Introduction

The Center for Future Banking (CFB) would like to engage with entities that share its mission and research agenda. The Banking industry is at the core of a nations economy and critical to its economic vitality. Banking has many long standing traditions that were created under very different conditions than exist today. The pace of technological advancement, the impact on society, the expansion of the global economy, the sophistication of the financial systems, the need for local development, the management of money, access to capital, increasing expectation of customers, shifting demographics, and consolidation of banking, all contribute to an increasing need to development new strategies for conducting banking. These new strategies are not obvious and no longer can rely on slow incremental changes that are traditionally the case with Banks. Banking, in general do not innovate, at least not in the same sense as other industries, yet the environment under which it serves has changed substantially in capabilities and access of the average person to information and systems that give them more control raising their expectations of service from Banks as well as any business they use. The banking industry is very dependent on the engagement of a chain of providers and businesses that use banking services. It ability to innovate is wholly dependent on engaging with the value chain of providers. It is through this engagement that new techniques and methods may be devised using research to understand what may be possible in the future. This probable future sets the guide for developing new products and services and helps inform the business decisions that are made by Banks and its providers. In general the service industry has lacked a science of service that uses research methods to uncover those salient aspects of service to people which inform the design of better products. Marketing research is typically used to help understand the existing market environment but given the pace of change it is necessary to go beyond and project into the future, what environment might emerge and the forces at work that influence its creation. Two significant changes have occur that afford opportunities for advancement that were not possible before, the rise of Information and Communication Technology (ICT) in the daily lives of consumers and its central role in Banking, and the fusing of Social Sciences with Computation, these two capabilities create the possibility to conduct research on a scale and of the type that were previously not possible. Rapid advances in other areas, cognitive sciences, psychology, human computer interfaces, robotics, product design, neurobiology, health care technology, learning technology, architecture, all promise radical changes in what people expect of the social interactions within physical spaces and with objects.

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The Alliance with CFB would provide a means of engaging in research that benefits consumers, the Banking Industry, and its providers by establishing a means of creating future possibilities without the typical pressures of business cycles and competitive issues. The Alliance may be enabling of greater competitiveness and the vehicle for The market establishing the new environment under which Banks will operate.

environment is being created by consumers using the capabilities afforded them with the advancement in personal ICT, namely the Internet and mobility. These new capabilities create a market environment where services can be co-created or co-generated with the consumers. This is radically different than the market conditions that Banks have traditionally service and challenges notions of control, ownership of data, and service. These challenges are shared amongst many service and product companies who find themselves unprepared for the unsettling changes in their industries. Corporations need to turn to academia and form an Alliance with researchers who are attempting to understand the societal phenomenon at work and are responsible for creating some of the capabilities that caused these changes to occur in the marketplace. Corporations and Academia have very different missions therefore establishing an Alliance framework that fuses the goals of Corporations and Academia into a synergistic arrangement is what CFB is attempting. This requires active engagement in the process of research to develop a common understanding of what will be best to accomplish our mutual interest.

Research Alliance Strategy
A Research Alliance is a trans-organizational system in which that participation is by the respective organizations and not the individuals. This gives a formal structure to casual individual associations where people may exchange information professionally but their organizations are unaware of such exchanges. The Alliance is a long term purposeful arrangement that allows each party to gain or sustain some competitive advantage and would involve real value exchanges of money, time, knowledge, service, product or influence. An Alliance between corporations and academia creates a formal knowledge network that is a purpose driven group of experts working together to build each others capacity and develop new understanding for use outside of the network. An Alliance is a partnership, coalition or community of practice and may be inclusive of each of these common business associations with the expressed goal of having an outlook focus on the research that spans a time horizon that is greater than the normal product innovation cycles. While these product innovation cycles vary by industry, in Banking they effectively do not exist therefore a horizon range may be beyond three (3) years.

