customer Probity Check Trading Product Factory Campaign Execution Campaign Management Market Insight Segment Analysis Transaction Capture Services Corresponde nt Banking Brand & Product Management Public Relations Market Research Deal Structuring (Securitization / Syndication) Servicing Routing & Tracking Business & IT Architecture Acquisition & Alliance Planning Sales Customer Information Management Distribution Performance Management Distribution Support Audit/QA/Legal Facilities Operation & Maintenance Procurement Business Policies & Procedures

Selection – Of the dozens of business services essential to financial organizations today… Campaign Management = Cloudable / yes, 100%, cost savings 30% to 80% …IBM can help you identify those that can be delivered and consumed most efficiently, effectively and securely over the cloud. 30 © 2016 IBM Corporation 3/19/2018

Selection – Cloud workload analysis helps banks determine cloudable functions and processes High-level representative view of banking functions and processes Strategy & Insight Front office and Channel Management Bank provides the following inputs § Servers and Operating systems § Location distribution § Overall storage § Non functional requirements (NFR) § Application and workload data § Current costs Input/output, disk and utilization mapping 31 © 2016 IBM Corporation NFRs examination 3/19/2018 Brand & Product Management Processing / Back office Risk & Financial Management Support Services Cloud service provider can provide the following inputs § Target cloud configuration § Target cloud NFR Cloud workload analysis § Historical data § Target cloud cost Operating system and software compatibility Migration difficulty

Prioritization – Some banking functions and activities are more conducive to cloud than others CATEGORY 1 – READY FOR CLOUD CATEGORY 2 – NOT READY FOR CLOUD Characteristics Standardized applications Apps that require on-premise data (that cannot be migrated to cloud) Self-contained workloads High degree of customization Applications developed using Service oriented architecture Legacy systems A third category relates to workloads that require individual analysis and may be ready for cloud Example workloads are § Isolated workloads Complex application integration § Preproduction systems Apps that need high performance § Batch processing Example workloads Analytics Sensitive data Collaboration Highly customized Infrastructure compute & storage Not yet virtualized third-party software Workplace desktop and devices Complex processes and transactions Business processes Regulation sensitive Disaster recovery Legacy industry applications Development and test Source: IBM cloud implementation projects and analysis 32 © 2016 IBM Corporation 3/19/2018

Prioritization – A cloud readiness assessment shows 35% of existing workloads can be moved to cloud More ready for cloud Front office and Channel Management Strategy & Insight Management Strategy & Governance Sales & Servicing Distribution Planning Relationship Oversight & Management Business Strategy & Resource Planning Strategic Change Governance Customer Insight Customer Analysis & Models Deal Structuring (Securitization / Syndication) Corresponde nt Banking Trading Customer Probity Check Proposition Development Product Catalogue Channel Planning & Development Product Operations Planning & Development Processing / Back office Common Application Processing Statements & Correspondence Document Management Customer Fulfilment Product Accounting Collections & recovery Underlying Asset Procurement & Management Complaint & Exception Handling Contact / Event History Customer Maint Ops Mgmnt Specific Cheque Processing Reconciliation Card Processing Cash Inventory Transaction Execution Merchant Operations Payments Transaction Authorization Treasury back office Trade Finance specific Processing Billing Fraud / AML Detection Cash Managmnt Clearing & Settlement Custody & Other specific processing Systems Development & Operations 3/19/2018 Helpdesk Services Human Resource Management Risk & Financial Management Risk Portfolio Management Lending Policy & Planning Finance Financial Control & Consolidation Performance Management & Reporting Finance Policies Fixed Asset Register Accounting / GL Treasury Compliance Support Services NOTE: The above is a representative example only © 2016 IBM Corporation Transactions Market Info Not ready for cloud Asset / Liability Policy & Planning Product Factory Campaign Execution Campaign Management Brand & Segment Management Customer Profile 33 Transaction Capture Services Marketing Market Insight Segment Analysis Servicing Brand & Product Management Public Relations Market Research Sales Routing & Tracking Distribution Performance Management Channel Operations Distribution Support Customer Information Management Business & IT Architecture Acquisition & Alliance Planning May be ready for cloud Audit/QA/Legal Facilities Operation & Maintenance Procurement Business Policies & Procedures

Quantification – A 35% partial workload migration to cloud helps bank improve its profits and reduce costs Revenue PBIT Op. Costs (excl IT costs) **IT Costs Illustrative Current Costs for cloudable workloads Projected Savings Projected IT Costs Projected Op. Costs (excl IT Costs) Projected PBIT Improvements in banking operations § § § Enhanced customer centric operations Increased collaboration, capability & reach Focused selling ** IT Costs is estimated at 6. 6% of revenue using Gartner’s IT Key Metrics data Note: The above is a representative example only 34 © 2016 IBM Corporation 3/19/2018 § § § Increased efficiency with rapid turnaround time Shorter time to market Enhanced service orientation

