Gennaro Casale

Transcript

Gennaro Casale

Digital advantage in banking
Innovation Group Banking Summit
Milan, September 23rd
Key messages
Digitization is pervading FS: "hybrid1 models" are increasingly the preference for banking customers
• Both looking to advanced countries (e.g., in US ~70% of retail customers prefer an hybrid approach)...
• ...and laggards (e.g., in Italy preferences for hybrid expressed by ~50% of retail customers)
• All of these, being especially true for high value customers with AuM > €175k
Fintechs clearly got the point and are gaining ground by solving simple banking needs with simple digital
solutions – This is reflecting in a booming amount of investments in the sector in the last 5y
• Globally, from €~900M of investments in 2008 to €~3B in 2013
• With a share of investments moving from simple payments to other "core" areas of banking (real competition)
A radical shift is therefore needed in the way innovation is pushed forward in banks
• Both developing innovation internally, through innovation labs working with a "start-up" approach...
• ...and scouting externally, with corporate accelerators and VCs, as the top-players are already doing
A new mindset, new skills and relationships with real "innovators"
are the foundations to build new profitable business models
1. Do a transaction online at least every 2 months and visit branches at least every 2 months
Source: BCG, BCG digital retail banking survey 2015
Gennaro Casale_Intervento innovation Group_Sett2015.pptx
Draft—for discussion only
1
Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved.
Anyway, being digital doesn't mean necessarily being shopisticated: "back to basics" is important
• Customers are demanding digitalization to solve basic banking needs first (e.g., tracking applications online)
• Complex features are perceived as a second priority (e.g., desktop sharing for customer assistance)
• In this scenario, usage of available data to increase service level and define tailored offers is key
Digitization is pervading FS
Hybrid model is increasingly becoming a preference for banking customers
Preferred banking model
from online respondents
Clients >€175k in assets
% respondents
% respondents
100
100
12
24
10
Face to Face
Face to Face
25
80
80
x7
70
50
72
Hybrid1
60
60
Hybrid1
58
40
40
20
20
x4
26
18
17
19
Digital
Digital
0
0
Italy
Spain
US
Assets >175k
Overall the impact of digital and hybrid approaches
are limited by penetration of online banking in Italy
2
Back-to-basics still a winning approach
What customers want
Majority of customers
expecting basic
features
Many expecting a
basic, but customized
approach
Only few, already
expecting advanced
features
What customers say
Examples
Solve my basic banking needs first,
complex features are a second priority
• Do all routine transactions online
• Receive notifications and check status
of processes online
• Payment safety (e.g., quickly switch
cards on / off)
I look for simple solutions
to solve my simple needs
Use my information to give me proactive,
very customized advice
Don't make me work for insights, you
have all the information to give me
guidance
Make the bank more "social", to facilitate
the exchange of opinions with my peers
Payments are simple, I should do them
on every possible channel
Banks should prioritize investing on the basics and integration of info
• Interactive online tools and simulators
to receive customized advice and
compare offers
• Share work across channels
• Have access to tutorials and easy
descriptions of products
• Videoconference / share the desktop
with a banker to receive support
• Customization of product's features via
mobile or app
• Payment using email, social media or
mobile number
3
Fintechs progressively gaining ground towards banks
Sector has grown dramatically in the next years, covering "core" banking areas
Fintech sector has grown
at ~25% CAGR1 from 2008 to 2013
Fintech is not only payments, but it is
covering a wide range of customer needs
Investments (M$)
% of Fintech investments by topic
3,500
100
3,000
90
Personal
Finance
Management
28%
Payments
19%
Data
Analytics
10%
Capital
Markets
29%
Banking
80
~25%
2,500
70
60
2,000
70%
50
1,500
1,000
14%
40
30
900
20
6%
10%
500
3,000
4%
10
10%
0
0
2008
2013
2008
2013
In 2020, one third of banking revenues expected
to be captured by non-banking players
1. Coumpound Annual Growth Rate
Source: CB insights
4
Examples of Fintechs addressing simple banking needs
"Vertical" solutions with a simple and endearing user experience
Instant loans
for small businesses
Commission-free, retail brokerage
One-stop shop banking for SMEs
Algorithmic investment advice,
wealth management from USD 5,000
Budgeting / Planning / Saving
with a beautiful app
Mobile app to create,
sign, and send legal contracts
Source: BCG
5
A radical shift needed in the way banks do innovation
With an internal "start-up" mindset and new capabilities to capture external innovation
In-house ideation and
development of ideas
• Leveraging leads and
sparks from the bank
• With a "start-up" attitude
(fail fast, fail beautifully)
• Having an open dialogue
with final users / market
• Involving new skills and
competencies (e.g., UX
designers, HCD, ...)
Acquisition
Acquiring promising ideas
from the market
• Buying majority stake or the
entire startups
• Acquiring IP or exclusive
development rights
Participation
Internal development
Co-investing with other
market players
• Involving VC, incubators
and other funds
• Buying stakes or using
other forms of participation
with financial/non-financial
players
Source: BCG
6
Many players have already started to build idea portfolios
Some with corporate venture funds, others with a structured internal approach to innovation
BBVA Ventures
Citi Ventures
Web and mobile application
simplifying banking processes
by unifying users' various
accounts into one accessible
bank card
Merchant services aggregator
and mobile payment
company that aims to
simplify commerce through
technology
Artificial intelligence
technology to improve
consumer experience on
mobile devices through
intelligent conversation.
Develops an analytics
platform to deliver credit and
marketing scores using
mobile phone behavioral
data
DocuSign helps businesses of
all sizes easily and securely
sign, send, and manage
documents in the cloud
Click Security provides
security analytics for
enterprises, critical
infrastructure, and agencies
to protect their networks
The creator of EyePrint ID
that transforms a picture of
your eye into a key that
protects your digital life
Business intelligence
platform on 30+ million
small-and-medium-sized
businesses
Cloud-based invoice,
payment and discount
management solutions for
large buying organizations
Business intelligence solution
enabling users to integrate,
analyze and visualize large
datasets
Mobile services coupling a
combination of location and
mobile identity technologies
to secure commerce and
enable mobile marketing
Cloud-based intelligent
customer engagement
platform for retailers and
consumer businesses
AmEx ventures
Wells Fargo Lab
Note: http://fortune.com/2014/06/26/big-banks-are-shunning-tradition-and-turning-to-tech-startups/
Source: BCG analysis
7
Digital initiatives also aim to business diversification
An example of cooperation between a primary EU bank and a large retailer based on big data
Credit Card
data (Bank)
Those aggregated information are sold to
retailers, to set appropriate campaigns
Benefits for the bank
The bank is able to map the customers'
purchases through card transactions
New revenue stream, not linked with the "core"
business of the bank
Benefits for the retailers
PoS terminal
data (Retailer)
Possibility to design offers and promotions targeting
the real needs of their customers
Note: http://fortune.com/2014/06/26/big-banks-are-shunning-tradition-and-turning-to-tech-startups/
Source: BCG analysis
8
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Gennaro Casale

Transcript

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