2019 Commerce and Payments Year In

2019 Commerce and Fintech Year in Review

Fiserv Data & Analytics

Holiday shopping Resurrection Open banking in 01 kickoff 05 retailers 09 the US

Amazon’s brand Upping the brand Banking 02 partnerships 06 experience 10 disruption

Amazon Go Delivery fulfillment Neo and challenger 03 expansion 07 frenzy 11 bank lessons

Walmart’s shifting Revamping the QSR Voice 04 eCommerce strategy 08 drive thru 12 banking

Pre-Holiday Thanksgiving + Black Friday Total 15% Spend 11.9% 11.5% 10% Through Black Friday, the 2019 holiday season looks to be off to a solid start, 7.1% and reminiscent of patterns we saw in 5.7% 2017. 5.1% 5% 2.6%

0% 2017 2018 2019

Note: Figures include Brick & Mortar and eCommerce channels. Source: Fiserv aggregated same-store consumer spending data. FORTUNE Magazine World's Most Admired Companies® 3 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Thanksgiving + Black Friday

YoY Growth Total Retail = 7.5%

17.2%

Growth by 14.4% Category 10.6% With tremendous momentum from eCommerce, Furniture, DIY, and Sporting Goods led all retail categories for growth 7.7% during Thanksgiving and Black Friday. 6.2% 5.6% 5.4%

Furniture / Building Sporting General Clothing & Electronics & Specialty Furnishings Materials & Goods Merchandise Accessories Appliances Retailers DIY

Note: Figures include Brick & Mortar and eCommerce channels. Source: Fiserv aggregated same-store consumer spending data. FORTUNE Magazine World's Most Admired Companies® 4 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 On Black Friday 2019 On a “typical” Friday 49% 58% Are we of shoppers traveled 0-5 miles from of shoppers choose to stay closer home to shop on Black Friday 2019 to home on a typical Friday there yet? 1 out of 4 only 17% Across the continuum of the full shopping shoppers used a credit or debit card of shoppers will travel more than 25 public, we evaluated the percentage that at a merchant at least 25 miles from miles away from home to spend were willing to “Go The Distance” on their home zip code Black Friday

eCommerce • Growth continues to outpace market • 37.7% market share (2019 projection) 1 • Up from 36.5% (2018) 1

Amazon Prime • US subscribers top 105 million 2 • Up from 95 million last year 2

Source: 1. eMarketer, June 27, 2019. 2. Statista, September 3, 2019. FORTUNE Magazine World's Most Admired Companies® 6 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Some brands forgoing Amazon to go direct to consumer

• Control brand image • Gain deeper access to customer purchase data • Drive deeper, more personal customer engagement • Improve margins and profitability • Unclear if other high-profile brands will follow suit

Source: General industry information FORTUNE Magazine World's Most Admired Companies® 7 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Amazon pushes to be pack leader in online fashion

Private-label fashion brands in 109 Amazon’s portfolio at start of 2019 1

Increase in Amazon’s private-label 5X brands in two years 1

Expect continued growth

Source: 1. TJI Research via Reuters, April 9, 2019. FORTUNE Magazine World's Most Admired Companies® 8 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Amazon eyes physical retail with Amazon Go

• Amazon Go operating in 21 US locations • Cashierless format planned for new spaces • Larger supermarkets and smaller pop-ups • Potential licensing of technology to rival retailers • Deals with CIBO Express and Cineworld’s Regal theaters reportedly in discussion

Source: General industry information, Bloomberg, November 20, 2019, CNBC September 30, 2019. FORTUNE Magazine World's Most Admired Companies® 9 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Walmart’s aggressive investments in digital nativev brands

37% YTD online growth 1

Source: 1. Walmart U.S.’s total net sales growth for the nine months ended October 31, 2019, Walmart 10-Q. FORTUNE Magazine World's Most Admired Companies® 10 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Post investment, course corrections underway to boost ROI

Consolidate investments in-house

Offload less profitable brands

Limit new acquisitions

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 11 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Evolving strategy with grocery expansion and private-label brands

Expansion of Delivery Unlimited and grocery pickup services across the US

More cost-effective

Ability to sell across all channels

Allswell mattress brand launched in February 2019, with physical and digital store fronts

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 12 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Retail’s evolution has claimed numerous casualties over the years.

Resurrection Retailers Retail comes back to life.

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 13 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Now some brands are rising from the dead…

… and relaunching with new strategies Refreshed

01 Omnichannel or online 04 Leaner inventory carry Rearchitected only Reenergized 02 Smaller store footprints 05 Updated consumer experience

03 Employing new 06 Testing and learning technologies (e.g. using data Retail-as-a-Service)

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 14 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 They’re not dying, They’re evolving.

