Joining and Connecting the Dots Unlocking the Value of Data

© 2012 OLIVER WYMAN

FINANCIAL SERVICES

Gareth Lodge

Senior Analyst, Banking Celent Banking Event, Boston

25 January 2012

Joining and Connecting the DotsUnlocking the Value of Data

2© 2011 CELENT, A DIVISION OF OLIVER WYMAN

Big event, big themes, big ideas?


Big Data Defined…But does it help?

• Definition– refers to the tools, processes and procedures allowing an organization to create,

manipulate, and manage very large data sets and storage facilities.

• Hype– “Worldwide information volume is growing annually at a minimum rate of 59% annually”

Gartner June 2011– “Global digital content created will increase some 30 times over the next ten years – to

35 zettabytes)” IBM CIO Survey, 2010

• But why?– Must focus on information volume, variety and velocity– In reality, a move from “what happened and why” to “what is or will happen, and why?”


The Big Data OpportunityIts, er, big


The Information value chainWhere to start?

Source data

Process data

Manage data

Usedata


Common challenges in all payment businessesBusiness drivers will shape the future

• Regulation

• Economic uncertainty

• High IT overhead

• Increased client expectations

• Emerging competitive landscape

Business Drivers Strategic Responses

• Reducing the cost base of technology

• Invest in lower capital businesses

• Customer centricity

Technology Imperatives

• Implement end-to-end payment lifecycle servicing

• Modernise core payments and banking platforms

• Enhance client access and usability


Strength of Reason: 5 = High, 1 = Low

3.83.6

3.1 3.0

2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Uncertaintyre: Customer

Uptake

IntegrationComplexity/

Legacy

Costly UpfrontDevelopment

Time toMarket Too

Slow

ComplianceToo Difficult

Ave

rage

Score

of Ju

rors

Recent poll of 22 payments experts representing 15 countries across 5 continents showed that retail banks are struggling with payments innovation

Why banks reject innovative ideas?

Who is best at driving innovation?Degree of Success: 5 = High, 1 = Low

4.0

3.22.7 2.5

2.2 2.1 2.0

0.00.51.01.52.02.53.03.54.04.5

Ave

rage

Score

of Ju

rors

Other comments/ findings

• The inability to guarantee customer uptake was the chief reason for innovative ideas to be rejected by organisations. Banks want “proven innovation” – a contradiction in terms.– “Opportunities are often over-analysed.

With many innovations you just cannot predict how customers will react, so you have to make the developments and then hope for the best; that just isn’t how banks work.”

• Third-party innovators or developers have the greatest influence over innovation. In-house teams are said generally to be a ‘tick box’ for senior management rather than bringing true innovation.

• Innovation in 2011 most likely to come from/ in:– Asia: a top region by a clear margin,

followed by North America– Low value and micro payments– Improved product access

Source: Payments Innovation 2011 – The Global Jury Decides, a report sponsored by Ixaris, released February 2011


FormatsV2 V3

V2V3-Converter

Paymul 96.A Dirdeb 96.A CSV-Überw.CSV-Lastschr. Paymul 96.A

V2 V3

V2V3-Converter

MT94xMT94x Paymul 96.ADirdeb 96.A

V3 V2 V3

CSV-Lastschr.CSV-Überw.

Kunden Host db-direct 6.x db-direct internet db-bankline db-direct MC

MT94xPaymul 96.A Dirdeb 96.A

W W W

DB-E04(FRA)

BCS-FTP(FRA)

DBI-Srv.(BCN)

EDI-C.(FRA)

Merva(FRA)

ZSESTA

Paymul 96.A (ZSE)Dirdeb 96.A (ZSE)MT94x

Paymul 96.A (ESA / XEE)Dirdeb 96.A (ESA)

RVS

Paymul 96.A (ESA / XEE)Dirdeb 96.A (ESA)

Paymul 96.A (ZSE)Dirdeb 96.A (ZSE)

V3(ATZ,ATS,ATL,ATP,ATF,ATQ)

V3 (ATZ)V3 (ATU) V3 (ATF)V3 (ATQ) V3 (ATS)V3 (ATL) V3 (ATP)

STA

STA

STA

x.25 (B canal)

ZSE,ATZ,ATS, ATP,ATL,ATQ,ATF, ATU

ESAXEE

ESAXEE

ESAXEE

ESAXEE

STA

ESA, XEE, ATZ, ATU, ATF

ATQ, ATS, ATL, ATP

ESA, XEE, ATU,

ATF, ATQ, ZSE

ESA, XEE

IBM-Mailbox(VIE)

B@FIR(FRA)

Ext & Int. MT 101

ATZ, ATS,

ATL, ATP

Booking files

V3 bank clearing

MT 940MT 942

MT 940, MT 942

Tandem/i(FRA)

MT 101MT 103

MT 103SWIFT

ATZ, ATS,ATL, ATP

STA

MT94x MT94x

Connection to Internet



STA

https

CAT-EB(FFM)

AdministrationRepl.

V3 – client data carrier(IBM is Service

RZ / authorisation

with DBZ

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ATZ, ATU, ATF, ATQ, ATS, ATP, ATL,

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V2/V3

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Scanning(VIE)

V3

FINPAY FTP

Ext. MT 101

FTP

ATB, XCF, XAP

Retour-INFO

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PRISMA(FRA)

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V3

Repl.

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vice

FTP

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V3RVS RVS

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httpshttps

Real-life “Spaghetti-ware” – Tier 1 bank


An Abundance of Delivery Channels

Future Channels?


Understanding payments is a means, not an endPayments Lifecycle Management

Payment delivery

Payment approval

Payment verification

Invoice receipt

Invoice verification

Invoice approval

Invoice Creation

Invoice delivery

Payment receipt

Payment check

Seller Buyer


Simple Manufacturing Logistics Chain

Source: Celent

MANUFACTURINGPLANT

RETAILSTORE 1

SUPPLIER A

RETAILSTORE 2

SEA FREIGHT

DISTRIBUTIONCENTER 1

SUPPLIER B

DISTRIBUTIONCENTER 2

“The information about the package is as important as the package itself.”

Fred Smith (founder of FedEx), 1978


Delivering customer value, in real time

Enterprise Intelligence

Credit limits

Tenure with bank

Customer Intelligence

Analytics

Segmentation

Business Intelligence

Visibility of real-time data

Service request delivery

Transactional Intelligence


Multichannel Technology Framework

Channels Applications

Branch

ATM

Mobile

Internet

Contact centre

Intelligent processing

Rich Internet ApplicationsSOABPM

Customer dataAnalytics

ID Verification

Deposit products

Mortgage loanCredit cardsConsumer

loansWealth

management


Contextual self-support


Conclusions

• Big data isn’t a big idea….– Whilst not new, it’s certainly increasing in importance

• …and it’s not necessarily the answer– Too much data is an issue, but a lack of data isn’t

- Knowledge is only valuable if actionable

• Digestible data is even better than Big Data– Understanding which data to capture and why is critical– Being able to capture, respond and influence in real time should be the goal

• Payments are a source of the data but channels is where the engagement takes place


Gareth LodgeSenior Analyst

[email protected]+44 7753 614647

Joining and Connecting the Dots Unlocking the Value of Data

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