imagine - deloitte.com...war on talent and specialists competition from non traditional banks impact...
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Imagine
The Future of Banking
2© Deloitte 2019
Introduction
Chris Vialle,
Chris ViallePartner
Monitor Deloitte Nordic Strategy, Analytics and M&A
Financial Services, focused on Nordic Banking
linkedin.com/in/[email protected]
Previously: New York and Amsterdam office
3© Deloitte 2019
Deloitte and World Economic Forum Partnership
2015
The Future of Financial
Services
2016
Over the horizon: Blockchain
and the future of financial
infrastructure
Picture perfect: A blueprint for
digital identity
2017
Beyond Fintech: A pragmatic
assessment of disruptive
potential in financial services
2018
The future of automation
and AI in financial services
4© Deloitte 2019
Today is about the future of banking
1. Being a bank is not what it used to be..
2. The future of
banking
3. The opportunity for
Nordic banks
5© Deloitte 2019
1. Being a bank is not what it used to be..
6© Deloitte 2019© Deloitte 2019 6
Being a bank is not what it used to be..
Now
• Global banking ROEs sub 10% in Europe and 16% in Emerging markets (down from 20%)
• 60-70% of IT spend if still on keeping legacy running
• Majority of investments go into compliance and ‘cleaning up challenges of the past’
Near future
• Regulatory burden is unlikely to go down
• Expected credit cycle
• Huge technological change - Cloud, AI, Analytics, Blockchain (?) requiring new Ways of
Working, new capabilities and investments
• New entrants (fintech, big tech) and incumbents reducing current profit pools
7© Deloitte 2019
2. The Future of Banking
8© Deloitte 2019© Deloitte 2019 8
Identification of trends and driving forces The Center for the Long View(CLV) combines traditional research methodologies, Artificial intelligence and expert interview to identify driving forces that shape the future of banking
Source: Center for the Long View
Approach
• In addition to traditional desktop research , the Center for the
Long View (CLV) uses Deep View, which scans all internet
news, patent data and/or user content and clusters them into
associative topic networks
• The A.I. system is based on a proven, open source cluster
algorithm to ensure reliable results
• Furthermore, the CLV conductx interviews with key
stakeholders and industry expert to validate existing drivers
and to gain a deep understanding on future trends and drivers
around a topic
Benefits
• Our A.I. based trend sensing and analysis machine ‘Deep View’
help us to identify relevant trends and drivers much faster by
combining human intuition and artificial intelligence
• Conducting interview allows us to validate and gain an expert
opinion on the trends and drivers of the future
Deep View (A.I. Tool)
9© Deloitte 2019© Deloitte 2019 9
Driver Rating
Source: Center for the Long View
Breadth and depth of
AI usageYoung talent
development
Breadth and depth of
cryptocurrency usage
Willingness to share
sensitive data
Breadth and depth of
biometrics usage Financial rating based
on AI / Big data
Centrality vs
decentrality of data
Platform as a service
Regulation on the
abolishment of cash
Cybersecurity
capabilities
Fintech and startups
Social acceptance of
crowdsourcing
Brexit / Collapse of EU
/ Regional integrationMonetary policy Geiz ist Geil
Influence of China
Secure data as a
service
Global interoperability
of banks
Breadth and depth of
blockchain usage
War on talent and
specialists
Competition from non
traditional banks
Impact
H
L
L HUncertainty
Competition from Asia
Breadth and depth of
micropayment usageImportance of
omnichannel banking
Interest rates
Cost of banking
services
Volatility of global
markets
VC / funding
environment
Data analytics / leverage
of customer information
Retirement of
Millenials
Importance of work-
life balanceData protection lawDigital wallets
Carbon taxation on
blockchain
General education
level
Social standing of
freelancing
Aging
Islamic banking
Importance of
convenience Importance of
customer experience
Digital transformation Trust in the financial
system
Quantum computing /
CPU power
Social acceptance of
algorithmic decisionmakers Trust and Loyalty in
Security and services
Breadth and depth of
mobile device usage
Customer driven vs
product driven banking
Importance of
individuality
Young customer
expectations
Economic growthSocial importance of
cash
Consumer protection
law
Income and wealth
distribution
Importance of SDGs
of banks
24/7 on Demand
customer service
Digital rift in our
society
Cosmopolitan mindset of
young people
Trust towards bank
advice vs private advice
Social Standing of
working in a bankImportance of regions
Importance of personal
values
Robo advisory
Speed of transactions
Instantaneous
transactionsBank-as-a-service
Relationship to moneyEducation system
Migration
Impact of social media
on politics
Near and off shoring
Cultural significance of
saving
Acceptance of consumer
financing
Importance of face to
face contact
Please contact us for more information
10© Deloitte 2019© Deloitte 2019 10
The Trustmachine
This is a world in which banks do not offer their banking services directly to the customer, but on a leading platform for banking
services. Banks only act as platform and network administrators to provide trust and safety
Big fish/ small fish
In this world, the banking sector went through a series of consolidations. Bank co-exist with fintechs and integrate their latest technology in order to provide the customer a seemless and holistic
banking experience.
The dawn of Democratized Banking
We entered a peer-to-peer worlds of decentralized banking. Fintechswon the fight against traditional banks and cryptocurrencies have
become mainstream. Banks are only required as specialist advisors for complex transactions.
