CH&Co Innovation Report

CHAPPUIS HALDER & CO.
Innovation in Financial Services
July 2017
Relevant experiences

2 Strictly confidential – ©Chappuis Halder & Co.CH&Co._Innovation_July2017
Focus on 4 relevant digital innovation projects CH&Co.
has successfully delivered
1 KYC & Onboarding: Digital Identity and Blockchain
2 Smart Automation: use machines in compliance
3 HighWayToMail: use email in management
4 Offshoring programme: Loan factory

KYC-Chain and CH&Co proposal
 One of the main issue in the KYC process is the
document collection:
– High and rising cost: US$15-50,000 in cost to
onboard a client
– Time: Onboarding industry average of 26 days
– Identity: the problem is not regulation, it’s a lack
of digital identity
– Inefficiency: KYC is performed multiple times,
with no benefit (duplicative process to gather
same documents)
– Clients are not willing to share data with a 3rd
party
– A centralised approach with a single large
database creates a single point of failure
– Lack of standards between utilities and banks,
no “digital rails”
Context and Rationale
 Connect banks directly to customers through a
distributed ledger based technology and a
decentralised approach
 Create common digital rails through a client digital
identity which can be re-used in order to improve
KYC process efficiency
 Avoid need for clients to communicate with multiple
institutions for KYC
 Painless KYC processes: decreased costs and
lower effort for compliance officer
 Enhance customer experience, improve financial
systems efficiency and foster financial inclusion
 Reduction in risk through instant account
setup/refresh, shared PEP research and
remediation
 A community of peers to share knowledge and
insight
Expected benefits
KYC-Chain and CH&Co disruption proposal
Blockchain KYC Utility can provide banking industry wide savings of 50%
1KYC-Chain

Business case: Customer journey from bank view
1
2
4
3
5
Bank A
Bank A sends invite to
customer to upload
documents
KYC
Repository
Onboarding
tools Database
Internal infrastructure not
connected to blockchain
Bank database
Bank B
Documents are transferred
from Bank A to Bank B
KYC
Repository
Onboarding
tools Database
Internal infrastructure not
Bank database
Blockchain
Bank A Relationship manager
invites customer to upload the
document
Bank B Relationship manager
invites customer who already
has KYC Chain ID
Customer leverages on step
1 and only communicates
additional information
requested by the Bank B
and uploads documents if
needed
KYC-Chain
Interface
Bank A
KYC-Chain
Interface
Bank B
1KYC-Chain

Smart automation technologies could help to reshape
Compliance departments answer cost & quality
requirements
DigitalmaturityoftheCompliancesetup
Sustainability of the setup (One-off Vs. BAU)
Automate rule-based tasks related to
production and first level control
Level 1: Traditional process or
IT initiatives
Review & optimise existing organizations,
procedures & workflows
Case study: Identify AML historical patterns
Clean-up of AML tool/filtering rules
Case Study: automate KYC screenings
from multiple sources and data inputs in
multiple back-end systems
Level 2: Robotics
Level 3:
Artificial Intelligence
& Machine Learning
Setup cognitive systems to
record and analyse patterns,
in order to assist judgment-
based work
Case Study: identify &
decrease the false alerts related
to Sanction screening which are
systematically escalated to
Compliance teams
High
Low
High
2Smart Automation
Low

Typical Smart Form process
An electronic form used to apply for products and services
2Smart Automation
 Capabilities beyond traditional paper forms:
– Electronic completion, Dynamic sections, Database
calls, Electronic submission
– Standard template saved as a PDF, online or offline
– Content can be readily updated and files can be
easily attached
– Ability to submit directly to databases and internal
programs
Key Features
 Lower cost of processing submitted forms
 Fewer data entry errors
 Lower postage & mail handling costs
 Enables the use of digital signatures for non-repudiation
 Submitted forms can be easily integrated with back
office systems using XML data
 All smart forms contain a unique barcode
 The barcode contains all finalised data pertaining to the
form which is asymmetrical from all others
Key Benefits
Processin
g &
Retention
Execution
Signature
Capture
Document
Generation
Smartform is created by the bank
for use by clients and potential
customers and uploaded digitally
(publicly available)
Client/potential customer fills-in
and signs the smartform either
manually or electronically via e-
signature and submits the form
Smartform is received, auto-
integrated (e-fax capabilities)
verified, processed, and retained
by the bank
Customer entries are digitally
captured and populated into the
Bank’s systems
If instruction is related to
payment, entries are similar to
eBanking payment with STP
processing in BO tools
Smart Form Process

RPA Application for screening
…To automated screening
Single input via
user interface
Single input
Automated
reconciliation
3
minutes
Compliance officers
spend more time on
investigation and
analysis
Automation is
scalable and offers
the opportunity to
multiply data sources
Suppression of
human mistakes and
oversights frequent
with manual tasks
Data collection and screenings are the main waste of time for analysts.
Multiple logins and inputs are time consuming and manual reconciliation engender mistakes.
Manual reconciliation
Multiple results
Data sources
Internal and 3rd party data
bases
Watchlists, News
Multiple
logon and
inputs
>2 hours
From current manual screening…
2Smart Automation

