1. Banking Technology: Is it enough to eliminate brick and mortar banks? Presented by: Neesha Mehta May 17, 2006

2. Slow decline of Brick and Mortar Banks  December 2002: 9,354  December 2003: 9,181  December 2004: 8,976  December 2005: 8,832 (FDIC, 2006)

3. Situation  Start-up bank: Stonebridge Bank– opened Feb 17, 2006  8 full time employees  One location in downtown Minneapolis  Service oriented bank  Where do we invest our capital? New bank branches  Face to Face service Innovative technology  Independent banking capabilities

4. Literature Review ServiceCost Online banking$.01 ATM$.27 Face to Face Transaction$1.07  “The Internet functions as a cost-curbing device that brings savings directly into the hands of the Consumers” (Bielski, 2004) (Dandapani, 2004)

5. Potential Barriers for Customers  Awareness that online banking technology services exist  Accessibility to technology  Security concerns  Adaptability

6. Research Question Does banking technology eliminate the need for brick and mortar banking structures?

7. Methodology  100 paper surveys mailed to random sample from St. Paul Radiology employees 16 questions Opportunity to add comments

8. Results  46% response rate

9. Where do you bank?

10. How many banking services do you use?  11% use 1 service  33% use 2 or more  51% use 3 or more  4% use 4 or more

11. How often do you use each online banking service? Online Banking Service 2-3 times each week Once a week Twice a month Once a month View/Reconcile30%28%17%5% Bill Payment11%17%19% Transfers019% 28% Apply for Loans0003% Direct Deposit3%11%64%3%

12. Ages of respondents & services they use Service21-3031-4041-5051-60 Online73%100%86%43% ATM91%85%86%71% Branch Visit55%62%93%100% Phone Bank18%0%7%14%

13. Respondents thoughts on online banking  72% say it’s convenient  86% feel online banking is reliable  75% are confident with online banking  91% feel that online banking is easy

14. Why don’t you bank online?

15. What factors would motivate you to bank online?

16. Research Question Does banking technology eliminate the need for brick and mortar banking structures? NO

17. Summary of Research  Brick and mortar banks will not be eliminated  76% of respondents still visit a bank  89% of respondents have security concerns  100% of Baby Boomers visit a bank branch

18. Recommendations  Educate consumers on online banking benefits  Educate on security precautions  Assist in the set-up of online banking  Increase marketing efforts

19. Questions?