making connections digital financial services and ...€¦ · the focus for our first digital...

Making connectionsDigital Financial Services and technology platforms

24 February 2016

With the increasing technology of mobile devices and the sophisticated apps and services available to accompany them, Digital Financial Services have never been more relevant. The exponential rise of Mobile Banking has led to a close focus on the legal issues that arise.

Whether you are an established bank investing in Digital Banking opportunities or a new entrant to the market looking to take advantage of the decreasing barriers to entry it is essential that you are aware of the legal issues and your legal team is prepared for the increasingly changing world.

The focus for our first Digital Financial Services event of 2016 is technology platforms. A successful digital product cannot be delivered to retail or business customers without the right technology in place. In this session we will look at some of the key issues in technology contracts and how the latest technology can enhance the customer experience and put your business ahead of the competition.

Digital Financial Services and technology platforms


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Welcome Futureevents

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Eversheds is one of the world’s largest corporate law firms. Committed locally, but connected globally, with offices based in the world’s major economic centres, we have a proven track record of delivering consistently high quality legal services across jurisdictions.

Our people share a distinctive culture which has deep client relationships at its core. Whether providing advice which is complex or straightforward, multi-national or local, an attitude of delivering only the very best underscores everything we do.

Our dedicated international sector group offers the benefit of over two decades of experience advising financial institutions in relation to the issues and developments impacting upon the market. Few law firms are able to combine industry specific skills with the breadth of resource offered by us across multiple jurisdictions.

About Eversheds LLP


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Thank you for joining us at our Digital Financial Services and technology platforms seminar. We will be covering the following topics:

– Current trends and innovation in the digital landscape

– Contractual and regulatory considerations in the design, build and operation of digital platforms

– Digital Financial Services and the customer experience.

WifiAccess to our wi-fi network is available throughout the seminar. To connect please select the Eversheds network and you will be logged on automatically.

CPD pointsThis workshop is accredited for 2 hours of Continuing Professional Development (CPD) points. Please use the information below to claim your points.

Conference name: Digital Financial Services and technology platforms – 24 February 2016Company: Eversheds LLPReference code: 042/EVER

Welcome


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Matthew GoughHead of Digital Financial Services, Eversheds

t:+44 292 047 [email protected]

Matthew specialises in commercial law, particularly in the areas of consumer law, information technology and commercial contracts. Matthew is rated as a Band 1 Leader in his field by Chambers Guide to the Legal Profession which states that Matthew’s team is “meticulous and immensely practical” and that

he is “incredibly dedicated to serving his clients’ interests”. He is also noted in the Legal 500.

Matthew is a member of our Financial Institutions sector group and leads our Digital Financial Services group. He advised on one of the first online banking projects in 1997 and advises on both the procurement of technology and the contractual and consumer law aspects of the customer experience. His clients include clearing banks, insurers, building societies, aggregators and technology suppliers.

Speaker biographies

Matthew Gough Craig Rogers Wayne Peacock


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Speaker biographies

Craig RogersPartner, IT and Outsourcing, Eversheds

t: +44 207 919 [email protected]

Craig advises on complex, cross-border IT and outsourcing arrangements. He has led significant transactions across all industries but has a particular focus on the financial services sector.

Craig joined Eversheds in 2015 after 12 years in-house at IBM, Oracle and TCS. In his last role, Craig was lead counsel for IBM’s Financial Services business in Europe and lead regulatory

lawyer (Banking & Insurance) for EMEA.

Craig has led strategic transactions with retail & investment banks, building societies, payment providers, regulators and exchanges (including HSBC, Barclays, RBS, Lloyds, Deutsche Bank, UBS, Cooperative Bank, Société Générale, Visa, Amex, Nationwide, Yorkshire Building Society, the FCA, LCH.Clearnet and the London Stock Exchange).

He has written several articles on the regulatory aspects of Outsourcing and Cloud services and is a regular speaker at conferences. Craig is a member of The Society for Computers and Law.

Matthew Gough Craig Rogers


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Wayne Peacock

Speaker biographies

Wayne Peacock

Wayne PeacockEuropean Interactive Leader –Financial Services, IBM

Wayne is an Executive Partner leading IBM’s Front Office and Digital team across Europe. He has extensive delivery experience across Retail, Business, Corporate Banking Clients and Financial Markets clients.

Wayne set up and also leads IBM’s European Interactive Labs team, a team dedicated to digital innovation and rapid prototyping. Wayne set up this dedicated team in 2011 to create new digital experiences for customer.