Migration – Cloud migration from architecture through implementation 1 Create Cloud strategy, architecture and plans Determine the organization goals, platform requirements & complexity associated Develop enterprise cloud strategy, options available and roadmap Envision the cloud architecture that will support cloud initiatives Update IT Strategy and IT plans to align them with cloud strategy 2 Identify and prioritize workloads 3 Determine cloud deployment options 4 Develop Cloud business case Define business drivers to prioritize use cases for cloud Define multi-sourcing models and cloud vendor selection criteria Develop cloud cost models including transition Implement a Cloud. First strategy to evaluate right blend of cloud options for new projects Assess and determine how to best leverage the options of private, public and hybrid delivery models Finalize a cloud business case and examine its ROI including time required for initial payback Assess and evaluate from the current applications, the best candidates for cloud Develop Cloud Service Catalog, SLAs and KPIs Determine the applications to be moved to cloud 5 Prepare for implementation Prepare infrastructure for cloud Develop § Cloud Risk Management plan and policies § Security and Compliance plan and processes § Transition plan including workforce transition Assess impact on operating model; identify and plan changes required Cloud planning should result in accelerated migration, quick wins and mitigated risks Note: The above shows an overall plan and will include aspects of workload prioritization and migration discussed in other slides 35 © 2016 IBM Corporation 3/19/2018

A defined approach and accelerators speed up cloud adoption Strategy 1 2 3 4 Actions for migration Create Cloud strategy, architecture and plans Identify and prioritize workloads 5 Accelerators § Develop a vision for cloud, align business – IT objectives & goals § Identify changes in Enterprise Architecture and IT plans § Use assessment & decision framework as a tool for prioritization § Identify bank’s functions, processes and applications that can be moved to cloud Determine cloud deployment options § Assess workloads, data, impact on security and compliance § Rapidly assess and determine optimal option from private, public and hybrid models Develop Cloud business case § Determine models for business case § Identify business functions / processes impacted by cloud, business benefits, overall costs, and risks Prepare for implementation 36 © 2016 IBM Corporation 3/19/2018 § § Acquire / prepare cloud infrastructure Develop Cloud Risk Management plan Develop transition plan including workforce transition Assess impact of cloud on current operating model

Cloud strategy comprises four elements Strategy 1 2 3 4 5 APPLICATION AND DELIVERY PLATFORMS BUSINESS MODELS ENABLED BY CLOUD Driving agility and productivity for the enterprise; tested strategies to improve life cycle performance Promoting highly competitive initiatives at the enterprise and Industry level INFRASTRUCTURE PLATFORMS DATA PLATFORMS Delivering consumable, secure and readily available resources to enable agile execution 37 © 2016 IBM Corporation 3/19/2018 Instantiating well-integrated business intelligence to manage the enterprise

Well defined cloud strategy enable banks to adapt to transforming industry landscape Strategy 1 2 3 4 5 § Cloud technology has brought major transition in banking industry § Banks are preparing to adapt to industry changes brought on by the cloud § Most of the banks have included cloud adoption as a major part of overall long-term strategic planning § The cloud strategy aims at aligning cloud deployment to business strategy to improve internal business efficiency, increase customer demand reduce operational costs Cloud is a priority for banks and increasing number of banks are starting with an enterprise-wide cloud strategy 66% of organizations have well-defined cloud strategy Source: Economist Intelligence Unit Cloud survey commissioned by IBM, unpublished industry data, 2015, Question: 10. Which of the following best describes your organization's approach to the cloud? , n=132 38 © 2016 IBM Corporation 3/19/2018

Enterprise innovation is realized by integrating new technologies with existing core systems Strategy 1 2 3 4 5 Systems of insight Advanced analytics and cognitive computing systems that harness big data enabling competitive advantage for banks Systems of engagement Leverage mobile and social to transform relationships with customers, employees & citizens Systems of Insight oitavonn. I n Enterprise Innovation Systems of Record Systems of Systems Engagement of Engagement Systems of record The traditional core systems such as accounting applications and product systems that record key internal data Pervasive Security Intelligence A dynamic approach to threat reduction through a life cycle of prevention, detection and response. Enabled by Cloud Pervasive Security Intelligence 39 © 2016 IBM Corporation 3/19/2018 Cloud enables leaders to take a systematic approach to integrate these capabilities to drive enterprise innovation

A phased migration to cloud helps manage risks Prioritization 1 2 3 4 5 Potential migration risks § Incorrect analysis and identification of workloads Phased migration approach Discovery Phase Analysis Phase § Inability to meet non-functional requirements Discover Analyze § Incorrect ROI analysis § current assets and usage § cloud feature / fit § topologies & dependencies § cloud providers § Inadequate preparation of infrastructure / apps for cloud § Complex applications’ interoperability & integration § Failure to comply with security, privacy & regulatory requirements § Management complexity as resources get distributed in a virtualized environment 40 © 2016 IBM Corporation 3/19/2018 § platforms and licenses § SLA’s, security & compliance Migration & Validation Phase Establish the Migration Toolkit Cloud-enable infrastructure & applications § contract models Migrate § resource sizing § Applications, Platforms and Data § workloads § Infrastructure § Operations Services Validate Migration

