HIGH-TECH AND HIGH-TOUCH BUSINESS LENDING AT RABOBANK
Erik PasschierEVP, Manager IT Domain Lending & Insurance, Rabobank
Balancing act between High tech and Human Touch
Business innovation together with Pega
Erik Passchier, June 5th 2017PegaWorld Las Vegas
Contents
• Introduction to Rabobank
• Rabobank Strategy
• Business Lending in the Netherlands
• Positioning Pega at the Rabobank
• Pega at work at the Rabobank
• Conclusions and Outlook
4
Introduction to Rabobank
Rabobank cooperative banking
Annual summary 2016• Net profit 2,024 (million EUR)• Total assets 662.3 (billion EUR)• Comm. eq. Tier 1 14.0 %
Ratings 2016• S&P A+ • Moody's Aa2 • Fitch ratings AA-• DBRS AA (high)
more info: www.rabobank.com
Rabobank marketshare Netherlands
Net Profit
2.2 billion
2 bilion
2015 2016
Mortgages Savings Business lending
Rabobank strategy
CustomerDistribution / Front Office
Manufacturing / Back Office Market Infrastructure
Individual
Institution
Inve
stin
g /
Wea
lth M
gmnt
Pers
onal
Sa
ving
sLe
ndin
gCa
pita
l Ra
isin
g
Source: based on illustration ‘Financial Services Value Chain Supermarket Age’ by Doug Nelson, Capgemini Consulting= flow of capital
Value chain that we were used to…
Paym
ents
CustomerDistribution / Front Office
Manufacturing / Back Office
Market Infrastructure
Individual
Institution
Inve
stin
g /
Wea
lth M
gmnt
Pers
onal
Sa
ving
sLe
ndin
gCa
pita
l Ra
isin
g
Source: based on illustration ‘Financial Services Value Chain Next Gen’ by Doug Nelson; Capgemini Consulting
Paym
ents
Independent, digital front ends API-driven middle- and back office
Electrification of market infrastructure
Independent , digital front ends and middle- and back office
The value chain will change radically
Risk of losing customer relationship
2000 2018
Delivery of Parcels
Dutch postaldelivery
liberalization
Software
Microsoft disconnects
Internet Explorer from Windows
Energy
Decouplingdistribution fromnetwork support
Telecom
Net-neutralityon 4G networks
Banking
PSD2 implementation
2001 2004 2013
Bank of the future
The futureis not aboutbanking…
It’s aboutconnecting
people.
The ambition of Rabobank
Become the #1innovative bankinconnecting people.
Create new income streams
SupportInnovations
Partner forclients &
stakeholders
Increase innovation
DNA
Clear ambitions towards clients and
stakeholders
Business lending in the Netherlands
Lending Enterpises market development
The demand for credit is expected to rise through improving economy; Challenge is to serve the customer with shrinking balance question
Changing regulationsChanging Customer behaviorPressure on the traditional
revenue model
Finance additional challenges in the business playing field in the Netherlands
Required data and regulations
standards (e.g. IFRS9, A-IRB model
en Mifid)
Higher requirements of business credit portfolio quality
Economy draws to making demand for credit is expected to
rise
Rising credit demand can not be absorbed
by balance sheet
Number of business financing is going to
rise, share bank credit drops
3%
2%
1%
0%
-1%’20’17’14
2010: € 407 mrd
2016: € 425 mrd
BBP Nederland (2014 – 2020)1
Bron: 1CBS en CPB verkenning 2018-2021, 2DNB
bancair
bancair
Between High Tech and Human Touch
15
Lean startup learnings
Pega workflow strategy
Continuous Improvement
Agile implementation
Technically everything is possible …… but how does it connect to the customer and employee experience?
