Tomorrow’s  banking  transforma1on,  supported  by  CH&Cie  

Patrick  BUCQUET  -­‐  Chief  Inspira7on  Officer  –  Head  of  the  CH&Cie  FinLab    pbucquet@chappuishalder  -­‐  @pbucquet  -­‐  +1  347  419  7709  December  2014  

The Banking industry is going through major changes, and banks are more and more challenged by new entrants

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Finance is a “more-business” on large audience

… Next Gen Banking

Banking is an experience and

not a service

Regulation is no longer a barrier for new entrants

UX  is  key  to  provide  a  service  focusing  on  one  use,  providing  a  powerful  UX  

Authori7es  favor  financial  inclusion,  suppor7ng  new  entrants  in  the  industry  

The  actual  barrier  is  now  the  audience,  the  success  is  to  be  able  to  manage  a  large  volume  of  users  to  make  banking  a  sustainable  business

800 million users (e-commerce)

8,5 million users, 40% of Kenyan

adults

1% of Whole Foods transactions after 1

month (US)

Disruption in Banking is lead by new comers, which are taking full advantage of technology enablers arriving to maturity

§  Differentiate web and mobile, leverage on smartphone capabilities

§  Integrate innovative services (NFC payment, PFM management, etc.)

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Next Gen banking services

Basic Digital Banking

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3

Improved Digital

Banking

§  Standard offering: copy-paste branch services on digital, either web and mobile

§  Value proposition is matching a clear user’s expectation or solving a user’s problem

§  New entrants benefits from a low or unclear regulation

§  They propose a new business model, challenging the traditional commission-based banking business model

Breaking points: •  Digital standards transforming the User

Experience (lead by other industries) •  New technology capabilities (mobile, social

media, NFC, etc.) arriving to mass deployment •  New business models possible using the large

amount of data

Traditional banking services

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User eXperience

New entrants attack all the part of the banking value chain, having in common to propose a new way to serve users, focusing on an the User eXperience

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UX is not limited to User Interface (UI). It is the way to engage, serve and connect user.

§  Authentication

§  Aggregation

§  Coaching, advice (including P2P) User Engagement

§  Payment

§  Investment Products & Services

Market Place (connecting users

and needs)

§  P2P Lending, Crowdfunding

§  FX

Illustra1ons  

The Next Gen Bank will rely on an outstanding UX, with 8 main pillars to achieve success

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UX

Community & Social §  Banking part of the online social

environment: access to P2P expertize, sharing with peers, etc.

§  P2P services

Always on & Real-Time

§  Omni-channel, multi-device §  24/7 access whatever the channel §  Real-time updates, alerts

§  Users can provide feedbacks and ideas to improve the offer

Co-construction

Empowerment & Coaching

§  Tools to take decision §  Nudge approach §  Coaching, advice, access to expertize

Reward

§  Loyalty programs §  Users want to be recognized for their

loyalty

Simple, Design, Useful

§  Match specific user’s needs §  Simple use, no complexity §  Useful information

Personal

§  No more “one size fits all” §  Strong level of personalisation (UI, offers,

savings & budget management, etc.) §  Personalized advice

§  Fair-cost pricing, transparency on fees and business models

§  Clear communication (on overdraft, scoring, etc.)

Transparency Fun & Emotion

§  Banking part of the day-to-day life, less boring, more fun

The Next Gen Banking business models will rely on user’s data instead of commissions on transactions

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§  In Europe, the EU is pushing down the interchange rate (0,2 – 0,3%)

§  Customers are more and more requesting transparency on prices

§  Banks are no longer seen as the only financial service providers

§  Digital companies have developed a media-like business model, valuing their audience with a deep profiling of their users

There is a strong pressure on commissions

Other industries have lead the path to new business models

§  Lead generation

§  Profiling / Scoring

§  X-sell / up-sell

New business models are based on data

When it comes to user’s data management, Banks are far away from the best-in-class

