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Exponential banking: Reinventing Financial Services in a world of Exponential Change


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A Point of View on the threat of Fintechs and Neobanks in the Financial Services category and what banks should do to respond and continue to unlock business and customer value and drive growth.

Banks should look beyond just embracing the latest Fintech and look to reinvent themselves as the Exponential Bank of the Future.

Published in: Economy & Finance
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Exponential banking: Reinventing Financial Services in a world of Exponential Change

  1. 1. Exponential Banking Reinventing Financial Services in a World of Exponential Change
  2. 2. Why We Are Here The Problem Statement Technology is rapidly accelerating the transformation of society as a whole – changing industries, businesses, lifestyle and culture. Particularly in banking and financial services, the global emergence of FinTech continues to disrupt the traditional financial services landscape. Increasingly banks and FIs are under pressure to innovate to overcome these challenges and to tap on new opportunities to address the unmet needs of customers. The Ambition Bank XYZ in Singapore is undergoing a digital transformation that goes beyond just embracing the latest FinTech. It is about putting customers at the core, focusing on delivering what customers what, when they want it and how they want it in a really frictionless way. The ambition is to leverage on financial technology as opportunities to reduce friction between consumers and financial services thus opening up new growth opportunities for the bank.
  3. 3. A Primer To A Bigger Conversation WHAT: Value Drivers For Growth WHY: Drivers of Exponential Change HOW: Transformation Roadmap Exponential Growth Opportunities
  4. 4. In A World Of Exponential Change Macro Environment Technology Competitive Dynamics Consumer New generation of digital natives / Digital becomes mainstream Evolution of the customer journey - Increased demands and expectations Innovation in payments and cryptocurrencies Lack of trust in FinTech innovations Fintech funding and growth in SG DBS leads the way as Asia’s Best Digital BankHighly progressive regulatory approach / Regulation Sandbox Non-tradition entrants in payments (Grab, Go-Jek, Razer, Singtel) Push towards cashless society Tension between innovation & protection Rise of blockchain / distributed ledger technology Cybersecurity concerns + KYC/AML Mobile as the great equalizer Move towards ecosystem brands Open Banking / APIs Nimble startups without legacy technology stacks Data as a competitive advantage BANK XYZ
  5. 5. Key Value Drivers For Growth Automation / Cost savings Improve customer experience Acquire new customers Create new revenue streams Create a sustainable competitive advantage Transaction migration, automated customer service Friction-free, provide personalized services. A focus on customer lifetime value and total relationship balance Mobile first digital bank, ePayments Monetization beyond core banking services Step change & future proof the bank Exponential Incremental
  6. 6. Exponential Growth Opportunities Opportunity 1: Extend value across the customer journey § Address customer expectations and create a frictionless and consistent brand and service experience across differentiated channels and devices. § Focus on real-time engagement with customers through the entire customer journey. Create a Financial Supermarket to offer a curated mix of internal and 3rd party offerings that gives customers an easy one-stop access to financial products and to address financial needs through a single integrated platform. § Determine the core FinTech technologies to pursue to reach the unbanked / underserved and new customers in their journey – ePayments, mobile digital bank, P2P lending Opportunity 2: Collaboration and Investments § Bank XYZ is uniquely able to balance the tension between innovation and protection § Leverage on brand legacy to address consumers trust issues in embracing FinTech solutions § Determine the core areas in FinTech to engage in and then decide on the innovation gap - if we should develop internally, partner with or invest in/acquire FinTech disruptors. Overlay with short-mid-long term goals § Reasons to partner with FinTechs include access to a range of innovative technologies, business models, disruptive behaviors and ideas that a bank may not have the capacity, capability or culture to develop internally. § Need to develop a workaround for different data standards and interoperability - Embrace open banking initiatives and open / API architectures.
  7. 7. Exponential Growth Opportunities Opportunity 3: Data Analytics and Monetization § Use real-time data more effectively internally to obtain better insights for product development, cross-sell, customer purchasing behavior and predicting demand / growth opportunities. Ensures products and services are better meeting the needs of customers and improving the overall customer journey § Extract value from data as a core asset by monetizing it with 3rd parties. This leverages on the impact of Open Banking and includes creating new offerings such as reports and benchmark analysis based on bank data or to allow individuals to use their bank credentials to access secure 3rd-party online services. § In addition, when used responsibility, non-identifiable bank data contains a rich set of exclusive information on customer demographic and lifestyle preferences that could be used for telco, retail, CPG, automotive etc. Opportunity 4: Establish a secure perimeter (Cybersecurity) § Cybersecurity is viewed as one of the most important and present threats in the industry § Pay to play opportunity – As consumer trust is paramount + operating with regulatory framework, we need to get this right in order to leverage on all other opportunities. § It is more likely a question of “when” rather than “if” a breach will occur – vital for Bank XYZ to have an effective response capability so that attacks can be quickly and effectively detected, analyzed and responded to.
  8. 8. Exponential Growth Opportunities Opportunity 5: Beyond Banking Grow beyond your core and into relevant ecosystems § Embrace the broader role a bank can play on behalf of customers § Extend out from the core business (account services, line of credit, secured loans, credit cards, investments) into both banking and non-banking ecosystems § Banking ecosystems include – Financial education, accounting, loyalty discounts, account consolidation, budget management § Non-banking ecosystems include – Business process outsourcing, stock management, health services, subscription management, home services, telco services § Allows you to form a network of value across industries and create your own ecosystem to provide services customers want at a lower cost and with greater convenience => Drive new revenue streams. § Tap on existing customer base and operational capabilities, strengthen engagement and capture data that will provide 360 view of customer needs. McKinsey & Company
  9. 9. Transformation Roadmap: How Do We Get There Priority 1: Simplify legacy systems and update your IT stack to get ready for the “new normal” Prepare for a world where change is constant and where digital comes first Stop over-investing in legacy systems and adopt an aggressive PaaS and SaaS based model Priority 5: Plug the weakest links – Pay attention to cybersecurity and put measures in place Consumer trust in financial services is paramount especially when it comes to adoption of innovation. Cyberattacks are not a matter of “if” but “when” Priority 2: Get more intelligent about your customer needs Leverage on your data and the power of analytics / AI to give customers more Understand and anticipate their needs and provide rich, compelling and personal services to them. Priority 3: Embrace openness and collaboration Collaboration at scale - Prepare your architecture to connect to anything, anywhere. Priority 4: Build your Army - Make sure you have the necessary talent and skills Recruit domain experts from outside the industry, develop robust learning modules for internal upskill and foster a culture of collaboration, innovative thinking and agility.
  10. 10. Key Takeaways Beyond just embracing the latest Fintech Reinvent Bank XYZ as the Exponential Bank of the future Overlay Drivers of Exponential Change with Value Drivers for Growth 5 High Level Exponential Growth Opportunities Identified 1 2 Responding to category disruption & the threat of fintech upstarts / virtual banks An opportunity to lead the change within the category3