Outcome Digital Business Lending
16
Processing time 24h & 60s
Standardized credit scoring
Max 4 client documents
to 9 products
towards 11 types of collateral
Processing time 4 weeks
Expert based credit scoring
8-10 client documents
39 products
160 types of collateral
Positioning Pega at Rabobank
Business Function model Rabobank
Product management and operations
Governance Organisation SupportOrganisation
strategy
Investor relations
Sustainability policies
Audit services
Knowledge market policies
Compliance & risk policies
Value chain management
Portfolio management
Human resource management
IT development & operations
Facility management
Communication
Management reporting
Fiscal and legal support
Procurement
Risk management
Risk model management
Market risk management
Asset & liability management
Operational risk management
Customer process managementMarketing
Interaction managementIdentity
managementDialogue handling
Access management
Financial management
Consolidation and reporting
Treasury management
Financial restructuring & recovery
Compliance
Customer due diligence
Fraud & AML management
Data management
Relation managementThird party
management
Document management
Financial risk management
Service management
Transaction management
Information provisioning
Advisory service Sales
Financial accounting
Customer management
Relation interactionmanagement
Asset management
LendingNon financial
servicesFinancial markets
InsurancePaymentsAccount
administration
Pega at Rabobank
Product management and operations
Governance Organisation Support
Compliance & risk policies
IT development & operations
Risk management
Customer process management
Interaction management
Dialogue handling
Financial management
Financial restructuring & recovery
Compliance
Relation managementCustomer
management
Lending Payments
Service management
Advisory service
Advisory, Sales andService processesfor Enterprise Lending.
Architecture: CorePega 7 platform
Global Client onboardingfor wholesale customers
Architecture: Pega CLM, KYC
Service and claim processesfor Payments.
Architecture: Pega Smart Investigations
Arrear management, collections and support forcustomers in financial stress for Mortgage Lending
Architecture: PegaCollections
Track, route, issue, prioritise and report on crime cases.
Architecture: Core Pega 7 platform
Customer due diligence
Information provisioning
Sales
Banking Services and operations of Rabobank Country Banking and Rabo-Direct in Australia and New Zealand.
Architecture: Pega CRM, CSFS, KYC, Decisioning
Relation interactionmanagement
Development and operations
Architecture: Pega Designer Studio, BIX, AES
Pega at work in the Rabobank
Agile way of workingStandup24 hours
Sprint2 weeks
Every 4 weeks
PEGA COE & Delivery
Pega DesignAuthority
PEGACoE
Jura-AD Jura-MC
Architecture&DesignMon-toring
Jura-RD
Release
Jura-IL
LCM
LEGO
GenericAssets
Fuji
Innovation
SolutionArchitecture
LSA’s
BusinessArchitectureGovernance
SolutionArchitecture
BusinessArchitecture
PEGA @ Rabobank agenda 2017
23
1. Deployment Automation
2. ComponentizationContainerization
3. Pega Mobile
4. Standard Development Model for Pega@Rabo
5. Data Governance
6. Test Automation
7. Infrastructure, Cloud, HA
8. Robotics
9. Software QualityPegaSecure Coding
10. Application ServicesAPI’sPEGA
A BC
123
D
24
ComponentizationContainerization
Deployment Automation
Software QualitySecure Coding
Creating and improving the reference architecture
DevOps
Standard Model For Pega Development
Data GovernancePega Infrastructure,
Cloud & HA
Test AutomationFunctional / Technical
Pega MonitoringLogging
Application ServicesAPI
Rabobank Reference
ArchitecturePega
Need for Cloud
25
Rabobank Cloud Strategy
Business Requirements
Principles for Rabobank cloud-native software architecture, development and infrastructure
- A standard way of working for all the Pega Delivery Teams -
Our mission is to deliver scalable, modular Pega applications. We promise optimal delivery times. We are ready for the Cloud.
Cloud options for PegaApplications
DevOpsCollaboration between Software
Developers and IT operations
ComponentizationDevelop an application as a collection of small services
Continuous DeliveryMake a change ready forrelease without waiting.
Container based InfrastructureFrom traditional infrastructure to
containers. Future: ‘serverless’.
= worldwide trends in software architecture and development
BUSINESS DRIVERS
INFRASTRUCTURE DRIVERS
DELIVERY PRINCIPLES
TREND: COMPONENT ARCHITECTURE TREND: DEV & OPS = DEVOPS TEAM
TREND: FULLY AUTOMATED DELIVERIES TREND: LESS AND LESS VISIBLE INFRASTRUCTURE
Conclusions and outlook
Next steps for business lending
27
Pre Approved Lending
Artificial Intelligence Risk assessment
Automated funding from partners
Robotics to solve data/legacy issues
Adaptive Lending
2828
Thank you for your attention
28
Erik.Passchier @Rabobank.nl