looking to the future - financial services in the digital medium

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www.mercer.com.au Looking to the future How best can a financial service be provided in the digital medium? Innovate 08 David Anderson Outsourcing Business Leader, Asia Pacific 7 August, 2008

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In this address to the annual Financial Services Council conference I presented the global state of play for digitisation - covering aviation, music and entertainment and financial services. I presented a view of what's in store for financial services for the future. This work continues to inform our digital strategy today.

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Page 1: Looking to the Future - Financial Services in the Digital Medium

www.mercer.com.au

Looking to the futureHow best can a financial service beprovided in the digital medium?

Innovate 08

David AndersonOutsourcing Business Leader, Asia Pacific

7 August, 2008

Page 2: Looking to the Future - Financial Services in the Digital Medium

1Mercer

Today’s agenda

The dim and dark ages: our recent past– Can you remember when…

The global state of play right now– Airlines– Music– Financial services

Facts about the end consumer

What’s in store for the future?– Empowered consumers engaged with their finances through the digital medium

Page 3: Looking to the Future - Financial Services in the Digital Medium

The dim and dark agesHow time, technology and functionhave moved on quickly

Page 4: Looking to the Future - Financial Services in the Digital Medium

3Mercer

Dial telephones

9 till 5 shopping hours (till midday on Saturday and closed Sunday!)

Travelling on anything with a paper ticket

Using a public pay phone

When PC’s were a novelty – and came without colour screens!

A world without the internet – no email, Google, yahoo, YouTube,facebook, MySpace or LinkedIn

A time without mobile devices or communication – no phone, iPod,SMS text, Blackberry or GPS

Can you remember…

Page 5: Looking to the Future - Financial Services in the Digital Medium

4Mercer

Endowment policies and group ‘key man’ plans

Superannuation and insurance sold and serviced only through anagent

Deposit administration and the advent of unit-linked, or investment-linked super

Banking only through the branch - 10 till 3

Passbook savings accounts

Bankcard

Loans negotiated only with the bank manager

Shares purchased in person through a stock broker – T+5 settlement

The introduction of the ATM

And for financial services…

Page 6: Looking to the Future - Financial Services in the Digital Medium

The global state of playAirlines, music and financialservices

Page 7: Looking to the Future - Financial Services in the Digital Medium

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The airline industryMass expansion and transformation

From the past…Three days and seven stops fromSYD to LHR

Paper tickets purchased over-the-counter at the airline

Check-in counters and queues

Random seat allocation

Frequent flyer points

Sole source carriers

Pre-recorded movies and news

Airline issued boarding passes

No in flight communication

To the present…22 hours and one stop from SYDto LHR

eTickets and online flightpurchases

Quick check self serve kiosks

Select your seat in real time

Online loyalty stores

OneWorld and Star Alliance

Foxtel digital live to air!

Online remote check-in

In air text, voice and internet

Page 8: Looking to the Future - Financial Services in the Digital Medium

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From the past…Vinyl records and 8-Track tapes

In store purchases

The vinyl then CD jukebox

Pre-packaged album content

Sorting through storage shelves

Records in milk crates, stackedcassettes and CD storage towers

Physical fulfilment and fixedlocation play

To the present…Cassettes, then CDs, then MP3

Anywhere, anytime online sales

iTunes library

Burn your own tracks on demand

Online store personalised profile

Thousands of songs, videos,pictures, TV shows, games andapplications in your pocket!

Mobile fulfilment and play

The music industryFrom the physical to the virtual

Page 9: Looking to the Future - Financial Services in the Digital Medium

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The financial services industryAggregation and integration

mint.com, wesabe.com,covestor.com

Get a complete picture of yourpersonal finances, including fees,all in one place

Credit cards, bank accounts,loans, investments, mutual funds

Highly personalised budgetingtools - set goals & track progress

Email and text alerts

Compare accounts to identifypotential savings

Online communities – askquestions and share advice

Page 10: Looking to the Future - Financial Services in the Digital Medium

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The financial services industryMobile banking is here

Check account balances, viewmini statements, transfer money,pay anyone, receive accountalerts

‘Bank in your pocket’ – any hourof the day and no need to visit abranch

Lower cost per transaction, reachlarger customer base

ANZ M-banking (Feb 2008):encrypted data allows fundtransfer via mobile

NAB text banking (Apr 2008):account balances via SMS

Page 11: Looking to the Future - Financial Services in the Digital Medium

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The financial services industryBuy and sell shares on your iPhone

Access live market news andmovements

View your holdings

View the latest stock prices

View company details, news,announcements and charts

View the daily market report

View your stock watch lists

View your outstanding, executedand cancelled orders

Buy and sell stocks in real time

View market depth

Page 12: Looking to the Future - Financial Services in the Digital Medium

Facts about the end consumerWhat do they really want?

Page 13: Looking to the Future - Financial Services in the Digital Medium

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Always on the go, time poor

Juggling work, study and family life

Worried about budgeting, mortgages, petrol, price of groceries

Looking for the best deal with minimal effort

Trying to manage a multitude of accounts: mobile, home phone,broadband, credit cards, bank accounts, personal loans, home loan,bills

Concerned about having enough superannuation and insurance

Increasingly switched on to technology

Want a provider they can trust

Consumers are time poor

Page 14: Looking to the Future - Financial Services in the Digital Medium

13Mercer

On demand self service

Consumers want a choice of how they access service (online, chat,email, phone, call back, SMS)

‘Try before you buy’ – online product comparisons

Sophisticated personalisation of content

Information that finds you – when you need it

Gmail – adverts and content based on personal profile

Consumers co-creating products and services to suit their needs

Consumers want service on call: at their fingertips; and in their pocket!

A desire for personal, immediate fulfilment

Page 15: Looking to the Future - Financial Services in the Digital Medium

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They now live in a wireless, digital reality

Internet, email, mobile phone

Social networks, video, audio streams, online calculators and projection tools,interactive webinars, blogs, Bluetooth, forums, RSS, wikis, wii

Wireless hyper-connectivity– Anywhere, anytime connectivity and access to information– Greater reach to customers– GPS– Video messaging– Hot spots and Bluetooth pairing

Accessibility, flexibility, versatility

Real-time on demand personal information

Smart phones as a new push/pull service platform

Page 16: Looking to the Future - Financial Services in the Digital Medium

What’s in store for the future?Financial services in a wireless,digital world

Page 17: Looking to the Future - Financial Services in the Digital Medium

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Real time video calls and financial coaching

Online financial planning programs such as C2MF (see to my finances),integrated with BPAY, e-banking, mobile communication and straight throughprocessing

Electronic and voice activated disclosure documents

Your super, insurance, banking and stock details aggregated on one mobiledevice – and you can transact in real time

Funds transfer and investment switching on your TV - your financial recordson YourTV. Monitor your investments, switch options, transfer cash and seegraphical representations of past (or projected future) performance

Asking a friend or colleague ‘how much is your super worth right now?’

A nation of educated, empowered and engaged financial services consumers.World leaders in savings, again…

One-to-one service through a combination ofconverging digital technologiesImagine this…

Page 18: Looking to the Future - Financial Services in the Digital Medium

Analogous to this…

Page 19: Looking to the Future - Financial Services in the Digital Medium

www.mercer.com.au