With over 80 assets created last year across all industries, Wayne has changed IBM the engagement model into being fast and agile.

Wayne led the full transformational delivery of Nationwide’s Internet and mobile programme. He established a digital capability within Nationwide that went on to achieve “Best Online Banking Provider’ and “Best Overall Online Provider” in 2013.

The team were awarded the “Nationwide Team Of The Year” award too and now support all their Multi-Channel support and transformation services.


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Craig RogersMatthew Gough

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Introduction and hot topics

24 February 2016

Matthew Gough

Partner, Head of Digital Financial Services

Introduction and hot topics Matthew Gough, Eversheds

UK banks’ digital presence and evolving technologiesCraig Rogers, Eversheds

Digital Financial Services and Technology Platforms

24 February 2016

Craig Rogers

Partner, Technology and Outsourcing

Delivering technology platforms Craig Rogers, Eversheds


24 February 2016

Craig Rogers


Scaling and accelerating digital transformation Wayne Peacock, IBM

Scaling + accelerating Digital Transformation

February 2016


Speakerbiographies


AboutEversheds LLP

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Introduction and hot topics

24 February 2016

Matthew Gough

Partner, Head of Digital Financial Services


Speakerbiographies


AboutEversheds LLP

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Eversheds LLP | 23/02/16 |

− Welcome to today’s session on Digital Financial Services and technology platforms

− It follows our first Digital Banking Conference (30 September 2015)

− Today’s agenda: •  Craig will cover contracting and technology platforms •  Wayne will cover delivery of digital financial services projects •  We will conclude with a panel Q&A - please have your questions ready

− We have financial institutions and platform suppliers represented today

− We have further events throughout the year that I will mention at the end

Introduction and Hot Topics



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− 8 October 2015 – EU Parliament adopted PSD2 (to be implemented by 13 January 2018) − 17 November 2015 – FCA’s proposed guidance and consultation for regulated firms outsourcing to the “cloud” − 23 November 2015 – Deloitte Consumer Review – 21% of consumers surveyed suffered from cyber crime − 19 January 2016 – UK Government Office For Science – Distributed Ledger Technology – beyond block chain − 20 January 2016 – New Bank Start Up Unit set up by PRA and FCA − 16 February 2016 – Lloyds Bank and Accenture Consumer Review – 11.1 million people in UK have low digital capability − 2016 will be a busy year!

Some hot topics since our Digital Banking conference:



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eversheds.com ©2016 Eversheds LLP Eversheds LLP is a limited liability partnership

Matthew Gough

Partner, Head of Digital Financial Services +44 292 047 7943 [email protected]


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24 February 2016

Craig Rogers



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− Introduction from Craig Rogers •  Background •  Personal perspectives on digital banking

− Overview •  UK banks and their digital presence •  Evolution of Banking & Payment Technologies •  Delivering Technology Platforms •  Questions

Introduction



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UK Banks – Digital Presence


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High street banks UK banks and their digital presence


Source: Eversheds market research


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Challenger banks UK banks and their digital presence



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Evolving technologies


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Developments in technology to the digital era Evolution of consumer payments


1770 1928 1950 2005 2007 2015


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− Contactless payments: − £4 in every £5 spent at UK retailers on credit/debit cards − Contactless accounts for 1 in 10 payments − Spend limit increased to £30 (ATV £6.37) − £1 billion spent on contactless cards in Nov 2015 − Apple Pay: − Launches in 2014 in the US, 2015 in UK − Supported by HSBC, Lloyds and RBS (Barclays tbc) − Killer App but

•  lack of terminals hampering growth •  Scrap over Interchange fees limiting adoption outside UK/US

Innovative technologies



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− From 2013 to 2014 mobile banking transactions doubled. − £2.9 billion transferred a week using banking apps. − 22.9 million banking apps have been downloaded between 2011 and 2015, 930 an hour for the past 12 months. − Telephone banking fell by 43% between 2008 and 2013. − The UK is the world’s number one in mobile payments. In Q2 2015, 44.8% of online payments were made using a mobile device (compared to 26.7% in US) − Average Transaction Value = €28.27 for Smart Phones and €32.66 for tablets (overtaking PCs) − 36% of global mobile payments are now on iPhone.

Growth of mobile payments


Source: Adyen Mobile Payments Index 2015.


