The future of banking - NextBank Sydney 2013

The Future of Banking
Keeping pace with Digital evolution in Financial Services
Next Bank Sydney
2013


We are in an exciting phase of change

The Renaissance: !
15th Century
Da Vinci

Michelangelo

The Medicis

The Industrial
Revolution: !
19th Century
The steam engine

The Digital Age: !
1990 to ?
Google

Facebook

Cloud computing

Quantum computers

Recent history is littered with “game changing” technology The Future of Banking

1973

personal
computer

1876

1927

phone

1987
1982

tv

camcorder

1963
1895
radio

mobile
phone

2007

iphone

1984

vcr

laptop

1979

walkman

2010
ipad

1983
cd

Today, ﬁnancial services acknowledges the importance of digital The Future of Banking

Technology is changing the world we live in


22.32 million people
16.2 million Australians online
72.5% : Internet penetration
E-commerce market size : $37.1 billion

Nielsen online landscape review january 2013.pdf


Device ownership is changing

69%
60%

64%
67%
54%

53%

50%
46%

35%

35%

18%
2011
2011

2012

2013

2011

Desktop

Source : Nielsen online landscape review january 2013.pdf

2012

Laptop

2013

4%

2012

Tablet

2013

2011

2012

2013

Smartphone

Mobile continues to evolve

• There are 6.8 BILLION people on the planet 4 BILLION of them use a
mobile phone.
• 91% OF ADULTS have their mobile phone within arm’s reach 24/7
• There are 5 X as many mobile phones in the world as there are PCs
• Australia has been identiﬁed in the top 6 nations that have not only
adopted smartphones, but actively use them for consumer
purchases


Marketing in the digital world is more complex

retail

TV
radio

PR
outdoor

DM

The creative idea
strategy
digital

insight
mobile



The perfect storm
NBN

BIG DATA
BROADBAND

APPS

MOBILE DEVICES

SOCIAL MEDIA
WEARABLE TECHNOLOGY


There are many digital channels to consider
viral

search

display

email

social

digital strategy

mobile
ads

buy now

request
info

downloads

contact us
product info


And they continue to grow
games

community

viral

search

word of
mouth

tagging

email

display

RSS

podcasts

digital strategy

mobile
ads

social

blogs

forums

request
info

buy now
online
trial

widgets
downloads

videos UGC

product info

click to call

contact us


Implications for
ﬁnancial services
The problem isn’t predicting whats going to happen or what you NEED to do
.... its ﬁguring out what you CAN do


Short fuse, big bang
IMPACT
SHORT FUSE, BIG BANG

LONG FUSE, BIG BANG

ICT & media
Finance
Transport
Professional
Services
Arts and
Recreation

Health
Recruitment

Agriculture

Real estate

Government
Utilities

TIME
Accommodation
& food service

Constructing
Wholesale

Manufacturing
Mining

SHORT FUSE, SMALL BANG

LONG FUSE, SMALL BANG
Source: Deloitte consulting

People Research products Online


Source: Google Think - Complete Credit cards Study 2012
©Fusion Digital Pty Ltd + IdeaGarden Pty Ltd 2013

14

Social media drives customer choice


•83% of consumers say it would be important to read user-generated content before making a decision about
banking or other financial services.

•26% of consumers would never choose a bank without reading at least one piece of user-generated content
•Financial Services saw the highest portion of reviews that mention "customer service" at 17%.
•77% of long-term customers say they would recommend their financial firms to others
•32% of total product reviews come from financial customers.

