Post on 29-Jan-2016
Nayana D.P. DehigamaMBA Sri JDoctoral Candidate, AIT-Thailand
Founder Chairman / Managing DirectorEpic Technology Group
Bank on Entrepreneurial Innovations
in the digital age
Why Innovations & Entrepreneurship are important for Banks?
Two states that organizations function:
Growing
Dying
The Virtuous Cycle of Survival
Innovation
GrowthProfitability
Entrepreneurship
‘Innovation’
Adopting change for continuous improvement/growth
- Nayana Dehigama
Three Facets of Innovation
Product Process
Business
Where should Innovations be adopted?
Resources Products / Service Offerings
Operations Market / Channels
Customers Disruption Strategy
Business Innovation
“ENTREPRENEURSHIP”
?
What is….
“ENTREPRENEURSHIP” in Organizations
Ability to introduce “Innovations” in response to perceived opportunities (Profits/Growth)
-Nayana Dehigama
“Entrepreneurial Innovations”
Innovating for Sustainable Growth-Nayana Dehigama
Innovations for Sustainable Growth
Two Essentials The Starting Point
VISIONING &
FUTURING
Let’s look at what is happening around us…
Global shift in Consumer Behavior
People will prefer to communicate than to
commuteDr. Arthur C Clarke
3 Billion internet users globally
- ITU
7 Billion mobile cellular subscriptions & 3.6 Billion from
Asia Pacific – ITU
By 2018, more than 50 % of online users will use a Tablet or
Smartphone for all online activities
- Gartner
Speed of Change
2x more smartphones in 4 years
Number of subscriptions
- PWC
2x more connected devices by 2020
Tipping Point Market share of smart connected devices, 2012-2013
- PWC
2017
16.5%
13.0%
2016
16.3%
13.9%
2015
15.9%
15.1%
2014
15.3%
16.7%
2013
14.6%
20.2%
2012
11.8%
28.7%
More PCs than tablets More tablets than PCs - PWC
2005 Pope Benedict Election 2013 Pope Francis Election
Brick & Mortar branches diminishing
Big banks in many markets have reduced branch density.
1 Average of major banks1 additions and subtractions to branch networks, excluding effects of M&A
Source: Banks1 public disclosures; McKinsey analysis
Branch-density trend of top retail banks, 2006-111
%
- 11.3
- 5.9
- 5.6
- 2.3
- 1.7
1.0
6.6
Customers are leaving branches for Internet and Mobile Banking.
Monthly usage frequency
Developed Asia (HK1, Singapore) Emerging Asia (China, India)
Branch
Internet & mobile
-29%1.351.89
2.35 3.20+36%
20112007
1 Hong KongSOURCE: 2007 and 2011 McKinsey Personal Financial Services surveys
20112007
0.38 0.50+39%
1.931.44
Two “Firsts”
First ever drop in branch usage since 1998
First ever data showing that Developed Asia consumers use new channels (internet/ mobile) more than traditional channels (telephone and branch)
-26%
Asia-Pacific’s cash intensive economies will see strong growth in cashless transactions.
Share of cash in number of transactions%, 2010
Growth in cashless transactions,2010 – 2015, %
IndiaIndonesiaChinaThailandMalaysiaTaiwanJapanKoreaSingaporeAustraliaHong Kong
99.7 2399.5 23
98.0 2797.1 20
92.5 982.9 5
76.8 1265.6 965.2 9
63.1 955.1 5
SOURCE: McKinsey Global Payments Map
Is there a hidden opportunity here ?
- PWC
Core IT Technologies Driving Technological Change
Big Data Mining
& Analysis
Social Networks
DataVisualization
Simulation& ScenarioModelling Mobile
Payments
Public CloudInfrastructure
Robotics
PervasiveComputing
GamificationM2M
Automation
Crowdsourcing
CyberSecurity
Crowdfunding
PrivateCloud
EnterpriseSocial
Networking
Geo-location
3DPrinting
The Golden Opportunitie
s
SL Government has launched an aggressive strategy to establish country-wide Digital Infrastructure (FTTH/B based GPON, LTE/4G, Google-Loon)
Mobile Phone Penetration in Sri Lanka
• Total Penetration: 99.2 %
• Smart Phones : 24% current (expected 85% in 5 years)
The Golden Opportunitie
sEvery Mobile Phone today provides a mean for Banks to reach the user and get the user engaged in business cost effectively.
Every Mobile Phone User is a walking opportunity for Banks to do seamless business and earn profit.
Future of Banking in the
Digitally Connected World
Regulations & Compliance
Security and Privacy Policies
Products/Services Portfolio
BC/DR
Big Data AnalysisCore Banking System
E Wallets Cash-less Society
Agent Banks
Contact Center Legal and Contractual Services
Bank Sales Agents (Product Marketing and Customer Enrollment)
External Service Providers (Cards Associations, Payment Gateways )
CTS
Un-attended Service Kiosk / ATM
KYC / Authentication
Vault
Customers- Scattered over a large geography
Bank Service Agents
Data Storage
Customer Experience
Software as a Service
Mini Bank Branch that offers Banking Services
Can you ever imagine a bank with 40,000
branches and 40,000 ATMs in Sri Lanka?
Challenges for today’s Bank
Challenges for today’s Bank
Globalization Sophisticated Customer Demands / Trends Regulations Downward pressure on ROE Technological Advancement Disruptive Technologies Cost Containment Managing Generation Gaps
The most critical challenge in the short run
• Striking the right balance between physical and digital channels
World Retail Banking Report - 2014
FUTURE OF BANKING IN THE DIGITAL SPACE
• Future banks should be ‘universal’ and ‘multitalented’• An innovative multichannel infrastructure is a must• Real-time Video Interaction with clients, agents, advisors• Innovations for customer experience : “Test drive” of banking
products & services• Comprehensive “Mobile Wallet” – Pay at anywhere anytime
to anybody• Connect with Gen Y – Gen Z using games and social networks • Content monetization: - Micro level revenue themes such as
music, e-book download, gaming, movies, ticketing• Personalization of corporate banking services
Who will survive and thrive in the Digital Age?
Remember, it is not the biggest or the most intelligent who can survive,
but The one who can quickly respond/adapt to changes, identify pockets of niche opportunities with demand and exploit them
through innovative means before the competitor, while securing ‘reasonable/substantial profits’.
What will make you a winner?
It is not the greatest product that will make you a “WINNER”…….
but the INNOVATION (Product, Process, Business) that addresses the ‘changing customer needs’ in the market