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− Launched 1999

− early success as platform for eBay (2002-2014)

− 8 million merchants / 26 currencies / 203 countries

− 179 million active accounts

− Technology neutral

− Moves to support micro/mobile/ in-store payments

− 4 billion payments (2015) - $300m per day – nearly 20% of the e-commerce transactions globally

Compare Visa’s digital wallet (V.me)

− Launched in 2012 / 5 countries

− Struggled to challenge PayPal dominance (despite having 2.1 billion account holders)

− Replaced in 2015 by Visa Checkout

Digital Wallets


Source: Forbes, PayPal, Visa Inc.


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− Crowdfunding / community funding platforms subvert traditional VC or debt models − Kickstarter raised $2.2bn since 2009 / 100,000 projects − Investments made in technology via Crowdfunding platforms expected to increase to $8.2bn by 2020 − Problems with Crowdfunded investments: •  Limited due diligence on projects •  Lack of guarantee from the investment platform

− High profile failures of Zano (a campaign for a palm-sized drone) that raised £2.3m and folded in Q4 2015

Peer-to-peer investment Disruptive technologies


Source: Kickstarter, Juniper Research


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− P2P alternative finance market for SMEs − Higher rates of return for investors than traditional saving/investment models − Platforms include Zopa, Ratesetter, Funding Circle

− £3.2bn raised in 2015; up 84% on 2014 − 13% of lending for SMEs <£1m turnover

− Bank-P2P partnerships (RBS, Metro, Santander) − Problems with peer-to-peer lending include:

•  investments unsecured; not protected under FSCS •  Limited due diligence / credit checks on borrowers

Peer-to-peer lending Disruptive technologies


Source: Financial Times 17/02/16, BBA.


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New ways to pay – mPesa Case Study Exploring mobile technology



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− mPesa is a mobile money transfer service, launched in 2007 − Transactions are sent via SMS (verified by PIN) − 17 million users in Kenya - nearly 2/3 of the adult population

− Provides access to financial system for the un-banked − Expanding to new territories (Tanzania, Uganda, India, South Africa) − Zapp / Paym learning from the African experience

Challenges − KYC / AML checks are rudimentary (fraud / money laundering) − Accounts are non-interest bearing

− Safaricom and Trustee are not regulated by the Central Bank − Limited control over capital investment; no FSCS-type scheme − Effective monopoly risks destabilising other mobile operators

New ways to pay - mPesa Exploring mobile technology



Speakerbiographies


AboutEversheds LLP

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Craig Rogers

Partner, Technology and Outsourcing +44 207 919 0707 [email protected]


Speakerbiographies


AboutEversheds LLP

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24 February 2016

Craig Rogers



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Delivering Technology Platforms


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Designing Digital Platforms


Customer Requirements

Bank Requirements


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Designing Digital Platforms


Customer Requirements

− Innovation

− Early adopter

− Simple and intuitive

− Safe and secure

− Good value

− Choice

− Tailored

− Fast service

− Control


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Contracting for Digital Platforms (1)



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Contracting for Digital Platforms (2)


Contract Lifecycle - Flexibility, scalability, changes •  Customer requirements •  Acquisitions / disposals •  Technology Innovation •  Regulatory landscape

- IP ownership - Compliance with laws •  Terms and conditions •  Payment Services

Regulations •  Consumer protection and

consumer credit •  SYSC •  Data Privacy


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− Retained IT Functions −  Skills transfer / skills retention

−  Exit Plans −  Asset Registers / Code Depositories

−  3rd party contracts −  Ownership of IPR

−  Source Code Escrow −  Step In Rights

−  Parent Company Guarantees

Workable Exit Strategies

Contracting for Digital Platforms – Case Study



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Craig Rogers

Partner, Technology and Outsourcing +44 207 919 0707 [email protected]


Speakerbiographies


AboutEversheds LLP

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Scaling + accelerating Digital Transformation

February 2016


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AboutEversheds LLP

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Wayne Peacock Wayne is an Executive Partner leading IBM’s Front Office and Digital team across Europe. He has extensive delivery experience across Retail, Business, Corporate Banking Clients and Financial Markets clients. Wayne set-up and also leads IBM’s European Interactive Labs team, a team dedicated to digital innovation and rapid prototyping.

Other relevant experience: IBM Interactive Labs & Studio’s

Wayne set-up this dedicated team in 2011 to create new digital experiences for customer. With over 80 assets created last year across all industries, Wayne has changed IBM the engagement model into being fast and agile.

Nationwide Building Society: Wayne led the full transformational delivery of Nationwide’s Internet and mobile programme. He established a digital capability within Nationwide that went on to achieve “Best Online Banking Provider’ and “Best Overall Online Provider” in 2013.