Banks can adopt type of cloud that best meets their requirements Deployment options 1 2 3 4 5 Private cloud Hybrid cloud Software, hardware and platforms are hosted in a data center owned by a bank used by different departments / units inside of the bank Software, hardware and platforms are hosted both in third party data centers, as well AND inside of a bank organization Software, hardware and platforms can be hosted in third party data centers OR inside an organization Software, hardware and platforms are hosted externally by a third party vendor who manages all aspects of the services for the organization Value drivers … . … Customization, efficiency, availability, resiliency, security and privacy …… Flexibility and benefits of private and public cloud while addressing data security, governance, compliance and budgetary challenges . … Common resources, security, privacy governance, compliance & budgetary challenges . …Standardization, capital preservation, flexibility and time to deploy 41 © 2016 IBM Corporation 3/19/2018 Community cloud Public cloud

Most banks use private and community cloud deployment models Deployment options 1 2 3 4 5 Private cloud infrastructure model for banks 1 cloud Hybrid Current cloud Source: Economist Intelligence Unit Cloud survey commissioned by IBM, unpublished industry data, 2015, [1] Question: 21 a. What best describes your cloud infrastructure model now? , n=101 [2] Question: 21 b. What is your preferred private-cloud infrastructure model now? , n=91 42 © 2016 IBM Corporation 3/19/2018 Public cloud Preferred private-cloud infrastructure model 2

Private cloud can help bank reduce its technology spend and Capex Business Case 1 2 3 4 5 Cost in USD mn A. Impact on spend Cost comparison chart (including 10% Yo. Y increase in OSI images) 20 100% 15 75% 10 5 - 47% 49% 48% 47% 13% Year 1 Year 2 Year 3 Year 4 Year 5 50% Traditional computing 25% Private cloud costs 0% % reduction ~50% savings from year 2 can be used for strategic initiatives Capex / Opex% B. Impact on Opex profile OSI Opex profile Source: The above is based on actual business case developed for an IBM banking client and is used here as a representative example. Actual results for other banks will vary 43 © 2016 IBM Corporation 3/19/2018 100% 75% 80% 80% 50% 25% 0% 75% 50% 0% 30% Current Year 1 Year 2 Year 3 Year 4 Year 5 status Based on agreed workload transition plan 25% 0% Capex Opex improvement

Security, privacy and compliance concerns can be addressed with cloud Implementation 2 3 4 5 As banks start planning to adopt cloud, key questions come up about their data & apps: § Where is our data stored? What about data sovereignty? § How do we protect our customers’ privacy? § How does cloud affect our regulatory compliance? § Is a business continuity plan available for cloud? Critical elements to address security, privacy and compliance concerns IT Strategy BANKS 1 Risks of cloud adoption Risk Management Plan Cloud requirements CLOUD SERVICE PROVIDER Monitoring & Auditing Cloud SLA Risk & Security Management processes Physical & Logical controls implementation Audits & reports Source: Economist Intelligence Unit Cloud survey commissioned by IBM, unpublished industry data, 2015, ‘Question: 24. a Which of the following cloud risks are of greatest concern to your organization? , n=132 44 © 2016 IBM Corporation 3/19/2018

Cloud is driving a new operating model aligned to business strategy Implementation 1 2 3 4 5 § An operating model is a framework formulating an operations strategy that best deploys and determine the explicit choices needed to achieve business goals § Market shifts in the digital economy necessitate banks to adopt new technologies like cloud, mobile, social media and analytics § To succeed with cloud, banks have to assess the impact of cloud on the operating model and all its dimensions and determine what actions are required to make cloud adoption smoother and more successful BUSINESS GOALS AND STRATEGY Target Operating Model Customer Experience Sourcing & Alliances Assets & Locations CULTURE Technology TOM Skills & Capabilities Processes Organization & Governance Performance Metrics ROADMAP FOR CHANGE 45 © 2016 IBM Corporation 3/19/2018

IBM and cloud

Remove this slide before sharing with clients Clients conversations on cloud tend to be of two types Clients who may not have thought about cloud in depth, who may need education Very sophisticated IT buyers who will be most interested in benefits and prioritization 1 2 Banks with low IT Maturity / sophistication may need help to fully recognize the power of cloud computing Areas of this deck to focus on are: § Section 1 – this section highlights why cloud is critical for banks, cloud’s potential to transform banks, drive innovation and efficiency improvement § Section 2 – this section highlights how banks can go about implementing cloud computing. While the section briefly talks about cloud first strategy, it details out workload assessment, prioritization, business case and migration § Section 3 – this section presents a high-level view of IBM’s cloud portfolio 47 © 2016 IBM Corporation 3/19/2018 Banks with high sophistication and maturity in their IT environment will inevitably be most interested in quantifying benefits of cloud migration, cloud activity selection, and prioritization Areas of this deck to focus on are: § Leverage CBM maps for discussing current workload assessment, prioritization and migration § At the same time, use examples given to highlight migrating horizontal applications (HRM, CRM, Risk Management etc) using born-on-cloud solutions § Use section 3 to present IBM’s cloud solutions

