Digital Banking 2030

FELABANNovember 7, 2016

Guillermo Kopp

Worldwide Financial Services Industry Director

Digital is driving massive demand for transformation in financial services

2

MANAGING THE REALITIES OF RISK,

REGULATION, LEGACY SYSTEMS, AND

COST PRESSURES

DELIVERING INNOVATIVE CUSTOMER

AND EMPLOYEE EXPERIENCES WITH

SPEED AND AGILITYIT budgetsare currently required to keep the

lights on (Source: Celent)

(Source: Capgemini)

50%of Gen Y

>15%customers

>

(Source: The New Yorker,

May 16, 2016)

FINANCIAL

COMPANIES

ACCOUNTING FOR

US CORPORATE PROFITS

LIKELY TO LEAVE THEIR

BANK IN THE NEXT

SIX MONTHS

Top reasons:

Ease of use and service

Paid in bank fines since 2009

(Source: Morgan Stanley)

$280B

~70% of

17%30%

Before

2009 By 2015

80% of bank customers prioritize online

and mobile functionality

(Source: Wall Street Journal

June 3, 2016)

80% of customers would

switch to a insurer that provided

personalized service

(Source: Accenture)

Driving Digital Transformation in Financial Services

Threats perceived by

financial institutions

TECH

COMPANIES

STARTUPS

TELCOS

RETAILERS

BANKINGLOANS & CREDIT

INSURANCE

INVESTING AND

RETIREMENT

WEALTH

MANAGEMENT

Source: EFMA-Infosys Feb 2015 Digital Banking Report

BLOCKCHAIN

“There are hundreds of

startups with lots of

brains and money

working on various

alternatives to traditional

banking.“Jaime Dimon, CEO, JP Morgan Chase

2/3 of

customers

globallyAre using FinTech

product or services.

Bankers underestimate

the impact of FinTech

firms on their customers.

Traditional banking customers seek

more personal or

tailored solutions…and are happy to consider

alternatives to traditional banks.

(Source: Gartner)

44%of banks report that

improving user

experience is their

top priority2

Consumer expectations are being shaped by customer experience leaders outside of banking

1. 2016 Capgemini world banking report, April 2016

2. Derek Corcoran, Digital Business Banking Trends in 2016, Avoka, March 31, 2016

Digital transformation is essential to sustaining a competitive advantage

5

ENGAGE YOUR

CUSTOMERS

with compelling

experiences across

all channels

EMPOWER YOUR

EMPLOYEES

to drive customer

intimacy and be

digitally astute

OPTIMIZE YOUR

OPERATIONS

for efficiency,

compliance and

risk management

TRANSFORM

YOUR PRODUCTS

to unlock new

revenue opportunities

and achieve growth

Bu

sin

ess

Ag

ilit

y

Cost Take Out

Risk Compute

Core Systems

Storage & Back-up

Dev/TestCloud Platform

Production Cloud Infrastructure

Productivity Applications

>80% of new apps

in the next 5 years will be

distributed/deployed on

clouds

from infrastructure to application platforms

The strategic focus in the cloudwill shift

34% of CIOs say technology

as a service (cloud) will

have the most profound

effect on the CIO role in

the futureBusiness IT

Mobility

Digital Marketing

Big Data/ Machine Learning

Internet of Things/Devices

Blockchain as a Service

Market Data/Analytics

Blockchain is a secure, shared, distributed ledger

Secure

Distributed

Ledger

Standby Letter of Credit (SBLC) - Current State Overview

Microoft

Treasury

Agrees to Buy

Requests SBLC

Provides SBLC

Terms

Accept Terms and

Provide Issuing Bank

Details

Validates and Approves

Issuing Bank

Submits ApplicationSends SBLC

Sends SBLC

Reviews SBLC

for Treasury

Processing

Tracks security to expiration date so

long as customer maintains

payment schedule. If customer

defaults, pursues claim with

Advising Bank.

Initial

Contract

Negotiation

Initial Contract Negotiation

Inform Advising

Bank in case of

Customer default

Amendment Negotiation

Amendment

Negotiation Forwards

Amendments

Resends SBLC

Reviews SBLC

Again for

Treasury

Processing

SBLC New Process Flow - Distributed Ledger

1. Applicant agrees to transact with Beneficiary via SBLC

5. SBLC activated with expiration date; transaction complete

2. Applicant submits SBLC request to the ledger

3. Applicant bank issues SBLC

4. Beneficiary bank reviews and advises SBLC

Blockchain-enabled Digital Transformation - Benefits

Improves process speed, efficiency and effectiveness

Shifts operating model from transactional to relationship driven

Enhances multi-party transparency

Lowers adoption barriers

Together, with a growing number of partners, we have developed an open ecosystem in a secure environment supported by Azure.

Azure

More partners every day!