Then Now

Source: Houston Chronicle, USA Today / NorthJersey.com. FORTUNE Magazine World's Most Admired Companies® 16 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Upping the Brand Brands are finding unique and unusual ways for consumers to connect and Experience interact with them.

“Hotella Nutella reimagines the joy of the hotel stay with a “This KFC fire log smells amazing and adds a little extra special breakfast experience that allows fans to enjoy Nutella holiday cheer to the home! As a lover of KFC, this log is the in new and different ways” gift of the season!!!...”

“We have created the ultimate immersive experience around "The Bell stands to be the biggest expression of the Taco Bell all-things-coffee in spectacular Starbucks Reserve Roasteries lifestyle to date. It will be fun, colorful, flavorful and filled with in flagship cities around the world.” more than what our fans might expect."

FORTUNE Magazine World's Most Admired Companies® 18 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 “Interactions, I believe, are the leading indicator for the future of every industry.”

– Derek White, Chief Digital Officer, U.S. Bancorp

FORTUNE Magazine World's Most Admired Companies® 19 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 of consumers view companies less favorably if a package isn’t Delivery Fulfillment 74% delivered when expected

We want it all. of consumers say on-demand And we want it now. delivery apps re-shape their 71% expectations for all online Delivery economy purchase deliveries under pressure to of supply chain go faster. professionals experience 73% pressure to improve and expand delivery capabilities

Source: project44, November 12, 2019, August 6, 2019. FORTUNE Magazine World's Most Admired Companies® 20 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Bigger freight fleets Robotics

Delivery Fulfillment Next-day delivery is More warehouses Drone delivery so yesterday. From 1- day to same-day, the race is on. Investments in tech and processes slash Multi-story Partnering for delivery time, from warehouses to the last warehouses the last mile mile

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 21 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Consumers love “to-go” options… of consumers used drive-thrus 39% more often than last year 1

Revamping QSR Drive-Thrus of consumers used take out more 29% often than last year 1 Fast food, not so of QSR sales come from drive-thrus 2 fast. QSRs struggle 70% to meet demand. …yet, drive-thru service is slowing 20 SEC slower in 2019 3 09 SEC slower in 2018 2

Source: 1. 2019 National Restaurant Association and Technomic. 2. 2018 QSR Drive-Thru Performance Study. 3. 2019 QSR Drive-Thru Performance Study. FORTUNE Magazine World's Most Admired Companies® 22 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 AI-powered voice recognition Digital only technology drive-thrus

Revamping QSR Drive-Thrus

Personalization & decision Partnering with ordering Fast, reinvented. logic aggregators QSRs double down on speed and service. Predictive ordering In lane enhancements (landscaping & order takers)

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 23 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Open Banking To get ahead of the curve, banks must open the book on open banking

• EU and UK mandates that FIs allow third-party access to customer data • Growing focus at multiple levels, including in the US, on transparency and user control of personal data • Launching an open banking initiative is a banking executive priority 1: ‒ In 2019, ranked #7 ‒ In 2025, projected to rank #1

Source: 1. The Economist Intelligence Unit, July 1, 2019. FORTUNE Magazine World's Most Admired Companies® 24 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Younger consumers find open OpenOpen Banking banking banking most valuable 1

18–21 Years 48% Opportunity knocks. 22–36 years 39% 37–52 years 23% Open banking opens 53-71 years 12% Over 71 years 7% doors. Overall 22%

• Open banking enables a wealth of simple, seamless consumer experiences: ‒ Apply for a mortgage ‒ Pay or get paid by someone ‒ Manage finances • Consumers of all ages increasingly see open banking as useful • Fintechs and Big Tech already using open banking to deliver financial services

Source: 1. Deloitte Insights, October 21, 2019. FORTUNE Magazine World's Most Admired Companies® 25 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Banking Disruption 10 years ago Banks risk Retailers try banking, but are defeated by regulatory disruption complexity and stick with fatigue. The end partnering is not in sight. 5 years ago Fintech emerges, but are challenged by access and reach, and pivot to partnering

FORTUNE Magazine World's Most Admired Companies® 26 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Banking Disruption This is no time for complacency. Some digital-only and neo banks gaining ground. Threats from digital-only challengers or neo-banks persist.

Chime has gone from 1 million accounts last year to about 6.5 million in December 1

Source: 1. CNBC, December 5, 2019. FORTUNE Magazine World's Most Admired Companies® 27 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 62% of Americans Banking Disruption would bank with a tech company.1 Big tech may be the biggest threat yet.

What’s in the Big Tech arsenal?