Banks are looking for “solutions as a service” – solutions that go way beyond the “software as a service” model § The IBM Payments-as-a-Service solution is a cloud based Fundtech’s Global PAYplus–Services Platform is a shared alternative to the expensive option of banks running and service framework that includes payments, cash and liquidity maintaining a complex payments engine in house management, financial messaging, the financial supply chain § IBM® and Fundtech have partnered to provide such a solution, called Global PAYplus Services Platform™ Back End Applications § It represents a collection of rules-driven payment services designed to allow the orchestration of end-to-end payment processing, data management, and integration across all channels through back-office systems and clearing and settlement systems, using industry standard interfaces. Customer Information Systems 48 © 2016 IBM Corporation 3/19/2018 Other • Data Warehouse • Investigations ESB – Routing & Transportation MQ Capture § Pay-per-use, with guaranteed minimum volumes § It runs on IBM Power® Systems supported by AIX®, Oracle Java, and Microsoft SQL Server. Accounting System MQ Web Service AML § Built on the industry-leading ISV application from Fundtech, hosted on Soft. Layer with GBS services wrapped around it § IBMs FTM product is the orchestration and integration layer, and therefore works with the Fundtech product in this solution. Customer Balance Checking System FX Engine Pre-processing Files & Payments Bank Operators across different countries Direct Access To GPP Payment Processing Engine AT DE Analysis — Validation, matching GPP IT Payments Between multiple countries Decisions — Which clearing to use Fees, FX, balance checks Completion — Accounting, advices

Soft. Layer has designed and deployed a global, interconnected platform to meet key operational and economic requirements Flexibility, Performance and Automation – Globalization, Transparency and Control. SOFTLAYER CLOUD ARCHITECTURE On demand compute with consumptive billing § Common user interface and APIs across a unified platform. Customers can mix and match dedicated, public and private clouds, and manage them from a single control panel § Private network provides seamless integration across architectures with low latency § Scalable computing with fast provisioning BARE METAL SERVERS PRIVATE (VIRTUALIZED SINGLETENANT) CLOUD PUBLIC (VIRTUALIZED MULTITENANT) CLOUD § Better I/O performance (e. g. , no “hypervisor tax”) and network § Select virtualization of choice § Customized configuration allowed § Provisioned in minutes § Open API standards § Higher degree of customization possible for hardware, network, security § Direct VPN to private network created instantly § Based upon enterprise Citrix Xenserver § Lower cost for workloads with high server utilization § Better security possible than multi-tenant cloud § Lower cost for burst workloads 21, 000+ customers in 140 countries 49 © 2016 IBM Corporation 3/19/2018 22, 000 domains § Customer can select DC / POD 100, 000+ devices 49

Bluemix design thinking: dynamic composition to accelerate consumer banking omni-channel transformation App development today is about speed and choice Microservices Io. T Mobile Design Thinking Extreme Agile APIs Cloud and Bluemix provides developers with instant access to the APIs, services and infrastructure they need to launch their ideas into the present Containers 50 © 2016 IBM Corporation 3/19/2018

IBM is serving the cloud computing imperatives in banking Strategize how to use cloud to drive savings and revenue growth. Build and run your private or hybrid cloud. Utilize cloud services delivered from IBM Cloud Strategy and Design Business Process as a Service Cloud Implementation Cloud Platform Technologies Software as a Service Cloud Migration Services Cloud Infrastructure Technologies Platform as a Service Cloud Security Services 51 Expert Integrated Systems Hybrid Cloud Technologies Infrastructure as a Service © 2016 IBM Corporation 3/19/2018

IBM is helping our clients achieve compelling business outcomes, no matter where the entry point is BUSINESS PROCESS SOFTWARE PLATFORM INFRASTRUCTURE as a Service Automating Business Innovation Marketplace of High Value Consumable Business Applications Rapid App Development through Composable and Integrated Platform built using open standards Enterprise Class, Optimized Infrastructure built using open standards Business Process: Mobile Compute Recruiting Commerce Security Networking Accounting Supply Chain Big Data & Analytics Storage Procurement Talent Management Development & Dev. Ops Payment Processing Analytics Integration Help Desk Collaboration Integration/ API Mgmt. IT Management 52 Marketing Traditional Workloads © 2016 IBM Corporation 3/19/2018

IBM cloud marketplace provides easy access to our as-a-service portfolio IBM CLOUD MARKETPLACE Your gateway to cloud innovation Explore hundreds of IBM and Business Partner services from across the cloud spectrum. Sign up to offer your cloud services in the marketplace today. Enterprise-grade business apps to accelerate innovation (Saa. S) Powerful services and APIs via an integrated cloud platform (Paa. S) Self-service IT infrastructure configurable to your needs (Iaa. S) Biz Dev Ops § Over 200 IBM and Third-Party Software and Services § Leverage world-class IBM partner ecosystem § Curated solution pages with IBM expertise § Easy access to build, consume, deploy and purchase services ibm. com/cloud/marketplace 53 © 2016 IBM Corporation 3/19/2018

