the digital revolution in financial services

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Human Centric Innovation

in Action

Digital Revolution in Financial Services

Fujitsu Forum 2015


Digital Revolution in Financial Services


Juan J. Alert

Head of Retail Banking WEMEIA, Fujitsu

Alejandro Pérez

Solutions, Business Support & Delivery Director Retail Banking, WEMEIA, Fujitsu


We are experiencing how banks are reshaping themselves to adapt to the new digital era. Supported by an Omni-channel model, they seek to offer their customers a more accessible banking at any time, anywhere and across devices - offering the right balance between physical and digital channels. Banking processes need to be digitalized end-to-end to offer customers a real digital experience. What does digital transformation mean and what does it involve nowadays?


Banks are part of a new world

Regulation: global and local

Customer: demands and

expectations

Technology and innovation:

enabler, differentiator and

disruptor

Competitors: old and new

Society: politicians, citizens, activists


Traditional Bank Model

Current goals Highly regulated Looking for a higher profitability Capillarity

Barriers

Legacy systems Regulation: limitation and costs Internal processes are not

following the same digital transformation

Internally, banks are heavy and with low technology leverage Redefine internal processes Transform Core banking

•FinTechs are growing fast : lending,

crowdfunding, social investing, crypto

currency, digital wallets

• Disruption by technology

• Profitable

• Low regulation

•Global business, less regulated

•High leverage by technology

•Cards, cheques, payments

•Recurrent

•Lower costs

•High Local regulation

•Low leverage by technology

•Costly infrastructure

•FinTechs are not present

Intermediation

margin

20% Fees Other

business

10%

Banking

Gross

margin 70%


The “always

connected”

behavior generated

a security issue:

Change enabled by technology…

Smartphone, wearable devices In the customer hands have changed their behavior

Cloud, shared processing Enabling new comers to create disruptive products

Social networks Bank reputation suffered from crisis and now is weak in

front a very well educated customer

Smartphone and customer: A point of no return through digital bank, that is the customer demand!


Actors of the change

Customers Became the center of the game

Demand a more win-win relationship with banks

Regulators Globalization, complexity, social demand and crisis have

enhanced local and regional regulation, in order to strength the finantial system and protect customers

Retail banks Facing low revenue and looking for higher profitability

Have an internal lack of flexibility and digitalization

New comers Leveraging current technology availability and accessibility

to approach high profitability business with companies 100% technology based


Retail banks

Shadow bank

Google Pay, ApplePay,

Mobile Payments

FinTech

How is the scenario

regulation flexibility presence

ability to

create new

products

internal

digitization


Complexity/overlapping new regulations Increasing regulatory intervention

Dedicated staff: to achieve compliance regulation JPMorgan hired 4,000 people in 2013 and HSBC declares to have more than 7,000 staff

Complexitty

Reg

ula

tio

n C

om

pli

ance

co

sts

Other new comers

Shadow bank

Traditional Banks

High

High Low

FinTech

Low

Is a complex scenario

Traditional Banks Newcomers

New products Long processes and

compliance with existent regulations

Still unknown by regulators

Time-to-market Unpredictable Immediate

Costs (staff, fines, data control)

Overcosts to be compliant

Production costs

Result Lost opportunity Market

Disruption


Technology will be

required to solve privacy

and security new

scenarios

Integrated Infrastructure

to support the new

hyper-connected world

And technology will leverage the new change

BigData Data is the new petroleum

Banks are machines to get and store data

Data analytics will enable personalized products creation

Biometrics Our body will be our password

Social bank Banks infrastructure and capillarity should be used to

transform banks role, avoiding being an “utility” reputation

Privacy

and

security

Human-Centric era


Innovation in the digital banking

Human Centric Innovation

Favouring the intra-entrepreneurs, generating fintech ecosystems, providing the organization with the needed support.

New channels appear and the office must re-invent itself.

Generating internal efficiency, improving actual business and opening new business lines. Client changes

Digital Banking

Re-inventing banking value proposal beyond what is strictly financial.

Data Analytics


• More accessible: wide opening times • Cosy and modern environment • A place to be listened: personalized attention and products • Same experience in all channels • Safe, simple

• Shorter Time-to-market • Sales and consultancy driven • Technology enabling business strategy • All channels seamlessly integrated

Branch: enhance the relationship with the customer

Bank’s

view

Customer’s

view


ATM channel is an efficient way to improve

and refresh the bank image:

• quick technology adoption in a safe environment

• connecting physical and digital world

• technology enables channel humanization

Future: the challenge of the self-service channel

Branding • Besides state-of-the-art services, the ATM channel is aligned with

Omni-channel look & feel, transmits the finantial institution brand message

New branch model • Absorb transactions and enable branch employees specialization

into a sales and consultancy profile

Enhanced Customer experience • 24 x 7 x 365 open bank • Wide range of services available out of branch working hours

Sales channel • Leveraging the big potential from a current point of contact with

customers • Selling products: personal loans, insurance, investment funds

Additional revenue generation • Its capillarity and availability serves travelling foreign customers, which

bank has low presence or no presence at all

Retain and win new customers • ATM availability, excellence in services and accessible locations are

among the most important factors that drive a bank election

humanization biometrics wearable security

Digitization Process: Society -> Customer Relationships -> Organization and Work-Style


Fujitsu FinTech consortium

2011

BBVA

EUR100 million fund

2014

Santander Innoventure

US$100 million fund

2015

Initial EUR10 million fintech fund

Open platform for both Financial Institutions

and Fintech Startups in order to make real

the innovation in Financial Business.

Aim of accelerating open innovation of Financial services. More than 100 companies

• 54 domestic financial institutions • 47 FinTech firms

Financial Innovation For Japan (FIFJ)


The use of data provided by clients is an important asset for entities to be more efficient and to define new business models.

Data analytics in future banking

Customer Centricity To improve users satisfaction and to increase

knowledge towards a personalised offer.

Open Business Together co-creation models which generate public event’s economical and social impact.

Operating Efficiency To improve capacities and efficiency

Optimal infrastructure location: ATM, branches.

Innovation Use of internal and external data to generate new

business models, products or services.

Internally...

Externally...