The Expert
This is a world in which banks mainly act as advisors for decentralizedplatforms that offer banking services. Large banks split up into
boutique banks and specialized in niche topics in order to becomemore profitable.
Strategic scenario NarrativesKey statements per scenario
Source: Center for the Long View
Do banks still need talent in-house?
Does banking stay within Banking?
Open development + expertise
Differentiation through in-house capabilities
High centrality
High decentrality
11© Deloitte 2019
How will we win?
What mgtsystems do we
need?
What is our winning
aspiration?
What capabilities must we have?
Where will we play?
What are our sources of defensible competitive advantages?
Which investments are required to close strategic gaps?
What are the operational and technologicalrequirements?
What actions do we take?
Strategy is an integrated set of choices
12© Deloitte 2019
Deloitte’s bank of the future model
Today’s BankBanking Provider
(very limited cases)
Products & services
BEYOND
FINANCIAL
SERVICES
ADJACENT
FINANCIAL
SERVICES
CURRENT
BANKING
SERVICES
OWN PLATFORM
Platform Ownership
PLATFORM OWNED BY
OTHERS
Banking Platform Banking Provider+
Banking & Services Provider
Exponential Platform
13© Deloitte 2019
A lot of our clients are considering / entering the ‘platform play’ The value Wallstreet is willing to pay ranges from 8 times your revenue
4X
Software
and data
(develop IP)
8X
Platform /
network and
transactions
1x
Assets and
physical goods
2x
People and
Services
Social Networks
Credit card company
Stock exchange
Biotechnology
Software
Pharmaceuticals
Industrials
Hospitals
Hotels
Consultants
Financial Services
Insurance
Digital Divide
Typical industries
Source: William Raboudo, Deloitte
14© Deloitte 2019© Deloitte 2019 14
Running from the lion…
https://youtu.be/D-ie_aFsfb8?list=RDD-ie_aFsfb8
15© Deloitte 2019
3. Nordic banks have an incredible opportunity…
16© Deloitte 2019
The Nordics have everything going for them…
Iceland
Finland
Ireland
Nicaragua
Norway
Sweden
Denmark
Rwanda
84.5
Philippines
Belgium
85.9
83.7
78.9
81.7
80.3
78.5
78.5
78.1
78.1
Top 10 countries in gender equality index 2014
Gender Equal
Norway
S. Korea
Finland
Netherlands
Sweden
Denmark
12.1
Czech Republic
Australia
Austria
Poland
5.3
8.8
13.0
10.2
12.8
13.4
13.9
14.2
14.5
Income Equal
Top 10 Child Poverty Rate (lower = Better)
Source: WEF, Unicef, Transparency International, Corruption Perceptions 2018, Deloitte Digital Banking Maturity 2018, Eurostat
Netherlands
Singapore
Denmark
87.0
Sweden
New Zeeland
Norway
81.0
Finland
86.0
Switserland
Canada
Luxembourg
88.0
86.0
86.0
85.0
84.0
82.0
81.0
Non Corrupt
Top 10 Corruption index (higher = less corrupt)
Canada
Sweden
Australia
Denmark
Switserland
UK
Norway
Finland
USA
Netherlands
8.25
7.71
7.87
7.83
7.68
7.57
7.53
7.36
7.27
7.22
Country Sustainability Scored and Rankings
Sustainable
17© Deloitte 2019
The Nordics have everything going for them…
Source: WEF, Unicef, Transparency International, Corruption Perceptions 2018, Deloitte Digital Banking Maturity 2018, Eurostat
Digital
Internet access
Internet banking usage is highly correlated with internet access
70%55%0%
90%80%50% 100%
100%
60% 65% 85% 95%75%
AT
BE
NL
CH
ILDECZ
SI
DK
ES
FI
HR
UK
HU
RS
IS
IE
BG
IT
LT
EE
LV
NO
PL
RO
LU
SK
TR
FR
SE
RUIn
tern
et
ban
kin
g u
sag
e
18© Deloitte 2019© Deloitte 2019 18
And also have room for improvement
Source: Deloitte Digital Banking Maturity 2018
Note: To achieve comparable data, country averages are based on the results of the top 5 biggest banks in given market in terms of assets
SENO FI ISDKRU PLCH TR ES
ES
ZA
PL FI
NO
FR BGCZ HR
LT
SE
DKBE
SK
NL
RO
AT
UK
EE
RS
HU LUIT LV
IS
SISA
JO LB
IE IL
AE
TRCH
RU
Digital champions
Digital latecomers
Digital adopters
Digital smart followers
KW
QA
DE
19© Deloitte 2019
Deloitte’s bank of the future modelThree ‘real’ options
Today’s Bank Banking Provider
Products & services
BEYOND
FINANCIAL
SERVICES
ADJACENT
FINANCIAL
SERVICES
CURRENT
BANKING
SERVICES
OWN PLATFORM
Platform Ownership
PLATFORM OWNED BY
OTHERS
Banking Platform Banking Provider+
Banking & Services Provider
Exponential Platform
2
3
1
20© Deloitte 2019
Maybe not everything for everyone...
But more:
Differentiated Nordic
Thank You Very Much!
Please Stay In Touch!
Chris ViallePartner
Monitor Deloitte Nordic Strategy, Analytics and M&A
Financial Services, focused on Nordic Banking
linkedin.com/in/[email protected]