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1.3B

798M

600M

800M

Worldwide users

152,5M

60M

83M

Number of customers

Number of customers

799M

500M

435M

X 2 X 5

230M

As a data-specialist, Alibaba is now one of the biggest financial service providers in the world

300 million users of Alipay (online payment) – 80 million

transactions par day

190 million users of Alipay Wallet

Yu’e Bao is the biggest funds (125 million customers, $90 Mds

AUM)

Zhao Cai Bao finances SME, based on a P2P model

Chinese banking regulator allowed Alibaba to launch

MYBank, a privately owned bank

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In the long run, banks are coping with a critical choice about their future with 4 main options to be considered

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UX specialist

Golden Factory

Generalist Niche

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1

3

2

1.  Provide banking Back-Office for all products & services (including banking regulatory constraints). Ex.: Bancorp providing back-office services to Simple (US)

2.  Provide underlying infrastructure to provide one specific service. Ex.: on payment, Ripple, Braintree or Chase Paymentech

3.  Focus on one service (niche positioning) and develop an outstanding UX. Ex.: Paypal, Apple Pay, Stripe, Venmo

4.  Focus on UX and leverage on user’s data to create value and propose all financial services (broker-like model). Ex.: Alibaba, Walmart, Mint

4 options to be considered for banks about their future

Today’s Banks

If they decide to compete on UX, banks would have to completely change their business model

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•  Banks will manage and protect Identity

•  Banks will take care of all the user’s data, controlling access by third parties

§  Banks will be part of user’s

community, organising exchanges

§  Banking will be a market place connecting people to their needs, and not only limited to finance

§  Banking will be a commodity, and as proven by Apple Pay, the service will not depend on the underlying product (same UX)

§  “Open Architecture” will be a standard, allowing each service provider to connect to any bank

§  Banks will become a trusted finance amplifier, part of the day-to-day life, with finance only a part of it

§  Banks will be able to advise users in their different moment of life … A Life

Coach … Bank-Agnostic

… The trusted

data manager

… A social enabler

The Next Gen

Bank will be…

In the short term, banks can still catch up with the market, focusing on UX and integrating underlying existing banking products

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PART OF THE INNOVATION IS NOT TO RE-INVENT THE PRODUCTS BUT TO PROVIDE A CONSISTENT UX

Credits

PFM

UX

Savings

Investments

Credits

PFM

Payments

Contacts

Banks need to change, innovation is a key component of the transformation, but requires a very specific approach

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Innovation comes first from one identified pain point •  The starting point must be one issue to be solved, from the user’s point of view •  The service will address one specific market segment, based first on use

Innovation is inspired by observation •  Innovation starts with the acknowledgement of how users use the service or would

use it •  Co-construction is a key part of the process to get users’ feedbacks to fine tune and

validate the concept, but based on a concrete service •  Innovation is about conviction, and does not come with focus group

Communication about innovative offers is the same as the traditional ones •  Innovation cannot be promoted, it has to be demoed

Right Wrong

Innovation can be managed like a standard project •  Small team, short Time-to-Market, Outsourcing are the pillars of a new approach to

manage projects •  Intrapreneurship mindset needs to be promoted internally

LESSONS LEARNED FROM LATEST SUCCESSES

Innovation is deeply changing the UX, and is not limited to the User Interface •  There is not always a need to re-invent the products and services, but to provide a

useful and consistent UX

CH&Cie is supporting banks with pragmatic innovation capabilities to deliver the NEXT GEN BANKING

§  CH&Cie has set-up an international market watch to follow the latest trends and identify the new opportunities

§  CH&Cie is able to test on the field the latest innovations to be sure it is a good practice to get inspiration from

§  CH&Cie is in contact with key players leading the path to innovation, start-ups, though leaders, industry most advanced players