Source: Kelton Research/Bazaarvoice, September, 2011

Increasingly, people are buying online


Product Purchasing by Channels 2010 v 2015
Current Accounts

84%

Savings Accounts

77%

Investments

78%

Mortgage

80%

0

Branches
Call Centres

0.375

59%

58%

4%

28%

72%

11%

10%

32%

12%

0.75

43%

38%

16%

73%

Consumer Finance Production

53%

9%

1.125

1.5 0

47%

0.375

0.75

1.125

1.5

Agents / Brokers
Direct Channels

Source: EFMA Online Survey Across 150+ Euro Banks

People are interacting across many digital touch points The Future of Banking
SMS

email
GPS
devices

3G content

kiosk
Digital TV

search

Display

Gaming
devices

Podcasting
Desktop
applications

Websites
PDA’s

Digital signage


Traditional channels have digital ampliﬁcation opportunities

QR code
bluetooth download

search
enter
vote

send to a friend
hear
photograph & share
send to a friend

word of mouth
print
buy
augmented reality
QR code

buy
augmented reality
QR code

voice
notify
tweet

In store/demos

promotions

website

coupons
notify
competitions

radio

tv
apps
augmented
photos
ideas

bookmark
download

outdoor
pos

social
share
like

download
coupon
loyalty

post

People have high expectations digitally
•People expect 24/7 access to their money
•They expect to be able to manage it through all their devices


Their habits are predictable


A seamless omni-channel experience is the norm


People expect ﬁnancial services will provide Channel choice, consistency, and continuity

Source: Forrester - Next-Generation Digital Financial Services


Right device, right service

46%
consumers that start banking
activity on one device continue
later on another

98%
will move between devices
within the same day

Authentication is evolving


Real time banking is inevitable


Non-traditional competitors are the real threat


Big Data represents big opportunities

Source: US Bureau Analytics McKinsey Global Institute analysis



New Banking Relationship
“We are moving away from a banking relationship
defined by the goal of being a customer's primary
financial institution to one where we focus on
becoming their primary financial application. It's no
longer about wallet share. It's about app-driven
mindshare”
Bradley Leimer, The Era of Engagement Banking
(2013)

Standing out is getting harder


Technology no longer a differentiator


It’s not
the

technology
we have to adapt to

It’s the way we

think

about “digital”

Value is a differentiator


USER NEEDS

How many of

How well do you

our products
do you own?

©Fusion Digital Pty Ltd + IdeaGarden Pty Ltd 2013

VALUE
ZONE

BUSINESS NEEDS

know me
and

treat me?

30

Self deﬁned fees


Value means Simple & Useful
Simple bank


Value that really delivers


Value the recognises our human-ness


Value that manages our expectations


Value that enables our passion


Value that delivers quickly


Value that recognises my relationships
Tandem


Value equals efﬁcient business models

Jibun Bank
Mobile Only
1.5 Members
150 employees



We are now face-to-face with an engaged customer
who expects
a completely frictionless, personalised always on
experience......
delivered on the device of their choice.


Size

The real
challenges

Organisational structure
Core technology
Incentives
Culture & Communications
Ownership
What your customers will tolerate

Size matters


Being big can be a liability

“fuck you”

Operational and political silos


CEO

BOARD

12 month
Marketing strategy

CMO

5 year
technology roadmap

CXO

CFO

CSO

CIO

“


This is all too much, we just
need to keep this simple
That’s all very well but we
are not there yet
We have a 5 year plan that
addresses that

“

Avoidance strategies

The executive continuum


THE EXECUTIVE CONTINUUM
LAND GRAB

This is my chance to be
the next CEO!

DENY & BLOCK

With luck, this won’t
happen in my time

Misaligned incentives


Layers of resistance to overcome


CEO
“We are not a digital business we have been
doing XYZ for a long time very successfully”
EXECUTIVES
“My KPI’s relate to proﬁt, I do not want to
put that at risk”

MIDDLE MANAGEMENT
“I am way too busy doing what I need to I have
no time to try new things that are untested”

COAL FACE
“This is the way we do things around here and
it has always worked well”

