Nayana D.P. DehigamaMBA Sri JDoctoral Candidate, AIT-Thailand

Founder Chairman / Managing DirectorEpic Technology Group

Bank on Entrepreneurial Innovations

in the digital age

Why Innovations & Entrepreneurship are important for Banks?

Two states that organizations function:

Growing

Dying

The Virtuous Cycle of Survival

Innovation

GrowthProfitability

Entrepreneurship

‘Innovation’

Adopting change for continuous improvement/growth

- Nayana Dehigama

Three Facets of Innovation

Product Process

Business

Where should Innovations be adopted?

Resources Products / Service Offerings

Operations Market / Channels

Customers Disruption Strategy

Business Innovation

“ENTREPRENEURSHIP”

?

What is….

“ENTREPRENEURSHIP” in Organizations

Ability to introduce “Innovations” in response to perceived opportunities (Profits/Growth)

-Nayana Dehigama

“Entrepreneurial Innovations”

Innovating for Sustainable Growth-Nayana Dehigama

Innovations for Sustainable Growth

Two Essentials The Starting Point

VISIONING &

FUTURING

Let’s look at what is happening around us…

Global shift in Consumer Behavior

People will prefer to communicate than to

commuteDr. Arthur C Clarke

3 Billion internet users globally

- ITU

7 Billion mobile cellular subscriptions & 3.6 Billion from

Asia Pacific – ITU

By 2018, more than 50 % of online users will use a Tablet or

Smartphone for all online activities

- Gartner

Speed of Change

2x more smartphones in 4 years

Number of subscriptions

 - PWC

2x more connected devices by 2020

Tipping Point Market share of smart connected devices, 2012-2013

 - PWC

2017

16.5%

13.0%

2016

16.3%

13.9%

2015

15.9%

15.1%

2014

15.3%

16.7%

2013

14.6%

20.2%

2012

11.8%

28.7%

More PCs than tablets More tablets than PCs  - PWC

2005 Pope Benedict Election 2013 Pope Francis Election

Brick & Mortar branches diminishing

Big banks in many markets have reduced branch density.

1 Average of major banks1 additions and subtractions to branch networks, excluding effects of M&A

Source: Banks1 public disclosures; McKinsey analysis

Branch-density trend of top retail banks, 2006-111

%

- 11.3

- 5.9

- 5.6

- 2.3

- 1.7

1.0

6.6

Customers are leaving branches for Internet and Mobile Banking.

Monthly usage frequency

Developed Asia (HK1, Singapore) Emerging Asia (China, India)

Branch

Internet & mobile

-29%1.351.89

2.35 3.20+36%

20112007

1 Hong KongSOURCE: 2007 and 2011 McKinsey Personal Financial Services surveys

20112007

0.38 0.50+39%

1.931.44

Two “Firsts”

First ever drop in branch usage since 1998

First ever data showing that Developed Asia consumers use new channels (internet/ mobile) more than traditional channels (telephone and branch)

-26%

Asia-Pacific’s cash intensive economies will see strong growth in cashless transactions.

Share of cash in number of transactions%, 2010

Growth in cashless transactions,2010 – 2015, %

IndiaIndonesiaChinaThailandMalaysiaTaiwanJapanKoreaSingaporeAustraliaHong Kong

99.7 2399.5 23

98.0 2797.1 20

92.5 982.9 5

76.8 1265.6 965.2 9

63.1 955.1 5

SOURCE: McKinsey Global Payments Map

Is there a hidden opportunity here ?

 - PWC

Core IT Technologies Driving Technological Change

Big Data Mining

& Analysis

Social Networks

DataVisualization

Simulation& ScenarioModelling Mobile

Payments

Public CloudInfrastructure

Robotics

PervasiveComputing

GamificationM2M

Automation

Crowdsourcing

CyberSecurity

Crowdfunding

PrivateCloud

EnterpriseSocial

Networking

Geo-location

3DPrinting

The Golden Opportunitie

s

SL Government has launched an aggressive strategy to establish country-wide Digital Infrastructure (FTTH/B based GPON, LTE/4G, Google-Loon)

Mobile Phone Penetration in Sri Lanka

• Total Penetration: 99.2 %

• Smart Phones : 24% current (expected 85% in 5 years)

The Golden Opportunitie

sEvery Mobile Phone today provides a mean for Banks to reach the user and get the user engaged in business cost effectively.

Every Mobile Phone User is a walking opportunity for Banks to do seamless business and earn profit.

Future of Banking in the

Digitally Connected World

Regulations & Compliance

Security and Privacy Policies

Products/Services Portfolio

BC/DR

Big Data AnalysisCore Banking System

E Wallets Cash-less Society

Agent Banks

Contact Center Legal and Contractual Services

Bank Sales Agents (Product Marketing and Customer Enrollment)

External Service Providers (Cards Associations, Payment Gateways )

CTS

Un-attended Service Kiosk / ATM

KYC / Authentication

Vault

Customers- Scattered over a large geography

Bank Service Agents

Data Storage

Customer Experience

Software as a Service

Mini Bank Branch that offers Banking Services

Can you ever imagine a bank with 40,000

branches and 40,000 ATMs in Sri Lanka?

Challenges for today’s Bank

Challenges for today’s Bank

Globalization Sophisticated Customer Demands / Trends Regulations Downward pressure on ROE Technological Advancement Disruptive Technologies Cost Containment Managing Generation Gaps

The most critical challenge in the short run

• Striking the right balance between physical and digital channels

World Retail Banking Report - 2014

FUTURE OF BANKING IN THE DIGITAL SPACE

• Future banks should be ‘universal’ and ‘multitalented’• An innovative multichannel infrastructure is a must• Real-time Video Interaction with clients, agents, advisors• Innovations for customer experience : “Test drive” of banking

products & services• Comprehensive “Mobile Wallet” – Pay at anywhere anytime

to anybody• Connect with Gen Y – Gen Z using games and social networks • Content monetization: - Micro level revenue themes such as

music, e-book download, gaming, movies, ticketing• Personalization of corporate banking services

Who will survive and thrive in the Digital Age?

Remember, it is not the biggest or the most intelligent who can survive,

but The one who can quickly respond/adapt to changes, identify pockets of niche opportunities with demand and exploit them

through innovative means before the competitor, while securing ‘reasonable/substantial profits’.

What will make you a winner?

It is not the greatest product that will make you a “WINNER”…….

but the INNOVATION (Product, Process, Business) that addresses the ‘changing customer needs’ in the market

Thank You!

nayana@epiclanka. comOctober 30, 2015