Although technology and compliance are top-of-mind for many lenders, it’s important to remember that customer or member satisfaction is still at the core of every financial institution’s success. Mortgage industry thought leader Doug Hautop, CG Director, shares CG’s tactics for helping financial institutions understand today’s consumers – and rise above the increasing crowd of competing lenders.

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The Competitive Landscape
3 Keys to Stand Out in Your Rapidly Changing Market

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What is The Competitive Landscape?
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Deepen Your Relationships
Think Outside the Bank
Digitize Your Perspective

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Customers and competition in today’s mortgage market
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Gen X and Gen Y customer behaviors are constantly shifting
The universal challenge: attract, retain and grow core customers
New competitors are taking market share by delivering a superior customer
experience
Your strategic vision must keep pace with technology advancements

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Understanding
GENERATION X &
GENERATION Y
Deepen Your Relationships
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Defining Characteristics of Generation X
1961 1980
aka The MTV Generation
Population: 82.1 million
They ARE:
Highly-educated, active, balanced, happy,
family-oriented
They ARE NOT:
Materialistic, lazy, disenfranchised

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$33,000 lost on average
X
45%
decrease in wealth
totals from
2007 to 2010

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Defining Characteristics of Generation Y
1981 2000
aka Millennials
Population: 80 million
They ARE:
“Detached from institutions and networked
with friends”
They CONSIDER:
Wealth a very important attribute

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Student Loan Debt Burden
Y
460%
increase in student
loan debt from
2004 to 2014

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Gen X consumer population has a split personality
Generation X Fragmentation
1961 1980
Programma 101
First commercial “desktop
computer”
Xerox Alto
First computer to use
mouse, graphics, desktop
Apple II
First affordable PC for
middle class
1964 1973 1977
Adopt baby boomer
behaviors
Borrow baby boomer and
Gen Y behaviors
Adopt Gen Y behaviors
Check writers PayPal accounts Mobile Wallet adopters

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Gen Y consumer population is complex
Generation Y Complexity
1981 2000
Compaq Portal
First IBM PC portable
computer
World Wide Web
Widespread internet
access
1982 1983 1986 1991 1997 1999
Motorola
First cell phone
IBM PC Convertible
IBM’s first laptop
Palm Pilot Wi-Fi
Micro budgeters
Delaying traditional life milestones: marriage, family, home ownership
Buying habits motivated more by service and feelings than product and brand appeal

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Don’t make assumptions
X & Y
Surveys and analytics are key to
finding the “sweet spots” for
reaching Gen X and Gen Y
customers.
And the results may surprise you…

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Most active
generation in
mobile
banking

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92%
direct mail is the
best way to
reach them

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Understand the appeal of
EMERGING AND NON-
TRADITIONAL PLAYERS
to refine your strategy
Think Outside the Bank
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1
2
3
4
6
8
5
7
10
9
Wells Fargo & Company
Chase
Quicken Loans Inc.
Bank of America
U.S. Bank Home Mortgage
PennyMac
PHH Mortgage
CitiMortgage, Inc.
Nationstar Mortgage
Flagstar
non-bank
lenders enter
the top 10 in
originations
3

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Big banks have the most to lose
Non-banks and emerging lenders
are making inroads
While banks are distracted by compliance and
budget woes, newcomers are grabbing market
share
Gen X and Y prefer service and treatment to name
brand power
Competition for customers is heating up
80%of U.S. Consumers
would consider a
mortgage from
a non-bank
1/3
Consumers would consider a
mortgage from Walmart
48%
Consumers would consider a
mortgage from PayPal

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What your non competition is
doing right
They are well capitalized, have a clean technology
slate and aggressive agendas
Lack of legacy system hurdles and regulatory
issues enables spending on innovation, analytics
and marketing
They are investing in technologies with seamless
customer interfaces, multi media capability (i.e.,
mobility)
The technology and customer service focus plays
directly into what appeals to Gen X and Y
1/3
of U.S. Consumers are
willing to pay more for a
mortgage if it comes with
superior customer
service

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Keys to Customer Value
Bond BuildersCost Conscious Planners
Cost
Trust
Customer
Service
Customer Value Continuum
$$$ $$$$
L H
L H
$
L H
L H
$$$$
L H
L H
CG research shows that mortgage buyers make decisions based on
what is most important to them

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The Zero Moment of Truth
Stimulus
ZMOT
First
Moment
of Truth
Second
Moment
of Truth
Pre-Shopping Open Bank Account ExperienceAdvertising

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70%
of Americans
look at product
reviews before
a purchase

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The “pre-shopping” phenomenon
What is it? How is it done? Why does it matter?
Customers educating
themselves on the
products and service
long before they buy
them
Via the internet, social
media and peer groups
Shoppers can make
purchase decisions at
ZMOT, before they ever
visit the aisle…..or a
bank branch

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PROPRIETARY COMMUNITY PARTNERSHIP
ZMOT is coming to a bank near you

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Gain new insight into the impact of
DIGITALIZATION –
communications, channels,
currency and technology
Digitize Your Perspective
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What is Omni-Channel?
Non-physical
Self-service
Physical
Human-interactive

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
Customer uses
her iPhone to
start the
mortgage
process…

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
While getting cash
at the ATM, a
reminder to
complete mortgage
application flashes
on screen…

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
Customer gets a
text message
from her bank
with a link to
continue the
process...

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
Customer goes
to the website to
continue the
application
process…

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
Customer
finishes her
application on
her iPad app…

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
Customer goes
to the bank
branch for a
meeting to get
advice and ask
questions…

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iPhone
iPhone
app
ATM
Branch
SMS
iPad
app
Website
Mortgage and
the Omni-
Channel
Experience
Customer checks
her application
status on her
iPhone app…

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Four RECOMMENDATIONS for
making positive changes
to your business
Your New Landscape
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INVEST
the time and resources to do a comprehensive
analysis of customer and market data. And
invest in technology that delivers to plan

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ENGAGE
with customers using the full force of your
media and channels – and the knowledge
you’ve gained from surveys and analytics

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PERSONALIZE
the experience by enabling outcomes across
the process, regardless of the device or the
customer preferences

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REVITALIZE
your customer base with a new toolkit and
your employees by rewarding customer-
centric behaviors

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INVEST
ENGAGE
PERSONALIZE
REVITALIZE
Analyze the data, do the research and
commit to technology and talent
Connect with customers in new ways
and via multiple channels
Cater to customer preferences no matter
where or how they interact with you
CG Recommends
Upgrade capabilities and change
perceptions with customers and
employees

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Carlisle & Gallagher Consulting Group
Doug Hautop
CG Director
doug.hautop@cgcginc.com
704.301.5142
212 South Tryon Street
Suite 800
Charlotte, NC 28281
704.936.1600