IBM can support you locally and globally … Banking Regional Contacts [FACE PIC] 54 Jon O’Donnell jon. odonnell@uk. ibm. com Vice President, Europe GBS Banking & Financial Markets Leader [FACE PIC] Yoshiki Minowa YMINOWA@jp. ibm. com Vice President, Japan Financial Solutions and Consulting Services [FACE PIC] Luis Loleo loleo@ar. ibm. com Vice President & Managing Partner FSS LA Sector Leader [FACE PIC] © 2016 IBM Corporation 3/19/2018 Greg Sarafin greg. sarafin@us. ibm. com US GBS Banking and Financial Markets Industry Leader Steve Bingham steve. bingham@au 1. ibm. com Managing Partner & Global FSS Leader Asia Pacific Likhit Wagle Likhit. Wagle@uk. ibm. com Partner and Vice President - Global Industry Leader: Banking & Financial Markets

IBM can support you locally and globally … Banking Regional Contacts [FACE PIC] Robert (Bob) Hoey rjhoey@us. ibm. com Vice President, Financial Services Sector, North America R P (Raoul) Engelshoven Van raoul_engelshoven-van@nl. ibm. com Vice President, Banking and Financial Markets, Europe Banking Global Contacts [FACE PIC] David K Zimmerman davidzim@us. ibm. com Global Solutions Executive and Worldwide Cloud Leader, IBM Global Banking & Financial Markets [FACE PIC] 55 © 2016 IBM Corporation 3/19/2018 [FACE PIC] Anthony J Lipp anthony. lipp@us. ibm. com Global Strategy Leader Banking & Financial Markets Boxley C Llewellyn llew@us. ibm. com Global Retail Banking Director

IBM can support you locally and globally … IBM Cloud Co. C Advisory Leaders Mike Fitzgerald – Partner Global CIO and Cloud Advisory mikefitz@us. ibm. com 240. 447. 4594 John Ludden – Managing Consultant Cloud Advisory jdludden@us. ibm. com 510. 798. 7072 56 © 2016 IBM Corporation 3/19/2018 IBM Cloud Co. C Advisory Leaders Nathan Herber – Associate Partner Cloud Advisory nlherber@us. ibm. com 916. 616. 5350 IBM Cloud Category Leaders James Gianotti – Cloud Industry Leader Cloud Category Gianotti@us. ibm. com 508. 446. 4177

IBM can support you locally and globally … IBM Institute for Business Value Contacts Nicholas Mark Drury Global Banking Leader - IBM Institute for Business Value Nickd@sg. ibm. com 65 -9840 -6874 Anthony Marshall Strategy Leader IBM Institute for Business Value anthony 2@us. ibm. com 1 -720 -395 -0506 Surendra Ramaiah Senior Managing Consultant – Strategy & Analytics surendra@sa. ibm. com 966 -533 -189 -520 57 © 2016 IBM Corporation 3/19/2018

APPENDIX § Target Operating Model § IBM Cloud implementation examples § Additional slides

Target Operating Model

Cloud is helping banks evolve a new operating model tightly aligned to business strategy Implementation 1 2 3 4 5 § An operating model is a framework formulating an operations strategy that best deploys and determine the explicit choices needed to achieve business goals § Market shifts in the digital economy necessitate banks to adopt new technologies like cloud, mobile, social media and analytics § To succeed with cloud, banks have to assess the impact of cloud on the operating model and all its dimensions and determine what actions are required to make cloud adoption smoother and more successful BUSINESS GOALS AND STRATEGY Target Operating Model Customer Experience Sourcing & Alliances Assets & Locations CULTURE Technology TOM Skills & Capabilities Processes Organization & Governance Performance Metrics ROADMAP FOR CHANGE 61 © 2016 IBM Corporation 3/19/2018

Customer experience with banking will drastically change CUSTOMER JOURNEY 1 2 3 Robert, an young Manager in an IT company, is traveling overseas for a project. He completes a video conference on mobile Skype with his bank’s Relationship Manager (RM) to finalize purchase of property and mortgage. He submits the loan application to the bank on his mobile. Bank processes the loan quickly. It also contacts one of its partners for home insurance. All documents are sent electronically, the insurer completes it without Robert visiting their office. Robert is happy that his bank handled all formalities and was able to complete the property purchase before his travel. He checks his account and confirms that his RM has setup electronic debit for his loan deductions in the first week of every month. 4 5 6 The first weekend in his travel, Robert logs into his bank account using his glasses. He checks the balance on his glasses and issues voice instruction to transfer money to his father’s account. He calls his father to inform him who confirms he has received it. Robert steps out for checking out the new city. As he enters a shopping mall, his banking app picks up two offers from electronics shops (based on his previous searches for i. Pad Pro). His bank offers him a loan option based on his profile. Robert visits the electronics shop and tries out the new i. Pad Pro. His bank also offers him enhanced benefits on his loyalty program due to local festivities. He opts for a personal loan and transfers it to his mobile wallet through which he pays for the new i. Pad Pro. 62 © 2016 IBM Corporation 3/19/2018