Deep pockets

Massive customer reach

Strong cultures of innovation and customer experience

Source: 1. Bain/Dynata Retail Banking NPS Survey, 2019. FORTUNE Magazine World's Most Admired Companies® 28 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Banking Disruption 50% of financial institutions are already either partnering or But they aren’t planning to partner with big tech1 going alone. Even big tech needs banks. +

“Here’s the bottom line: if a tech company wants to be regulated like + a bank, they’re welcome to come over. I have 6,000 people; we can hire 6,000 more and regulate the heck out of you.” +

— FDIC Chair Jelena McWilliams

Source: 1. KPMG. FORTUNE Magazine World's Most Admired Companies® 29 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Neo and Challenger Bank Lessons Commitment to customer experience may be the biggest competitive advantage

Brewing a perfect storm Failure to handle technical glitches with care risks harsh, negative scrutiny from for negative scrutiny consumers, regulators, and the media

• Technical glitches provoked angry reactions from traditional bank customers on social media • Some customers sought assistance through traditional means such as phone or in-branch • There were many reports of sub-optimal customer experiences, where customers had to wait on hold for hours, or even turned away from branch locations • Customer disruption / dissatisfaction ensued

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 31 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Neo and Challenger Bank Lessons Immediate, transparent, honest communication Similar issues, very different outcomes

• Several digital-only banks experienced similar technical glitches • Customers were kept informed; banks owned the issues Acknowledgement of the issue and • Customers were more forgiving responsibility to fix it • Negative brand impact minimized

Consistent updates

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 32 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Neo and Challenger Bank Lessons Above all else, customers demand clear communication and accountability

You play the game. Mr. Monopoly handles all the money and property transactions.

2011: Apple is the 2002: largest smartphone BlackBerry 2007: iPhone vendor 2011: iPhone 6 Plus

2019: Est. 70% smartphone penetration in US

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2023

2023: Virtually everyone on planet will use a virtual Voice Banking assistant

2011: Siri 2013: Cortana 2015: Google 2017: Bixby Blowing smartphone Home

2018: Est. 41% smart adoption rates out of speaker penetration in US the water 2014: Alexa

FORTUNE Magazine World's Most Admired Companies® 35 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Voice Banking 100+ million Smart speakers in the US, with Can you hear over 100 million users 1 me now? Voice is here to stay. If you’re not on 1+ billion board, you’ll be left behind. People use voice assistants (by 2023, that number will include virtually everyone on the planet) 2

Source: 1. NPR and Edison Research, January 7, 2019, and eMarketer, July 15, 2019. 2. Juniper Research, February 12, 2018. FORTUNE Magazine World's Most Admired Companies® 36 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Big brands with voice assistants Voice Banking Voice–it’s the new swipe.

Easy, fast to use

Tech advances make speech understood

Customers expect it

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 37 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 IPO M&A Financing Fintech Mega mergers and the Capital $ Markets Acquisitive Acquirers

Key 2019 Events

Trade and Tariff Retail Advertising Digital Cashless Alternative Digital-Only Troubles Platforms Credit Cards Stores Lending Landscape Banking

Faster Bank SCA Tech Cryptocurrency / SRC Payments M&A Introduced IPOs Blockchain Availability

RegTechs Data Retail-as- China Management Banking in Rise Vulnerability a-Service Opens Up Turnover the Cloud

Source: General industry information. FORTUNE Magazine World's Most Admired Companies® 39 © 2019 Fiserv, Inc. or its affiliates. 2014 | 2015 | 2016 | 2017 | 2018 | 2019 Fiserv. Launch of CheckFree Next enables intelligent bill A Historic 2019 payment experience

New Issuer Analytics Mortgage Momentum dashboard previewed at launched Money20/20

Joins Financial Data Named “Best in Class” Small businesses from across Investment Services joint Exchange as Board Member core banking provider US recognized as venture agreement with by Aite Group Clover Achievers Motive Partners

JAN MAR MAY JUL SEP NOV

FEB APR JUN AUG OCT DEC

Fiserv and First Data announce Acquisition of Software Express, Digital delivery of consumer Launch of interactive Branch Clover crosses $100 combination to create global leading EFT solution provider in bills via mobile wallet Kiosk furthers branch billion in annualized leader in payments and fintech. Brazil transformation strategies for payment volume financial institutions

Authorization Optimization solution Commerce Innovated welcomes Fiserv recognized among launched to maximize merchant five startups to participate in Refresh and relaunch of FORTUNE World’s Most approval rates and revenue Class 9 of Commerce. Clover Insights, now Main Admired Companies for sixth Street Insights consecutive year

Acquisition of ayCash, a leading Future merchant services digital merchant network services strategy set with Bank of provider in Germany America

Fiserv completes combination with First Data further cementing industry leadership

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