SBC Vertical Markets Retail Banking Overview

1. SBC Vertical MarketsRetail Banking Overview 2005 Update

2. Banking Industry Session Outline Section 1: The Banking Vertical Section 2: Defining the Banking Opportunity Section 3: Positioning with the Banking Customer Section 4: Success Stories Appendix: Additional Resources Confidential and Proprietary

3. The Banking Vertical

4. Financial Markets Financial Services Vertical Cap Markets Banking Other Stock trading Options and commodities Investment banking Traditional Banks Savings Institutions Credit Unions Credit Cards Funds/trusts Central bank/currency Real Estate Insurance Commercial and retail banking—largest opportunity for non-insurance financial services – about 55% of vertical revenue. Confidential and Proprietary

5. Overall Market Size – Financial Services Expected CAGR (2003 – 2010): 2.17% Confidential and Proprietary

6. Banking vertical is a subset of Financial Services Healthcare 7.9% Govt 7.7% % Growth2005/2004 Comms 6.7% Retail 6.6% Financial Services 6.0% Average Growth Services 5.7% Utilities 5.7% Manufacturing 5.4% Relative Size of IT Spending, 2005 IT Spending: World-wide Upside Source: Worldwide IT Spending 2004–2008 Update by Vertical Markets, IDC #32668 Largest Spend + Average Growth = Significant Opportunity Confidential and Proprietary

7. Overall Financial Market - Projected IT and Telecom Spending Confidential and Proprietary

8. Defining the Opportunity

9. Telecom Expenditures: Banks Expected CAGR (2003 – 2010): 3.58% Confidential and Proprietary

10. Telecom Services Breakout: Banks Confidential and Proprietary

11. Opportunity Segmentation > 70% in Region Total SBC Share of Segment: $720 Million Confidential and Proprietary

12. Top 10 Banks in Vertical IT and Telecom Spend Confidential and Proprietary

13. Section 3:Positioning the Customer

14. Challenges & Drivers Challenges Drivers Business Continuity, Compliance & Risk Management • Sarbanes-Oxley Act (SOX) • Check-21 • Gramm Leach Bliley Act (GLBA) • The Patriot Act • Basel II • Increasing and Changing Regulations Transforming the Branch and Enabling the Front Office: Improved Service, New Revenue • Increased competition • Expanded portfolio • Most expensive channel • Need for incremental revenue • Front-line execution of relationship-based strategies • Integration of delivery channels • Demand for Consistent customer experience • Differentiation through customer service • Relationship-based strategies Enhance the Customer Experience • Continuity of Government and Disaster Recovery • Multiple networks, duplicate resources and complexity resulting from M&A activity • Site to site collaboration • Customer demand for varied points of access • Resource shifting to meet changing customer needs Cost Control & Operational Efficiency • Continuity of Government and Disaster Recovery Source: Nortel Confidential and Proprietary

15. The Patriot Act The GLBA Act Regulatory Issues—Impacting Banks • Requires financial services companies to improve capabilities to identify customers & flag suspicious transactions (anti-money-laundering and anti-terrorism programs now required) • Requires integrating back end systems & upgrading storage and hardware infrastructure • Sarbanes Oxley Act—public company disclosure on effectiveness of internal controls on financial reporting • Requires a framework for internal control, rules, processes & audit trail The SOX Act • The law facilitates check truncation by advancing the use of a new negotiable instrument referred to as a substitute check. The law enables wide spread creation and use of substitute as a routine practice, not simply for damage or destroyed checks. Check 21 • The Gramm Leach Bliley Act—requires that financial institutions protect consumers’ personal information. • Requires distribution of privacy notices • Requires networking apps that enable a consolidated view of customers across multiple divisions. Increases competition by broadening allowable offerings. Confidential and Proprietary

16. The Role of the Branch has Evolved… Critical Success Factors Branch Strategies Characteristics Advisory Skills, Excellence in Customer Experience • Customer empowerment • Virtual agency • Specific value propositions Branch as Wealth Center Sales Skills, Incentives, Product Knowledge • ‘Best of breed’ manufacturer of products, services • Advantage based on scale,process excellence Branch as Sales Office Scale, Flexibility, Efficiency • Physical and virtual fulfillment • Supply chain management • Infrastructure management Branch as Service Center Alliance Skills, Open Strategy, Control Points, Destination • Price discovery • Intermediation • Risk management Branch as Marketplace Source: IBM Confidential and Proprietary