Beta Version of “HWTM” Project
1. This project does not only include detailed statistics about your mail activity
2. This project also include environmental component by analysing e-mail relations
(intensity, belonging to a specific network…). Data visualisation skills are key
3. A “sentimental” analysis part is ongoing to include behavioral indicators (if e-mail
is interrogative, exclamatory, explanatory, confidential …)
3HighWayToMail: use email in management

What we already achieved with the HWTM ideas:
In NYC, we helped one of our client to develop
KPIs related to agendas of an all team. We used
basics statistics and drew visualisations to help
framing meeting behaviors
 In a first part, we computed all the basics KPIs
such as number of meetings, hours spent by
meetings, distribution of the meetings by hour
 From those KPIs, you can directly optimise time
to organize meetings (people you should attend
a meeting with, how long…) but also predict
when you will attend a new meeting and the
duration of your next meeting
 3 key leverages:
Optimise time spent in meetings and predict
the future meetings
Optimise number of participant you should
invite meetings to avoid duplication
Visualise meeting network in the firm to
detect communities, roles and potential
patterns
KPIs drown from agenda analysis | Exhaustive possibilities
Dashboards have been developed for
every pilot users
KPI’s visualised include:
 Number of attended meetings
 Meetings distribution per duration
 Number of attendees per meeting
 Percentage recurring meeting
 Meeting distribution per time of the
meeting (morning, afternoon, before
10am,…) Number of postponed and
cancelled meetings
 Postponed and cancelled meeting
number
 Time between the invitation to a
meeting and its date
 Meeting number with the same
person for a given time span
 Meeting number in double or triple
booking
 Time between two meetings (i.e.
series of meetings or work time
between meetings)
 Predict future meetings’
characteristics
1
2
3

What we may achieve with HWTM ideas
In our research topics, we analysed the speed
of email writing according and mistakes people
can make when they have to send an email to
someone. We deduce efficiency from this
analysis
 When answering a mail to a client, one
should be aware of what is expected
depending the kind of request, the seniority
of the client or the emergency status of the
email
 The perspective to measure time spent on
an email but also the probability to make a
mistake should help anyone who want to
answer to a specific email depending the
client, the request but also the urgency
 3 key leverages:
Assess mail writing efficiency according
to the language and number of words
Assess the probability to make any
mistake when you send a mail to a client
Mix both assessments and sentimental
analysis to create the perfect answer
frame
How to answer to a mail | Speed, mistakes and previous analysis in mails
Probability to make a mistake – according our own tests
Sentimental
Analysis
Emergency
Analysis
Classification
Seniority
Analysis
Data Science
Analysis on a
client mail
Mail writing
speed
Mistake
Probability
Client
experience
Seniority
Advised number of
word for the answer
Advised number of
proof wording
Advised tone to use
for the answer
Advised time to spend
on a mail
Advised quality of
language to useData Science
Analysis
on the replier
Answering Framework
How to answer a client mail – HWTM aim
Seconds spent by words distribution – according our own tests
Object Errors Orthograph errors Grammar Errors
Misunderstanding
Errors
Total Errors
2% 11% 1% 0.30% 12.30%
1
2
3

Build a loan factory: An ambitious project for the FS
industry
 All Corporate & Investment Banks’ strategies
associated with financing businesses aim for the
same objectives:
– Reduce the cost per trade including running
costs for operations, IT and compliance and
associated investments
– Increase their share of fee business to optimise
the use of their balance sheet
– Accelerate the rotation of assets on the balance
sheet through an effective Originate-to-Distribute
strategy
– Look for innovative, alternative solutions and
adopt new technologies to offer a better client
and user experience
 Gather ‘best of breed’ providers to build a FS
industry utility for financing businesses that is
unique, innovative and cost efficient
 Deliver premium services from origination to
distribution to all stakeholders (lead arranger,
underwriter, agent, ops, investors)
 Syndicate a consortium of large financial
institutions to scale the platform and optimise the
project ROI
 Leverage new technologies to decrease cost of
business and operations, and streamline the loan
administration and distribution model
 Develop a sound economic model for the
consortium to deliver savings to its members
4Offshoring programme: Loan factory
Objectives of the projectDrivers for change

The Loan Factory value proposition is creating a unique
utility leveraged by latest technologies
Loan origination
Collaborative
Distributed
Confidential
Standardised
Loan administration
Automated
Secured
Mutualised
Cost efficient
Loan distribution
Liquidity
Market place
Benchmark
Technology enabled
Blockchain
Cloud computing
AI
Smart Contracts
Throughout
the Life
Cycle
4Offshoring programme: Loan factory

CH&Co. is an international strategy and management
consulting firm, specialised in Financial Services with a
strong spike on Innovation
200 consultants dedicated to the Financial Industry, 8 offices covering the
major financial places, 25% average growth for the past 7 years
We are organised to provide 3 main kind of
services
 Risk & Finance
 Business Operations & Transformation
 Business Development & Innovation
We have developed recognized thought
leadership and expertise on some key topics
 Robo-Advisors
 Process Automation by Robotics
 Smart Financial Crime (KYC)
 HighWayToMail
 Loan factory
 Digital Strategy & Observatory
 Distribution and Client 2.0
 Web & Mobile Financial Services
For the past 10 years, we have supported
major banks defining and implementing their
strategy in almost all business lines and many
geographies
Our international network allows us to pull from worldwide best practices in
order to provide tailored-made solutions to our clients

CH&Co Innovation Report

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