Value Delivered?

David Dalton, Partner & Global Blockchain Leader

A review of wins, losses and must do’s for FSI & Blockchain

CONTEXT

– Industry Forces, Digital & Emerging Technologies

UNBUNDLING

OF UNIVERSAL,

INTEGRATED FSI

COMPANY MODELS

Heightened Expectations

Informed Decisions

Best-of-Breed Consumption

Product-based Competition

Reduced Risk Appetite

Expansion of Institutional Capital

Scalable Next-Gen Infrastructure (e.g. Cloud)

Exponential Technologies(e.g. AI, Robotics, IOT, DLT)

Customer Protection

Emergence of Non-Traditional PlayersIncreasing Capital and

Compliance Burdens

Open, API Standards (e.g. PSD2)

Mobile & Internet Connectivity

EMERGING FORCES ARE SHAPING THE FUTURE OF FSIThe proliferation of devices, regulation, data and technologies has changed the market dynamic for FSI firms

THE TRANSFORMATION OF FINANCIAL SERVICES

FSI is being transformed in three waves

Digitalization Open Banking Beyond Open Banking

Platform-based business approachwhere multiple services are provided to customers in an integrated and coherent suite through an ecosystem of different service providers. The services provided can be from any type (e.g. mobility, protection products, delivery, home security), and banks can participate by providing niche and tailored financial services that consistently integrate the suite of services.

Transformation of traditional banking products and services from brick-and-mortar into internet and mobile. The services in most of the cases come from banks with limited presence of strategic partnerships with external companies. Banks which are only focusing on this step try to maintain status quo: old banking world in new channels.

Platform-based business approach where data, processes, and business functionalities are made available within an ecosystem of customers, third-party developers, FinTech startups, or partners. The services provided are financial, and may come from banks as well as from third parties.

THE EVOLUTION OF AUTOMATIONEnabling and disruptive technologies have the potential to transform and reshape enterprise processes and value chains

Robotic Process Automation

How its affecting industries?

• Robotic process automation (RPA) is the application of software and technology with the use of artificial intelligence to carry out repetitive tasks quickly, tirelessly, and accurately

• RPA can be used as a virtual worker, replacing humans in mundane and repetitive tasks. Robotic process automation allows modern banks to meet their high demands for audibility, security, and data quality, while also improving operational efficiency

Cognitive Technology

How its affecting Industries?

• Cognitive technology is in the same vein as machine learning and virtual reality except that it’s a broader concept

• For example, the cognitive technology umbrella includes things like natural language processing (NLP) and speech recognition

• Combined, these different technologies are able to automate and optimize a lot of tasks that were previously done by people, including certain aspects of accounting and analytics

Machine Learning

How its affecting industries?

• Companies like Google are using machine learning on mobile devices which can continue learning even when offline

• The result? Machine learning is reshaping the way businesses interact with their customers in a big way by helping them anticipate and meet customer needs more easily

Cloud Services

How its affecting Industries?

• Cloud computing is not a product, it is an IT delivery model that delivers IT in a much more efficient way

• By using the cloud businesses can reduce overall spending by requiring fewer IT resources to support new business initiatives

Virtual Reality (VR)

How its affecting Industries?

• VR is likely to affect companies across the board as they adopt the technology to help them engage customers more effectively and optimize their sales and marketing efforts

• It’s also a potentially useful tool for learning and is increasingly being adopted by educational organisations

Touch Commerce

How its affecting Industries?

• Using touchscreen technology with one-click shopping, touch commerce allows consumers to buy products easily from their phones

• This is one of the biggest things to hit e-commerce in recent years with purchases of this type expected to increase by 150% this year alone and retailers in almost every industry anticipating an increase in sales directly related to this new technology

250 Fintech’s

Transforming Financial Services

7

DISRUPTION WITHIN FSI – AN EXAMPLEThe potential for disruption is both a threat and an opportunity for financial services

Revenue

Growth

Return on Equity

IT Spend

Average Salary

Market Cap

€1bn

~50% pa

32%

€6.3m

€160,000

€12bn

€9.3bn

-1% pa

5.5%

€542m

€67,000

€12bn

Source : Financial Times

Cooperation with partners enable FinTechs to expand product portfolio with speed not seen before

FINTECHS OPERATING WITHIN FSI

FROM DT TO dX

DIGITAL TRANSFORMATION TODAY

Channel. Experiments. Cool Kids Club

TRANSFORMATION TOMORROW

Core. Platform & Ecosystem. Culture =

FROM WHAT

FROM COMPETE

FROM BUILD

TO HOW

TO COLLABORATE

TO ASSEMBLE

SO WHAT ABOUT BLOCKCHAIN?

– Industry Insights & Progress

MARKET INSIGHTSDeloitte’s 2018 survey of over 1000 Blockchain-savvy executives from across industries and global regions is a leading indicator of where Blockchain is headed

Cross Industry Insights:

• Blockchain is getting closer to a “break

out” moment

• Academic hypothesis of 5 years ago

becoming a reality

• Shifting from “Blockchain tourism” to

the design and development of practical

business applications

EXECUTIVE SENTIMENTExecutives were asked to determine the relevance of Blockchain technology to their organisation as well as providing a ball park estimate for investment

COMPARISON OF OUR 2016 & 2018 SURVEYS REVEAL USE CASE TRENDSOver the coming 12 months, we envision many types of participants with varying levels of Blockchain expertise and adoption coexisting in the Blockchain universe

0% 10% 20% 30% 40% 50% 60% 70%

Other

Voting

Payments

Digital Currency

Digital Records

Digital Identity

Internet ofThings

Supply Chain

Blockchain Use Cases – 2016 vs. 2018 Survey

2016 2018

HOW WE SEE THE MARKET EVOLVING

Emerging disruptors and large enterprise companies converging as their influence on each others’ activities increases

An increase in the number of industry consortiums forming to explore the potential of the technology together; sharing the risk and enhancing the likelihood of adoption

A shifting focus to operational and governance requirements beyond the technology exploration

A merge between blockchain and other technical solution offerings, notably Artificial Intelligence and IoT Devices

As the ecosystem evolves we envision participants with varying levels of Blockchain expertise and adoption coexisting in the Blockchain universe

MEASURES AND FOCUS AREASThere are four key areas organisations must concentrate on along their Blockchain journey

Corporate Culture And Change- Moving beyond a view of siloed competition to reimagine value chains in a co-petitive manner

Moving Beyond Blockchain Myopia- Blockchain is just one technology to consider in a broader digital innovation strategy as the business and technology functions within firms build their future value chains

Consortia & Collaboration- Blockchain is a network technology, single nodes will not create the value or reap the benefits of the technologies potential. Participants cannot act in isolation

Ecosystem AlignmentRegulators must step up to help shape and define the new paradigm in which industry resides. The markets which get ahead will be those where Regulators are active and openly embracing innovation at all levels

QUESTIONS & ANSWERS

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