With an international footprint, CH&Cie

identifies new trends to generate new ideas

With hands-on consultants, CH&Cie

scopes and organizes the project to develop the

concept

CH&Cie partnered with eYeka to turn an idea into a

concept with a crowdsourcing approach

§  Based on the first idea selected by CH&Cie, eYeka is launching a contest to a community of worldwide contributors to challenge the idea and turn it into a concept to be developped

§  In 3 weeks, a pool of concepts is collected and filtered from a business point of view by CH&Cie, then shared with the bank

§  CH&Cie’s consultants have all operational and concrete experiences

§  CH&Cie can gather all the required expertises, from IT to regulatory compliance

§  CH&Cie has developed a pragmatic to scope a project in 4 workshops and to deliver a concrete action plan

1 2 3

Ideas based on expertize /

convictions

Concept back-tested and adjusted through

collaborative innovation

Action plans to quickly deliver a first

concept (MVP)

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CH&Cie has developped a new way to manage project, to quickly deliver innovative offers

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CRAZY PATCHWORK OF IN-HOUSE AND

OUTSOURCED CAPABILITIES

GET INTO ACTION QUICKLY, TO DELIVER A PROOF OF CONCEPT,

AND NOT SLIDES

ONE CONCEPT & A CORE TEAM

PROJECT QUICKLY LAUNCHED WITH

REASONNABLE LOSSES ACCEPTATION

CONCRETE ACTIONS

EXISTING CAPABILITIES

= + +

NEXT GEN PROJECT by CH&Cie the successful project is not the one which anticipates the future 18-24

month ahead, but the one who builds it NOW

Throughout  solu+on  development,  CH&Cie  support  the  ini+a+ve  by  playing  the  product  owner  role  in  Agile  implementa+on.  

§  Support  the  user  experience  design      §  Scope  and  design  solu7ons  and  features    §  Act  as  the  product  owner  in  agile  development.    §  Coordinate  the  development  processes  between  all  

stakeholders  

User  Experience  Design  

Our value proposition: catalyst innovation with a strong business sense

From  concept  to  implementa+on,  CLO  func+on  played  many  roles  throughout  the  ini+a+ve  including  Project  Management  and  Competence  Integrator  

§  Define  the  overall  digital  strategy  and  offerings  §  Setup  and  build  up  the  digital  organiza7on  structure  §  Monitor  budget  &  forecast  status  §  Source  and  management  external  vendors  §  Plan  and  track  progress  

Chief  Launch  Office  (CLO)  

Map  and  create  business  /  organiza+onal  processes  (front  to  back  end)  with  a  user-­‐centric  approach  towards  digital.  Modeling,  op+mizing  and  reengineering    

§  Document  customer  journey  §  Model  and  analysis  processes  §  Op7mize  and  improve  processes    §  Leverage  new  technologies  to  reengineer  processes  

Business  Process  Management  

Provide  market  insights  to  generate  ideas,  animate  brainstorming  sessions,  challenge  the  offer  design  and  improve  the  offer  along  the  project  

§  Latest  trends  §  Market  watch  §  Best  prac7ces  §  New  project  approach  §  Concrete  return  of  experiences  (on  field  tests)  §  Contacts  with  thought  leaders  

Chief  Inspira+on  Officer  (CIO)  

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Use Case #1: CH&Cie and eYeka are supporting DBS to develop the next gen mobile banking in Asia

Mobile banking is a must-have in Asian countries, DBS wants to increase its footprint leveraging on mobile capabilities and penetration rate.

CH&Cie is currently advising and supporting DBS in the launching of a full mobile banking solution for India, China and Indonesia (countries where DBS presence is limited). CH&Cie quickly scope a first concept to be quickly developed based on agile methodology with an efficient on-boarding of the different stakeholders. eYeka’s community back-tested and fined tune the concept to finalize the offer design. About 50 people from eYeka’s community contributed to the project. 5-6 CH&Cie persons coordinate around 50 DBS persons and around 100 IT experts. The launch of the 1st live components of the application should occurs 12 months after the genesis of project.

