Retails banks risk reducing customer relevance, because of other providers competing for customer's attention through small screen mobile devices. Payments are moving to the backgrond and banks face the challenge of reintermediating themselves. Digital Identity offers the perfect lever for re-intermediation, since this capability leverages the banking world's core regulated asset: KYC. However a mindshift is needed, by moving from a product silo oriented approach towards true customer centricity.

1. tomorrow’s transactions today
ICCI Conference, Sofia
Increasing customer relevance for banks
Douwe Lycklama – 24 October 2014

2. 2 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Innopay: independent management consultants specialized in digital strategy and transformation
•Founded in 2002
•Partners: Shikko Nijland & Douwe Lycklama
•HQ in Amsterdam, NL
•17 consultants
•Active in transaction and service oriented sectors throughout EU
•Member of a.o. EBA, ECP/EPN and EPCA

3. 3 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Experts in transforming today’s complexity into business opportunities
Business
Technology
Rules & Regulations

4. 4 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Customers share their ‘digital attention’ more and more

5. 5 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Public and private services in digital transformation
Government
Utilities
Web merchants
The European 2020 initiative promotes cross-border digital transformation
E.g. Tuscany goes fully digital, PEPPOL as pan-EU e-procurement
Merchants can use customer intelligence for a customized retail process
Germany’s e-energy network: a new ICT-based "energy marketplace”
Banks
Financial services being innovated by non-bank players across the globe

6. 6 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Small screen: no ‘conversion killers’ allowed

7. 7 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Transactions:
crowded
place?!

8. 8 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
The foundation of electronic payments …
Bank buyer
Bank seller
Seller
Buyer

9. 9 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Pay platform ‘on top of’ banking infrastructure
Bank buyer
Bank seller
Seller
Buyer
Pay platform

10. 10 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
PSP adding simplicity
Bank buyer
Bank seller
Seller
Buyer
Pay platform
PSP

11. 11 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
‘Mobile era is here’
Bank buyer
Bank seller
Seller
Buyer
Pay platform
PSP
Pay app
Pay app

12. 12 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Online platforms: the continents
Bank buyer
Bank seller
Seller
Buyer
Pay platform
PSP
Online platform
Pay app
Pay app

13. 13 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Mobile drives usage
Bank buyer
Bank seller
Seller
Buyer
PSP
Online platform
App
Pay app
Pay platform
Pay app
Pay app

14. 14 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Ecosystem ‘replicated’
Bank buyer
Bank seller
Seller
Buyer
PSP
Online platform
App
Pay app
Pay platform
PSP
Pay app
Pay app

15. 15 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Will new technology push disintermediation?
Bank buyer
Bank seller
Seller
Buyer
PSP
Online platform
App
Pay app
Pay platform
PSP
Pay app
Pay app

16. 16 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Processor landscape disruption?

17. 17 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Banks have a hard time keeping up with the pace

18. 18 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
PSD2 is asking more from banks
In time & real time
More & more;
never enough
Easier

19. 19 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
... and redefine the acquiring domain in the payment value chain ?
Source: Innopay analysis
New XS2A model: entry of TPPs
Browser
Webshop
Routing Service
Creditor account
Scheme & Directory
Scheme
Messaging
(in scope)
Regulated domain
Creditor account
‘Standardized API’
Debtor account
Debtor
Creditor
‘TPP’
Online pymt provider
Account servicing PSP
Acquiring PSP
Traditional 4 corner model
Browser
Webshop
Online Banking
Routing Service
Debtor account
Creditor account
Scheme & Directory
Messaging
(in scope)
Traditional scheme
Secure
messaging
Account servicing PSP
Acquiring PSP
Creditor
Debtor
Scheme
Online pymt provider

20. 20 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Half full vs half empty
2014
20XX
Resistance is futile; take a venturous approach
Growing transaction market for both payment & non payment transactions
A bright customer’s perspective

21. 21 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Do not waste a good regulation
“Never let a good crisis go to waste”
-Sir Winston L.S. Churchill
regulation

22. 22 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Banks traditionally focus on transactions... ...but there’s more to gain at the ‘check in’
Today’s focus
Orientation
Selection
Delivery
Customer Care
Transaction
Check in
Tomorrow’s opportunity
eID next revenue driver
•More transactions
•Banks’ opportunity to be(come) relevant

23. 23 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
… it’s already happening
Being part of another party’s process is all about
1. Check-in
2. Convenience
3. Security

24. 24 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
The API economy is normalizing

25. 25 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Digital Identity: banks are well positioned
Trust of the consumer
Have invested in infrastructure
KYC
(Looked in the eyes first)

26. 26 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Digital identity:
the mother of all
transactions?!

27. 27 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
What can banks offer with Digital Identity
Trust
Compliance
Convenience

28. 28 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Increasing relevance for both payers and payees
Proven business model in The Nordics where
goverment & businesses are united by banks
Buyer Seller
Similar business
model as internet
payment providers
(Trx fee €0.10-0.15)
Issuer Acquirer

29. 29 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.

30. 30 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
# Authenticated transactions
2014
2020
Non- payments
Payments
Market for ‘other’ transactions booming:
•Personal data
•Contracting
•Sign up
•Login
Market for payment transactions stable
Private
Government
Identity transaction-market about to explode
Private sector will drive numbers, government catalyzes

31. 31 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
The land rush for relevance is happening nów… …and banks are not the only providers

32. 32 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Banks are not alone in the Digital Identity space
Banks: customer ownership, trusted relation, strong credentials,
Telco’s: customer ownership, access to trusted device
Social media: lots of data on consumers
‘Omnipresent’
Identity specialists: technology, B2B relations
Postal services: leveraging physical network, brand
Merchants: customer knowledge, brand, shopping experience

33. 33 Increasing customer relevance for banks. Douwe Lycklama – 24 October 2014. © Innopay BV. All rights reserved.
Five tweet summary .... (instead of Haiku)
1.Banks have increasing competition for #customer #attention and trust
2.#Banks reintermediate into customer’s daily lives
3.Newcomers and regulators press for #payment innovation #psd2
4.Never waste a good regulation: banking sector enters the #APIeconomy #psd2
5.#Digital #Identity = the new money: from product centric to customer centric #relevance up! @dgwbirch

34. tomorrow’s transactions today
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For your attention
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Douwe Lycklama, douwe@innopay.com, +31 655 711 150