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The key driver for an Entity to participate in CFB should be to bring more capacity to its work where the joint effort can do more than one that is separated. This would be where mobilizing the intellectual capital of the Alliance increases the likelihood of discovery and market innovation. The Alliance members should have complementary skills across the institutions that would lead to better research from varying perspectives. There is a need for critical mass of effort to have greater influence on the forces that are impacting the market conditions under which the companies and organizations are operating. CFB needs to extend its reach to include more points of view within its research activities and its outlook perspectives. Banking aligned with academia is not enough. Banks do not have a culture that is conducive to research given that it is a very highly mature and operational business model where risk are tightly controlled and conformity is mandated. Academia is concerned with its intellectual integrity in pursuing research that is foundational therefore is not pragmatic in terms of what a business would except of its results. CFB is aware of these cultural differences and are actively breaking down the barriers to collaboration. In the pursuit of further integration, CFB recognizes that other industries and entities view the markets differently than Banking and may have their own experiences with academic research that would provide value to establishing a new model for cooperation between corporations and academia. The MIT Media Lab has been at the forefront of this collaboration but we want to evolve it further into a synergistic process of scientific discovery and market innovation. To forge the proper Research Alliances CFB is seeking companies and organizations that are rethinking the business they are in, want to de-integrate and reconfigure the value chain, leverage in-house and Alliance researchers, have a fall back position with an outside-in view, values the role of research in informing a guided evolution of the markets. These are companies that may not have enough research resources to apply to the scale of the market problems, want to reduce its future risk, do not have the knowledge of other Alliance members and want to gain some exposure to adjacent markets, or cannot progress fast enough and is concerned with missing market opportunities by not innovating quickly. Three components are necessary to balance for a successful Alliance strategy, strategic value for the parties, urgency, and resource requirements. When all three are applied to its maximum potential it creates a strategic inflection point. The initial Sponsor for CFB, Bank of America has the commitment to define new markets but requires Alliances with other parties who share its sense of urgency and are willing to commit the resources to

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create the strategic value this unique opportunity can provide. Companies that share this view are likely to become full Sponsors of CFB. Other strategic research Alliances can be formed within CFB as well: Long-term investments in research that will be central to the parties mutual strategies and require joint research. Opportunities to advance a parties strategy quickly and cheaply where ready use of existing research is available and few resources are needed. Expansion opportunities where creating a new market is a chance to distribute via a new channel or deliver a new product. These may be co-branding, colocating, or distribution channels. A good example of this is the emergence of the Internet and now the emergence of Social Media. These opportunities would be handled by the respective businesses outside of CFB but may be discovered and tested within a research project. Research that is borne out of operational necessity to address constraints to growth. These are systems and process that may not scale or hit a performance maximum or have become obsolete and require radically new approaches to be researched. Non-strategic point solutions that are draining resources or present a risk to the business. These are escalating problems that affect an entire industry. Research marketplace repositioning that allows a company to move into a market before competitors, these are usually marketing agreements but may involve research to understand the fundamental operating principals at work in the new marketplace. Enabling ubiquity through licensing or open IP. This is where new markets might be created by enabling some capability that allows it to emerge. This is generally counter-intuitive for mature industries. An example is what Apple did to the music industry. To ensure that the Research Alliances are effective CFB will have a governance process which all Alliances must conform to. In addition we will set up a rating method to help Research Alliances improve their level of engagement. The rating will be based on the following criteria: Commitment

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Strategy Trust and Fairness Communication Conflict Management Decision Making Leadership Performance Measurement Roles Skills and Competence Team Coordination Flexibility Knowledge Management Organizational Values We will apply an annual 360 degree review process on all Alliance Entities to re-qualify them for renewal each year. Each Entity participating in CFB is responsible for its own product innovation cycle and is not to attempt to conduct product research within the CFB experimental research projects. The CFB research is the pre-cursor to product research and innovation and it CFB not to be confused with product development. Any entity that is found to abuse its access to CFB research will be immediately removed from the Research Alliance. innovation. research strives to enable transformational innovation and not transitional or incremental It is likely that while researching a transformational theme that many transitional or incremental artifacts and techniques may be devised but these are not to be confused with the central mission of CFB. We anticipate many residual value to come from the research and encourage the Research Alliance Entities to make use of these incremental advances while maintaining a focus on the transformational intentions of CFB. An important aspect of a successful Alliance will be the integrity and values the members embody that invoke a sense of trust and responsibility to serving the common customers and building a healthy market climate for expansion and sustain-ability. One of the Macro Themes of CFB is Corporate Social Responsibility and we strive to put that at the core of our Research Alliance Framework.

