banking in a (fin)technologist's world...banking in a (fin)technologist's world discussion...

RCGILTNER Services, Inc.

July 29, 2016

Robert C. Giltner Chairman

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Banking in a (Fin)Technologist's World

Discussion Draft

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“A banker, eh? Can you still make a living at that?”

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Agenda 1. What is FinTech

2. What Are the Technologies

3. How Are FIs Responding

4. Case Study

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The Hyper-Connected Digital Consumer

FinTech is providing the financial services customer experience that is expected in our hyper-connected world.

What Is FinTech?

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“FinTech” are disruptive technologies, also used elsewhere, that have stepped in-between existing players and their customers with improved service and lower cost.

What Is FinTech?

Checking Accounts

Transactions structured and packaged into

accounts

Community and Regional Banks

Transactions delivered individually and

unstructured on any mobile device

PayPal/Google/MPOS

Branches

Video

Viewing structured and packaged on

TVs/DVDs

Blockbuster/ Broadcast TV

Video delivered individually and

unstructured on any mobile device

NetFlix

Blockbuster Stores

Pre-packaged

Stores

Divisible

Web/Cloud

Before Delivery Distribution Now

Delivery Distribution

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What Are the FinTech Technologies?

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FI partnerships leverage the installed infrastructure and customers of FIs and overcome their legacy systems.

Key FinTech Technologies

A. Cloud-based technologies

B. Data driven insights/tools

C. Blockchain technology

Key Industry Applications

• Payments and information

• Lending • Wealth Management

• Insurance

What Are the FinTech Technologies?

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Cloud technologies available since 2010 enhance customer acquisition, reach, delivery and documentation in reaching broadband-connected consumers and providers.

Industry Examples • nCino

• Square

• RCG

MinuteLender®

What Are the FinTech Technologies?

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Data technologies allow combining 3rd party data and analytics to provide a 360-degree view of the customer and targeted product-service decision-ing.

Industry Examples • Google Geo-Fencing

• Betterment

Investments Robo-Advising

• Decision Logic Account Aggregation

Data Technologies • Comprehensive data

ecosystems, including 3rd party APIs.

• Robust analytics and data infrastructure.

• 360-degree single customer view.

• Targeted product and service decision-ing.

What Are the FinTech Technologies?

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Blockchain technologies, while still emerging, provide transaction execution and tracking much more efficiently that today’s systems positing.

Blockchain Technologies

A. Bundle recent transactions into a block.

B. Verify block with cryptology and computing power.

C. Add to tracking and management chain and distribute block over network.

Industry Examples Over 40 banks in blockchain tests, including:

• HSBC • Deutsch • Bank of America • JP Morgan • Santander • CITI • BBVA • US Bancorp • RBS

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How Are FIs Responding?

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The underlying technology is changing the revenues and cost structures of serving customers for FIs.

How Are FIs Responding?

“A sea change in banking economics is gathering strength - as digital grows the fight to hold on to customer relationships will be bank’s high stakes struggle.” The Fight for the Customer, McKinsey, 2015

Customer Branch Visits

Don't Visit 38%

<1 Per Month 26%

1-2 Visits/Mo. 20%

3 or More/Mo. 11%Source: BI Survey, 2016

Branches Per 100,000 Adults – 2004-2014

Source: FDIC

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Early investment in new technologies came from non-banks, but is shifting to FI partnerships.

Source: Accenture

$50 Billion Invested in FinTech Since 2010

Investment is Shifting to Bank Partnerships

How Are FIs Responding?

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“ The industry will increasingly be about "enablers" — companies that help financial services incumbents with digital technology to serve customers.”

Even community and regional banks are partnering with firms that leave customer relationships under their brand and control.

How Are FIs Responding?

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FI partnerships leverage the installed infrastructure and customers of FIs and overcome their legacy systems.

FI Strengths

• Customer relationships

• Installed

infrastructure

• Regulatory framework

FI Weaknesses

• Comparative high cost structure

• Legacy systems

technology

• Entrenched business processes

FinTech Partnerships

How Are FIs Responding?

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Case Study

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Cloud-Based, Digital Loan Technology Platforms

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Case Study

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