17. Bank Branches are Looking to… • Provide new customer productivity tools on every branch phone • Simplify management of moves, adds, and changes • Manage all centralized customer calls and give every employee in each branch a complete view of every customer’s account • Ensure that the most appropriate sales or service employee answers calls from the most appropriate customer • Enhance corporate communications by allowing employees to receive company information in a timely manner • Give senior executives more visibility by allowing them to talk to all branch employees live, every day in a TV format • Have real-time branch surveillance for productivity management and law enforcement support in hold-up situations • Distribute media for advertising, training or cross-selling promotions to all branches without increasing bandwidth charges • Push real-time information to tellers and agents, keeping them abreast of current information, via XML applications. Confidential and Proprietary

18. Eliminates redundant costs –voice/video/data Employee productivity tools Flexible/responsive operations Contact Center Integration Intelligent call routing Virtual Contact Center Video Conferencing Employee mobility within branch Branch Concierge Customer Experience: The Things Network Allows You to Do … Network Security integrated with Regulatory Compliance Centrally managed & Locally delivered: * E-Learning * Digital Marketing * Corp. Comm. Centrally Managed: * Video Surveillance * HVAC * Security ATMs & Kiosks Confidential and Proprietary

19. 2/05 Cost Control: Solving Problems w/ Technology Confidential and Proprietary

20. Telecom Trends Address Financial Critical Success Factors Benefits Business Continuity Robust networking Redundant networking w/ backup datacenters Complete security practices with Implemented solutions • Robust networking • Reliability • Uptime of networks is increased due to consistent • best practice architectural approach to network design. • Interoperability • Multiple solutions work together based on one common architectural approach • Security – Managed Solutions provides • 24x7x365 security response ability • router, firewall, anti-virus, and IDS rule & setup documentation • Anti-virus auditing report • Network security monitoring raw data logs • Security threat monitoring log • Redundant networking with backup datacenters • Availability of mission critical applications customer info • Complete security practices and policies with • implemented solutions Customer Experience and Service IP Telephony Web and voice based conferencing services VPNs for Branch and WAN connectivity Extensive web based services Cost Control – Operational Efficiency Converged single network State of art wireless solutions full branch connectivity and flexibility Image, storage and hosting Confidential and Proprietary

21. How Much Does an Outage Cost? Survey by Standish & Tower Group Confidential and Proprietary

22. Telecom Trends Address Financial Critical Success Factors Benefits • IP Telephony • Centralize and integrate contact center applications • Leverage agent resources over multiple sites • CTI—allowing agents to see who’s calling before picking up call • Merge voice over with e-commerce websites • Transfer calls between branches and virtual contact centers • Conference calling services for employees and customers • Mobility • Intelligent call routing—allowing access to voice & data via phone, laptop, PDA or any device anywhere • Wireless LAN phones connect to wireless access points throughout branch • VPN • Connectivity between branches • e–learning • Broadcast messages of products & promotions • Leverage all resources of the branches to give smaller stores the same look and feel of larger stores • IP enabled ATM and Kiosk provide information on product and services, i.e. loan approval • Expand web based banking services Business Continuity Robust networking Redundant networking w/ backup datacenters Complete security practices with Implemented solutions Customer Experience and Service IP Telephony Mobility VPNs for Branch and WAN connectivity and extensive web based services Cost Control – Operational Efficiency Converged single network State of Art Wireless solutions Full branch connectivity and flexibility Image, storage, and hosting Confidential and Proprietary

23. Telecom Trends Address Financial Critical Success Factors Benefits Business Continuity Robust networking Redundant networking w/ backup datacenters Complete security practices w/ Implemented solutions Converged single network—Efficient More efficient than running two separate networks Merged voice & data Use one network to satisfy multiple compliance issues Reduces maintenance costs by standardizing infrastructure Route calls to contact centers during peak hours State of Art Wireless Solutions Productivity gains with mobile wireless solutions Wireless concierge Hotspots Full branch connectivity and flexibility—Speed Allows rapid deployment of new applications Enabling change without re-engineering the network Customer Experience and Service IP Telephony Web and voice based conferencing services VPNs for Branch and WAN connectivity Extensive web based services Cost Control – Operational Efficiency Converged single network State of Art Wireless solutions Full branch connectivity and flexibility Image, storage and hosting • The Sage study found that while cost savings was cited as an IPT deployment driver by 75% of those surveyed, • Productivity savings was cited by more than 60%. • The productivity benefits were felt by both IT & non-IT workers. • 66% of the respondents said they perceive IPT deployment gave them a competitive advantage. Confidential and Proprietary

24. Key Trends Summary • M&A activity continues to drive consolidation and competition, leading to a more global market, and the development of multi-service financial “superstores” • Online services are changing the marketplace • Customer service and customization are important competitive factors • Focus on security and information privacy has sharpened as awareness of identity theft grows • Automation, self-service, and other IT-based services are being used to off-set staff reductions Confidential and Proprietary