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Types of Research Alliances
The types of Alliances vary based on capabilities of the Entity joining CFB. For large Corporations they would join the CFB as a Consortia Sponsor making the appropriate financial contribution. We seek a variety of Alliances with Corporations, venture backed businesses, Universities, Research Institutes, Government Agencies, Non-Governmental Organizations, not-for-profit entities, civil organizations, community outreach programs, and any entity which is servicing consumers where some aspect of their financial life is considered. The types of entities would be diverse and range from health care to entertainment, from consumer products to law. The most obvious Alliances would be with companies that provide services to Banks, namely technology companies but our Alliance selection plans to balance participation across to the spectrum of entities. The intention of CFB is to get a broad view of the market forces and avoid the current stasis that beset the Banking industry. We will limit the number of Alliances within a segment type and only admit entities that demonstrate a clear understanding of the CFB mission and have some capabilities to conduct research. To avoid conflicts only entities that are non-competitive with other Alliance members will be accepted although it is possible the specific research on noncompetitive issues may be conducted jointly by direct competitors, this will need to be evaluated on a case by case basis.

Qualification of Alliance Entity
The Alliances are formed with a research objective that is focused on one or more of CFB Macro Themes and poses new questions. The Alliance is not a means of selling product to CFB Sponsors or doing business development, or any of the typical business related functions that occur between companies. The Alliance entity is by invitation or nomination from one of the Sponsors of CFB. We may accept solicitation or applications for participation. Entities are welcomed to contact us to raise awareness of their research activities. CFB may invite non-competing Banks to become Consortia Sponsors but will limit participation to no more than five (5) Banks. These Banks are likely to be International Banks doing business primarily outside of the US.

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The Alliance entity must demonstrate two or more of the following: Academic Institutions doing research. History of inter-institutional cooperation Have dedicated staff conducting some form of research. This may be market research, product research, service development, staff scientist, employees with exemplary academic backgrounds, executives with recognized public accomplishments. Entities that have won awards for service or product innovations Entities that have a consistent long term track record of performance Entities that have recognized achievements in servicing the public. Entities with interesting data and capability to provide it for research. Entities with access to the public to participate in research studies. Entities who rely on banking as a critical component of the services they sell to the public Entities that provide products to the Banking sector. Demonstration of collaborative efforts with partners in creating new services and understanding of the market. Professional Societies that conduct conferences on topics within the CFB Macro Themes Civil organizations that engage the community. Entities operating at a national or international scale. Non-profit Entities empowering people in the emerging markets with new capabilities to form interesting business models. Alliance entities are required to assign a point of contact that may represent the company in its affairs and will participate in Alliance research and events. This should be the researcher assigned to CFB but may be an executive in the case where the participation is other than active research. When a researcher is assigned participation in CFB requires an annual publication of a report that is co-authored with one or more CFB researchers and is to be presented at the annual CFB event. Financial requirements for Alliance participation are established on a case by case basis and are judged on the value of the capabilities of the Entities to conduct research or

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provide some necessary aspect that enables research. Large corporation would need to be full Sponsors to participate, these are corporations with annual revenues greater than $100 Million. Smaller corporations may contribute in-kind services either with dedicated staff, products or services in support of a research project. Direct research grant awards are also acceptable and depend on the needs of the specific research effort. Alliance Entities may provide grants for specific research interest or access to data or populations of people willing to participant as subjects in a research effort.

Benefits
The benefits of Alliance members are the following: Secure a position as the front-runner for Innovation Strengthen reputation and boost market presence Speed to insight from research findings Access to Sponsor’s Executive in Residence as a liaison to the research activities. Access to CFB research papers Access to CFB website for videos of seminars and content of researchers Preferred invitation to CFB events open to the public Participation in an annual CFB Alliance meeting Access to other Alliance member researchers Access to open IP when generated as part of an enabling technology and not part of a competitive advantage of any of the Sponsoring companies Joint inventor or co-authoring with CFB researchers Preferential access to graduating students with thesis work related to CFB Macro Themes. Funding opportunity for very short research using the University Research Opportunity Program for undergraduates.

Governance
The Alliance Entity, when not a full Consortia Sponsor, will be hosted by one of the Sponsors. They may participate in the CFB Advisory Board within one of the Board Committees. The governance of the Alliance Entities is through the Bylaws of CFB.

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Participation is for one year and can be renewed after a review of performance of participation and research contributions. Participation on an Advisory committee requires that satisfaction of all assigned duties of the committee. performance will limit participation to one year. Lack of participation or

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