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Use Case #2: CH&Cie’s proposition to AXA Bank in France leads to a disruptive and unique offer

A disruptive value proposition… §  “mobile first” bank account with PFM tools and new services §  Focus mainly on day-to-day customer expectations §  Bringing concrete value to the user, with tools helping to take decision

… with a fair cost strategy §  All the core services included §  No frills offer §  Ancillary products / services in option

Our business venture: SOON, one of the first banks in the world natively designed for smartphone

CH&Cie advised and supported AXA Bank to launch Soon in France From the opportunity study to the launch, CH&Cie has been deeply involved in the project, our moto "foster ideas, bring solutions" has never been so true

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Introduc1on  to  CH&Cie  

December  2014  

Chappuis Halder & Cie is a Financial Services consulting firm, delivering strategic projects across the globe

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Chappuis Halder & Cie is a consulting company specialising in Financial Services. We have expanded geographically from our origins in Geneva, now serving clients in all of the major financial centres across the globe. Our main focus is on 4 business areas: Insurance, Retail & Private Banking, Corporate & Investment Banking & Commodity Trading. CH&Cie expertise is anchored in the deep sector and functional knowledge of our consultants; all of us have a financial services background, and know the sector inside out. Because we do nothing else, and we operate across the globe, we are able to bring a rich seam of best practice ideas and benchmarking data to our clients.

§  New York §  Montreal

§ Geneva §  Paris §  London §  Luxembourg

§ Hong Kong §  Singapore

CH&Cie FinLab is based in New York City, to GET direct connections to trend setters and to GET hands-on experience with innovations

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Support  innova+ve  start-­‐ups  to  improve  their  business  models,  look  for  investors,  select  best-­‐of-­‐breed  service  providers  to  propose  one-­‐stop  shopping  offer  to  our  clients  

§  Brainstorm  with  selected  start-­‐ups  to  beber  understand  market  trends,  Promo7on  of  selected  start-­‐ups  to  our  clients,  Connect  start-­‐ups  with  investors  

Build  new  plat-­‐form  to  be  proposed  to  our  clients,  build  on  one  project  to  develop  a  mul+-­‐client  plat-­‐form  

GET  involved  into  innova+on  

Build  direct  contacts  with  innovators,  to  iden+fy  and  understand  new  trends,  with  start-­‐ups,  investors,  regulators,  incubators  

§  New  York  §  London  §  Singapore  §  Tel-­‐Aviv  

GET  connected  to  the  heart  of  innova+on  

Keep  track  of  the  various  developments  in  the  sector:  new  ini+a+ves,  new  ideas,  main  trends,  etc.  

Assess  the  success  of  the  different  new  ini+a+ves  /  technology  with  on-­‐field  tests,  thanks  to  our  interna+onal  footprint  

GET  concrete  feedbacks  on  innova+on  

Produce  content  /  studies  /  overview  /  panorama  to  fuel  bank’s  innova+on  processes  

Select  ini+a+ves,  Iden+fy  poten+al  benefits  for  banks,  define  the  possible  partnership  in  bank’s  context  

Realize  benchmark  studying  best  prac+ces  and  new  way  to  manage  projects  

GET  ideas  for  our  clients  

CH&Cie FinLab is supporting the hands-on expertize of CH&Cie’s consultants

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Latest  CH&Cie  Digital  Club  was  in  Paris  with  Holvi

CH&Cie  is  a  regular  speaker  at  major  events  CH&Cie  frequently  issues  reports  on  hot  topics  

CH&Cie  recently  invested  into  innova+ve  projects   CH&Cie  Digital  Club  gathers  thought  leaders  

Demo at Finovate London 2014 – click here Presentation at the EFMA Banking in innovation in Barcelona, 2014 – click here Radio show – Breaking Bank – March 2014 – click here

innovation that works monipulse

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