New partnerships and alliances can speed and harden cloud adoption SOURCING & ALLIANCES IMPACT IMPLICATIONS § Organizations will have more partners and alliances through “Services” being offered by outside organizations § Procurement and sourcing functions will need to be automated and have shortened cycles § Complexity will increase in service contracts due to consumption-based billing § Vendor and service management will be an integral part of the Procurement function § Service quality and availability need more focus as they are managed through relationships and agreements with diverse third party ecosystem § Service level agreements to be defined clearly and governed by the need to secure and protect customer data in a shared environment § Service adoption to meet benefits realization needs to be included in the negotiating process 63 © 2016 IBM Corporation 3/19/2018

Business leaders redesign business architecture and processes to leverage cloud PROCESSES IMPACT IMPLICATIONS § The cloud strategy and technologies will require a shift from systems-based processes to services-based processes § Traditional legacy processes to be decommissioned or integrated into the new cloud-enabled processes § Cloud’s speed of service delivery impacts current processes as they need to match and deliver at the same speed § Banks will need control over the continued availability, reliability and utility of the cloud based processes and the platforms underpinning them § Process framework will migrate from functional silos to an integrated set of processes spanning organizational boundaries § Cloud’s service composition model provides freedom to engage/disengage functions as needed 64 © 2016 IBM Corporation 3/19/2018 § Dynamic processes for billing and allocation of resources are required to not be an impediment in achieving value § Processes to be made simpler and faster

Cloud will promote change in organization design and governance ORGANIZATION & GOVERNANCE IMPACT IMPLICATIONS § Major shift in how the new environment is managed and operated will have significant impact on the optimum organizational structure required in the future § Organizations will become more flexible, managing a fluid set of internal / external resources and service providers § Organizations and functions will no longer be constrained by the physical location of data centers, hosting providers and hardware platforms § As products and services become more ‘composable’, Governance across the ecosystem will become critical § Governance becomes more centrally defined with decentralized execution § Cloud service selection should follow the overall enterprise cloud governance standards § Strong risk management systems are critical to manage increasing risks arising out of broader cloud deployment § Current organization need to evolve • Organization Design, roles and responsibilities • Management systems 65 © 2016 IBM Corporation 3/19/2018

Organizations will overhaul performance management to optimize value from cloud PERFORMANCE METRICS IMPACT IMPLICATIONS § Cloud requires a dynamic financial model that measures consumption § Performance management strategy introduces new levels of complexity in management reporting § With the change in business model, new metrics that measure service availability, service quality, responsiveness, ability to change will gain more importance § Performance metrics are built into third party and service management contracts for all vendors delivering the cloud based service § Dynamic metrics tied back to SLAs will be critical for measuring success for cloud based services 66 © 2016 IBM Corporation 3/19/2018

Cloud will drive rapid change in enterprise skills and capabilities SKILLS & CAPABILITIES IMPACT IMPLICATIONS § Cloud brings customer centricity to focus which makes customer and service orientation skills critical within the bank § Deeper data analytics and customer insight capabilities will be the norm § Vendor management, contracting and relationship management skills will be critical to manage all the vendors and alliances § Training of staff on new skills required related to new and innovative services § Existing IT and other functional staff will likely need to be retrained or redeployed § Legal / operational support skills will be key to manage partnership agreements § Skills shift to managing vendor contracts and relationships of many vendors 67 © 2016 IBM Corporation 3/19/2018

Banks will benefit from cloud most when they accelerate adoption of other emerging technologies TECHNOLOGY IMPACT IMPLICATIONS § The technology function will be leaner with a more strategic focus rather than operational § IT Strategy, Architecture and IT Plans to be reviewed and updated to reflect changes in business strategy and cloud-enabled future bank § Cloud’s big impact on Technology will be to move on-premise technology deployment to cloud § As more services migrate to cloud, Service Management, IT Vendor management and IT Quality management will become key differentiators § IT teams need to be retrained and redeployed § Budget for the maintenance of legacy systems may reside, so they need to be budgeted and worked into the overall costs § An IT services catalog needs to be dynamic globally and be applicable for each market § A Dev. Ops approach will be required to get the cloud service delivered faster to achieve value 68 © 2016 IBM Corporation 3/19/2018