25. General Growth Opportunities • Customer service and differentiation are driving growth in call center services, managed services, and routing services • Internet banking is driving bandwidth, security and content services • Online processes are driving opportunities in image, storage, and hosting services • Regulatory and security needs are driving security services, redundant networks and business continuity services. Confidential and Proprietary

26. Starting Questions • Do your customers have anytime access to account information and services? Do you offer electronic statements and electronic bill presentment and payment (EBPP)? • Are you losing customers to competitors who offer enhanced services over the phone and Web? • Can your existing systems and network support your current product go-to-market needs? • Can your customers access their information through multiple channels of communications, i.e. phone, Web, at the branch? • How effectively are you using the customer data being collected online, on the phone and at the branch? How are you doing as compared to your competitors? Confidential and Proprietary

27. Starting Questions (cont.) • Do you know who your most profitable customers are? • Are you effectively cross-selling products to those customers who are most likely to buy them? • Do your employees have to access multiple legacy systems to process account transactions? • Do your data systems provide a comprehensive view of your customers on a single screen? • Does your staff have the tools they need to stay up to date on new products? • Are you facing rising costs for site-to-site communications, sales force management, and training functions? • Are you facing increasing competition due to mergers and acquisition? Confidential and Proprietary

28. Appendix:Additional Resources

29. Basic Needs and Opportunities – Telecom Services Confidential and Proprietary

30. Basic Needs and Opportunities – Consulting Services Frost and Sullivan – March 2004 Confidential and Proprietary

31. Basic Needs and Opportunity – Software SBC Solutions are lead Callisma or System Integration Partners Frost and Sullivan – March 2004 Confidential and Proprietary

32. Basic Needs and Opportunity - Hardware Frost and Sullivan – March 2004 Confidential and Proprietary

33. Key Challenges • Sarbanes-Oxley legislation and need for business transparency forces financial services firms to be as open as possible with their records, transactions, and business dealings • Graham-Leach-Bliley (GLB) legislation continues to push financial services firms to become financial “superstores”, encouraging significant cross-segment expansion • Business continuity/disaster recovery needs have taken on increased importance for financial service market follilng 9/11 attacks, forcing financial services firms to ensure that data is as accessible as possible at all times • Mutual funds scandals regarding “market-timing transactions” are leading to new regulations and promoting greater integrity of financial services practices. • Likelihood of increased merger & acquisition activity to achieve greater scale affects potential buying patterns for IT/telecom services • Online banking opportunities that enhance customer experience continue to be refined and improved, requiring investment in time and money from financial services companies • “Check 21” legislation forces financial services institutions to explore “check electronification” requirements Confidential and Proprietary

34. Securities & Exchange Commission (SEC) Electronic message storage • Commission Guidance to Broker-Dealers on the Use of Electronic Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 with Respect to Rule 17a-4(f)http://www.sec.gov/rules/interp/34-44238.htm • SEC Compliance and Storage Managementhttp://www.storageadmin.com/Articles/Print.cfm?ArticleID=26084 • SIA Objects to SEC Rule for E-Mail Storagehttp://www.securitiesindustry.com/midweek.cfm?article=741 • CIO: Mandate from SEC Regulators: Save Your Electronic Documentshttp://www.cio.com/archive/031503/tl_washington.html • CIO: SEC Rule Creates Opportunity for CIOs on Corporate Boardshttp://www.cio.com/archive/021503/tl_washington.html • Securities Industry: Instant Messaging Standards: Keeping It ‘Simple’http://www.securitiesindustry.com/midweek.cfm?article=764 • Banktech: Do Not Delete! http://www.banktech.com/story/news/BNK20030214S0002 • New York Times: New Demand Seen for Data Storagehttp://nytimes.com/2003/04/21/technology/21NECO.html • No E-Mail Relief in New Books-and-Records Ruleshttp://www.securitiesindustry.com/midweek.cfm?article=794 Confidential and Proprietary

35. Securities & Exchange Commission (SEC) Business continuity planning • Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial Systemhttp://www.sec.gov/news/studies/34-47638.htm • Comments on Proposed Rule: Draft Interagency White Paper on Sound Practices to Strengthen the Resilience of the U. S. Financial Systemhttp://www.sec.gov/rules/concept/s73202.shtml • Feds Prep Disaster Recovery Regshttp://www.byteandswitch.com/document.asp?doc_id=22508&print=true • Feds Set DR Regulationshttp://www.byteandswitch.com/document.asp?doc_id=31105&print=true • Securities Industy: Industry Still Worried About BCP Distance Regshttp://www.securitiesindustry.com/midweek.cfm?article=769 • Wall Street & Technology: Not Quite Righthttp://www.wallstreetandtech.com/story/inDepth/WST20021212S0006 • Wall Street & Technology: Is Regulation Right Around the Corner?http://www.wallstreetandtech.com/story/mag/WST20011210S0014 Confidential and Proprietary