the disrupted banking value chain
TRANSCRIPT
The disrupted banking value chainHow we got here and what’s nextSalvatore Iacangelo
7 June 2016S. Iacangelo 2
The most dangerous phrase in the language is,
"We've always done it this way.“(Grace Hopper1)
1 Grace Hopper (* 9 December 1906; † 1 January 1992), US Fleet Admiral and Computer Scientist
7 June 2016S. Iacangelo 3
It’s banking’s turn now
7 June 2016S. Iacangelo 4
?
Today’s clients expect a new kind of business & service model…
Client 1.0Old world
Client 2.0New world
Client 3.0Next world
Liliane Bettencourt
Elon Musk
Nick D'Aloisio
Bank’s value proposition
Wealth source
Mainly inherited
Mainly self-made Mainly self-made
Trusted advisor
Mainly banks
Mainly non banks ?
?
?
Investment behavior
Mainly delegator
Mainly self-directed
Financial skill Medium High
21%19%
61%
MixedInherited Self-made
26% Finance7% Real estate7% Technology
17% Finance13% Industrial8% Real estate
Top 3 occupations
Where my wealth comes from1
15%27%
31%34% 29%
44% 33% 29%
15%14% Advisor dependent
Self-directed
Advisor assisted
Event driven
UHNWI
HNWI
15%
Affluent
10%
How I invest my wealth2
1 Wealth-X, 2015 “World Wealth Report” 2 Spectrem Group 2015 “Advisor Relationships and Changing Advice Requirements” 3 Capgemini 2015 “World Wealth Report”
I expect a largely digital banking relationship3
55%
AuM $20mn+
74%
AuM $10-20mn
7 June 2016S. Iacangelo 5
Asset servicing Invest. solution design Investment advice
Incumbent BanksIncumbent Banks
718258
2014
2′064
2012
4′377
2011
2013
2015
8′362
LendingClub loan volume (USD mn)
4060
200
100
Family Offices
EAMs
Robo advisors
6595
6540
89
15
Indicative gross margin comparison (bps)
Shifting clients’ willingness to pay
New world
Old world
Accounts & Payments
Trading
Financing & investing
Non-Bank Start-ups
Communities, Forums
Robo Advisors
Family Offices, EAMsTech Expanders
Boutiques
New competitors capture the gap in the market… and the market in the gap
7 June 2016S. Iacangelo 6
FinTechs continue to grow albeit with significant regional differences
13.8
2.82.42.1
6.7
5.3
5.5
1.1
2011
2012
2013
+68%
2014
2015
12.2
19.1
2.40.3
2.80.4
3.9
Other FinTech investmentsVC backed FinTech investments
(e.g., angel investors, hedge funds)
FinTech investments continue to grow
1
2
3
60% of all global FinTech Deals56% of their volume60% of FinTech mega deals >$50mn
21% of all global FinTech Deals34% of their volume27% of FinTech mega deals >$50mn
19% of all global FinTech Deals10% of their volume13% of FinTech mega deals >$50mn
United States clearly leading in FinTech investments(data for 2015)
Source: KPMG/CB Insights 03/2016
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There is a clear focus among highest valued FinTechs on lending and payments
1.0
1.0
1.0
1.0
1.0
1.0
1.8
1.9
2.0
2.3
2.3
2.4
3.5
4.0
4.5
5.0
5.0
8.0
10.0
TransferWiseKabbage
SoFiStripe
Zhong An InsuranceLu.com
Coupa SoftwareChina Rapid Finance
Fundin CircleGusto
Oscar InsurancePropsper Marketplace
AvantAdyenKlarna
MozidoCredit Karma
One97Zenfits
Global FinTech Unicorns valued >$1bn have a combined valuation of $57bn42%of largest FinTech Unicorns focus on lending
32%of largest FinTech Unicorns focus on payments
LendingPaymentOther
Source: KPMG/CB Insights 03/2016
7 June 2016S. Iacangelo 8
Next big thing will be putting it all back together (but different)
Banking yesterday
Banking today Banking tomorrow
7 June 2016S. Iacangelo 9
What it takes to build a healthy Ecosystem
Piazza
PeopleStores
Road
Empty outside
mall
Empty high street
Road to nowhere
Piazza full of idle people
EcoSysInfrastructur
e
Community (people)
Content (producers
)
Commerce
(exchange)
7 June 2016S. Iacangelo 10March 2014 10