Cloud enables more efficient location strategies ASSETS & LOCATIONS IMPACT IMPLICATIONS § Migration to the cloud will require decommissioning and consolidation of technology assets § Decommissioned technology assets may still book value and impact the existing operating budget § Decommissioned assets and locations will be a factor in the future state financial model § One-time financial write-offs will need to be factored into the overall business case § Removal of physical / technology assets will reduce the quantity of needed remote offices and data centers § Excess data centers and remote locations will have to be repurposed or sold / leased to recoup cost § Role of branches need to be redefined and enhanced to provide a much better customer experience 69 © 2016 IBM Corporation 3/19/2018

Cloud-enabled organizations will rethink and recalibrate organization culture CULTURE IMPACT IMPLICATIONS § The shift to a cloud-based environment will also require changes in long-held organizational beliefs and cultural norms § Need to address perceived loss of control / potential resistance by existing IT and other functions whose processes will move to cloud § Banks as a whole need service-orientation, with a shift in mindset toward valuing the customer experience above all else § Need to educate employees on this shift: How will our culture change, and why? § What is the risk if we do not make this change? What would be the consequences of continuing as is? § § Open and collaborative reporting and management across organizational functions and units facilitates faster customer response § Requires reinforcement of expected behaviors through formal and informal mechanisms and interventions § Requires changes in § Leadership Behaviors § People practices § Regular communications on changes 70 © 2016 IBM Corporation 3/19/2018

IBM cloud implementation examples

A bank in Japan uses customer analytics to enable more personalized engagement and more effective campaigns This bank in Japan operates nearly 200 branches in Japan and other areas in Asia CHALLENGE When this bank saw deeper customer engagement as essential to its growth and profitability, it knew that having solid, data-driven insights on customer behavior and preferences was the foundation. The real key, it recognized, was to infuse these insights into customer touch points such as outbound campaigns and inbound calls. SOLUTION The bank is using cloud-based behavioral modeling to find service propensity patterns across its customer segments. And it’s incorporating those insights directly into its campaign management and inbound customer interactions to deliver a more personalized experience across all channels. Effectiveness – 20% increase in conversion rates for marketing campaigns expected Customer satisfaction – Improves satisfaction by providing customers with a more personalized and relevant experience Efficiency – Increases efficiency of marketing operations by significantly shortening the marketing campaign cycle Source: http: //w 3 -01. ibm. com/sales/ssi/cgi-bin/ssialias? infotype=CR&subtype=NA&htmlfid=0 CRDD-9 KJ 6 QW&appname=crmd 72 © 2016 IBM Corporation 3/19/2018

Bank significantly reduces deployment time and achieves optimized resource use by implementing virtualization and cloud computing One leading Chinese commercial bank is constantly seeking ways to set itself apart from its competitors and boost profitability CHALLENGE A leading Chinese commercial bank wanted to boost the flexibility and efficiency of its operations in order to better react to customer demands, and stay ahead of competitors. SOLUTION Partnered with IBM to launch a virtualization strategy, supported by servers with IBM® POWER 7® processors and IBM Power. VM® technology, as well as the IBM Smart. Cloud™ Entry solution. Flexibility – 99% increase in flexibility & workload deployment by implementing a virtualized computing environment Resource utilization – Optimized resource use, helping to cut costs and complexity. Source: http: //www-03. ibm. com/software/businesscasestudies/us/en/corp? synkey=Y 901642 O 93237 U 20 73 © 2016 IBM Corporation 3/19/2018

A leading Card Management System vendor now offers its system as Software as a Service based on an IBM PCI DSS Cloud Platform A global provider of card payment solutions and IT consultancy to 120 international and domestic banks, service providers and retailers to enable 7 mn transactions per hour, 1 mn merchants & over 60 mn cards CHALLENGE The client were looking for a resilient and PCI DSS compliant infrastructure in continental EU to start offering its card solution using a private cloud. SOLUTION The client deployed a private cloud architecture hosted at a pair of data centers and designed to feature numerous physical and logical security measures. IBM manages this environment around the clock. Availability – High availability (99. 999%) in a PCI Compliant multisite data center scenario in Europe with disaster recovery between data centers Enabling a CSP – Flexible pricing and architecture to let the client became a Cloud Service Provider Time-to-market – Fast time-to-market avoiding to buy assets & breaking barriers at customers. Source: https: //w 3 -03. sso. ibm. com/sales/support/Show. Doc. wss? docid=0 CRDD-8 ZMP 4 Q&appname=w 3 skm 74 © 2016 IBM Corporation 3/19/2018

A bank in the US protects retail and commercial customers from cybercrime with advanced cloud-based fraud prevention solution This bank in the United States provides a full line of retail and commercial banking products through 13 full-service branch offices in a large metropolitan area CHALLENGE This bank saw many security risks targeted at both commercial & retail customers. Despite having numerous fraud-prevention solutions, the bank sought to implement an extra level of security that would be easy to maintain while keeping costs under control. SOLUTION A cloud-based security solution facilitates clientless detection of malware attacks and infected devices. Using over 40 million endpoints worldwide, the software collects intelligence on active phishing and malware attacks, then applies behavioral algorithms to detect, block and remove security threats, including new variants. Speed – 72 infections detected and removed from customer devices in the first month of implementation Resolution –helps prevent potential losses by detecting and resolving malware infections Customer loyalty – Increases loyalty from customers through proactive efforts to resolve security issues Source: http: //w 3 -01. ibm. com/sales/ssi/cgi-bin/ssialias? infotype=CR&subtype=NA&htmlfid=0 CRDD-9 LDLLH&appname=crmd 75 © 2016 IBM Corporation 3/19/2018