The team were awarded the “Nationwide Team Of The Year” award too and now support all their Multi-Channel support and transformation services.


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1. A VISION that is tangible, shared and focussed on the customer

Delivering Omni requires…


2. AN ORGANISATION that is aligned to the vision and capable of delivering rapid, customer centric benefits

shared


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1. A VISION that is tangible, shared and focussed on the customer

© 2016 IBM Corporation |


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BLURRING THE LINES ACROSS INDUSTIES

PACE

INERTIA

EROSION OF VALUE CHAIN

Your Strategy Needs To Address The Following Challenges

100 YEARS OF CULTURE

SOPHISTICATED CUSTOMERS



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Rethinking Banking – Where Is The Battleground



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Lending

Entrant offering credit products, stand-alone or bundled with another product

CASE STUDY: Square gets into the lending business



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Account

Deposit

Sepa Transfer

Direct Debit

Overdraft Loan

Savings

Traditional Banking:

Instant Money Transfer

Send via Twitter, Email or Mobile

Lend to Friends

24 hour emergency loan

Social Trading, Social lending

Crowdfinance: Funding & Investing

Community

Virtual Currencies

Ripple Gateway

New Banking:

CASE STUDY: “Banking with Friends” API Economy Banking

API Innovation Partnership


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11

Venture capital

Westpac’s Reinventure Group, a $50

million fund set up to back start-ups, made a $5 million

investment in a peer-to-peer

lender SocietyOne

Develop in-house

Deutsche Bank is working with technology

partners to kick-off three innovation labs, as part of a five-year plan -Strategy 2020 comprising €1

billion of digital initiatives1

Accelerator programs

Citibank launched a global virtual competition to bring together

developers and leading

technology sponsors to build

the next generation of

fintechs

Partner

Tangerine partnered with FinTechs and startups for

creating banking applications using

a cloud-based development environment

Acquire

BBVA acquired a stake in Simple – a start-up bank – to accelerate their ability to address

Millennials through a modern mobile

banking experience

Financial Institutions are taking different postures in response to the digital disruption



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IBM Research: Mobile, Solutions, and Mathematical Sciences

Stores Call Centers Web Sites

The API Economy is the commercial exchange of business functions, capabilities or competencies as services using Web Application Programming Interfaces (APIs)

In the 1990s and decades later we saw Web sites evolve from brochure ware to commerce sites, marketplaces and industry platforms – revenue growth was incremental for incumbents but every incumbent made use of the Internet

Not having an API today is like not having a website in the 1990s…

www.

Web API’s

TIME



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digital touchpoints

physical touchpoints

The Banking Battleground

Be as good as the Fintech’s in experience

1

Empower & Harness your Talent, your

Data and Network

2

13

Build on your brand reputation and regulatory foundations

3

4 ‘own’ the customer experience



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Rapidly Innovating From an idea to a proof of concept that you can touch and feel in 3 weeks.

Anchor Your Vision §  Customer Experience §  Operating Model

§  Technology §  Business Strategy



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Accelerated Delivery by Bringing Business and IT Together To Accelerate Omni Channel

§  Predictable Service

§  Agile Delivery

§  Continuous Build

§  Continuous Integration

§  Automated Testing

§  Repeatable Patterns

§  Scalable Infrastructure supported by: §  Empowered Decision Making §  Regular Communication §  HR Eco System for Talent

19

Mixed teams that are bonded through a culture of success with a strong sense of partnership in delivering shared goals, working to a common vision.



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An 8 Year Journey With Nationwide

Digital Strategy

Internet

Mobile

Remote Advice

Digital Factory

1st Banking Smart watch

app in UK

1st Banking Apple watch

app in UK Mobile UX

Design Award

Tablet Banking

2008

2011

2012

2013 2014

Branch Account

Origination Homebuyer

Contactless Cards

Mortgage Affordability Calculator

New product Launch

2015



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Future events

We will be running a series of events on Digital Financial Services throughout 2016, with further seminars in May and September leading up to our second annual Digital Financial Services Conference in the Autumn.

Details of all upcoming events for the financial institutions sector can be found at eversheds.com/financialinstitutions/events. If you have any queries or would like to register your interest in any of our events, please contact our events team ([email protected])

Get in toucheversheds.com/financialinstitutions

@EvershedsFI


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http://www.eversheds.com/financialinstitutions/events

mailto:fig%40eversheds.com?subject=Financial%20Services%20Event

http://www.eversheds.com/financialinstitutions

https://twitter.com/EvershedsFI

making connections digital financial services and ...€¦ · the focus for our first digital...

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