Lack of measurable attribution


Unrealistic time frames


Attempting to boil the ocean


How much change will your customers accept



The Approach of the Future

The typical path(s) to business evolution


Leverage

VALUE IN DELIVERY

THE HOW

Integrate

VALUE IN PROPOSITION

Create
Enhance

Extend
THE WHAT

Reﬁne
Source: IBM Institute for Business Value analysis

The ideal path to transformation


Integrate

Envisage a
transformed
customer value
proposition and
operating model and
build a new set of
capabilities around
that

Leverage

VALUE IN DELIVERY

THE HOW

END STATE
E
U

I
H

K
N

ET
R

E
H

AL
T
O

AL
V

T

T

VALUE IN PPROPOSITION
VALUE IN PROPOSITION

Create
Enhance

Extend
THE WHAT

Reﬁne
Source: IBM Institute for Business Value analysis

Link digital to all other strategies

Corporate Strategy
Distribution Strategy

ATM

Technology
Strategy

PHONE

CALL CENTRE

ONLINE

BRANCH

Digital Strategy
Sales
Strategy

Brand
Roadmap

Product
Plan

Payments
Strategy

People
Strategy

MOBILE

Strategic
Themes

Vendor Relationships

! 

Digital Branch

! 

Architecture, Data, "

! 

Simplicity

! 

Seamlessness

! 

Financial Coaching

! 

Family Focus

! 

Multi-cultural "

software etc
! 

Mobile

People +"
Culture

! 

Risk
Treasury

Leverage Data

Product

! 

Marketing

Technology Roadmap

Retail +
Advice

! 

Opportunity

Ensure digital beneﬁts internal & external audiences

e-Commerce enablement"
transactional + administrative

Online product acquisition


Drive awareness/media spend/"
social sharing opportunities

Digital

Strategy

Build and enhance"
community program

Enable employee
education and training

Demonstrate"
Innovation

Connect employees with
members digitally

Deﬁne ownership and responsibility

Shareholder visibility

Digital Governance Board

Speciﬁc digital KPI’s

Inspiration, Training and
mentorship

CEO

EXECUTIVES

MIDDLE MANAGEMENT

COAL FACE

Think outside the box



BAU
=
Developing a business model
that can embrace disruptive
change

Engage all levels & silos of the organisation


board of directors
(investors and advisors)

audit committee

DIGITALS ROLE IN THE BUSINESS

CEO

CFO

PROFITABILITY, REVENUE
STREAMS AND COST REDUCTION
CIO

divisions

divisions president

Sales

Mfg

R&D

Res
ea

rch

3D p
r
dep inting
CRM
loym
ent
auto system
syst
s, sa
ems
mat
ion,

les
CRM
"

Divis
io
CIO n

divisions CFO

Marketing
Int.

Cos
t
redu
ction

Finance

Prod
u
grou ct dev
"
ps a
nd r
esea

s

rch

Warehouse
HR

IT

Purchasing

Hum
Intra
War
nets
Res an
eho
ourc
,
All
onlin
ianc
man use
es
e
age
train
data es,
men
trac
ing

t an
king
ROI
proc
d
calc
syst
urem
ulati
ems
and
ent
ons

cost

redu
ction
s

A SMALL TEST IN
THE REAL WORLD
TO PROVE AND
EVOLVE THE
CONCEPT

PILOT

LAB

DEVELOP AND TEST
IN A SIMULATED
ENVIRONMENT


"GLOBAL"
IMPLEMENTATION

ROLLOUT

A Culture of fast, inexpensive experimentation

Embrace a culture of change

Be
the change you want to see in
your organisation
Take
Business actions to shift
the culture

Align
culture with business
strategy

Align culture with business
strategy

Reward change


Give up on perfectionism


Look beyond short term gain


Be realistic about what you CAN’T know



“

It’s not the disruption that decides
what happens to

how
you

It’s

your company

respond

to it.


THANK YOU

jenny@ideagarden.com.au www.ideagarden.com.au
… or ﬁnd me on linked in

The future of banking - NextBank Sydney 2013

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