Additional slides

IBM has helped banks in cloud-enabled business and operating model innovation § GE Capital 1, using IBM’s Blue. Mix, built a cloudbased Dev. Ops platform to accelerate software delivery and time to market § Built software and apps, including the award winning GE Capital Bank, from the scratch in weeks rather than years § Dev. Ops capability provides GE Capital Bank with the agility of a startup and the resources of a large enterprise Source: See speaker notes 77 © 2016 IBM Corporation 3/19/2018 § Sun Trust Bank 2 implemented IBM Web. Sphere Cast Iron cloud integration to connect back-end enterprise applications, the company’s shared services, and the cloud § Integration enhances the way relationship managers work with customers, even when they are not directly connected to bank’s back-end systems § Provides access to accurate information, reducing delivery times for customers § Commercial bank in Nigeria 3 captures market share of first-time bankers when it deployed a private cloud environment based on IBM Power Systems technology § New solution enables the bank to save an additional 30 percent of its mobile banking revenue, previously forfeited

IBM is helping leading banks capture the financial and strategic benefits of cloud Operating Efficiency Revenue Growth 40% reduction in total cost of ownership Improve the advice & experience delivered to customers¹ Single view of customer drives new revenue BUSINESS SERVICES A major bank in Brazil 1 COGNITIVE BANKING DBS Bank Singapore 2 ANALYTICS A leading Polish bank 1 The bank reduced total cost of ownership by 40% by creating an inter-site cloud to host previously existing physical servers. DBS is using Watson’s cloud based service to "redefine" how voluminous amount of data, structured and unstructured, can be analyzed to provide intelligence that was previously not "humanly" possible. Data can now be entered into the system once, giving the bank a 360 -degree view of customer data—which embedded analytics can use to help generate more sales. Source: See speaker notes 78 © 2016 IBM Corporation 3/19/2018

Cloud has helped early-adopters motivate new forms of innovation and collaboration § Cloud promotes standardization, supporting flexibility and agility Under Cloud Cover survey: How leaders are accelerating competitive differentiation § Cloud supports refocus on customer experiences, integrating disparate set of processes designed and engineered to provide customer value 69% § Cloud supports next generation marketing and omni-channel interactions that are of interest to customers where, when and how they want to be engaged 56% § Cloud is transferring various functions such as IT, from fixed cost centers to variable cost structures of the banks 51% of the banks Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiation. For more info, visit: ibm. com/ibmcai/globalcloudstudy 79 © 2016 IBM Corporation 3/19/2018 achieved rapid innovation of novel products and services reinvented their customer relationships in response to changing dynamics increased engagement and collaboration across organization and ecosystem (colleagues, partners, customers)

A 35% partial workload migration to cloud helps bank improve its profits and reduce costs Illustrative Revenue PBIT Op. Costs (excl IT Costs) **IT Current Projected Costs for Savings cloudable due to workloads 35% migration ** IT Costs is estimated at 6. 6% of revenue using Gartner’s IT Key Metrics data Note: The above is a representative example only 80 © 2016 IBM Corporation 3/19/2018 Improvements in banking operations § Enhanced customer centric operations § Increased collaboration, capability & reach § Focused selling § Increased efficiency with rapid turnaround time § Shorter time to market § Enhanced service orientation

Regulatory authorities have recognized cloud’s role in banks’ business transformation, operational efficiency and innovation……. they are in various stages of evaluation to provide necessary guidelines in cloud usage 1 De Nederlandsche Bank (DNB), the Netherlands’ national banking regulator, has approved use of cloud in the country’s financial sector subject to its guidelines 3 Monetary Authority of Singapore has approved use of cloud subject to completion and approval of Technology Checklist and rights to conduct its own audit Source: See speaker notes 81 © 2016 IBM Corporation 3/19/2018 2 Reserve Bank of India (RBI), the Indian banking regulatory authority, has § recommended an approach for cloud computing for Urban Cooperative Banks § IDRBT has established an Indian Banking Community Cloud § IDRBT has developed a Cloud Security Framework for banking industry IDRBT - Institute for Development and Research in Banking Technology (established by RBI)

Ways that materials can be used Decks Executive Summaries § Presentation deck for cloud discussion § Send to client to demonstrate IBM thought leadership in Cloud § Extract slides for pitches and proposals § Refer client to IBM. com site § Extract slides for deliverables § Print Executive Summaries via POD and give physical copies and distribute in workshops, conferences etc. 84 © 2016 IBM Corporation 3/19/2018 § Refer client to IBV App Download materials: ibm. biz/Bd. HLa. T

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