Mega Trends in Retail Banking

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Mega Trends in Retail Banking

  1. 1. Mega trends in Retail Banking 3. International RISE Workshop (Jun 15, 2012) Frank Schwab http://www.rise-research.org/?p=438 http://www.FrankSchwab.de
  2. 2. Source: Berlin Institute for Population and Development Development of Age Structure in Germany
  3. 3. Development of Age Structure in United States Source: US Bureau of Census 1940 2000 2040
  4. 4. Development of Age Structure in China Source: US Census Bureau, International Data Base (2007)
  5. 5. Reverse mortgage
  6. 6. Reverse mortgage Borrower older than 62 years Borrower must occupy the property as their principal residence No minimum income or credit requirements No payments are required on the mortgage Not subject to income tax payment Maximum lending limit of $625,000.00 Payment is taken as line of credit, lump sum, or monthly payments
  7. 7. R E V E R S E L O A N
  8. 8. Trend = General tendency or direction
  9. 9. How to know?
  10. 10. "There is no reason anyone would want a computer in their home.“ Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
  11. 11. "Stocks have reached what looks like a permanently high plateau.“ Irving Fisher, Professor of Economics, Yale University, 1929
  12. 12. Dow Jones Industrial Average (1900 to Present) Source: StockCharts.com
  13. 13. It is difficult to make predictions, especially about the future Sir Winston Leonard Spencer-Churchill
  14. 14. Knowledge Society The Rise of BRIC Female Shift Change of Demographics Globalisation Information Technology Climate change Mobility Environmental Awareness Urbanisation Internet Individualisation
  15. 15. Characteristics of Mega Trends Long term – impact > 5 to 10 years, sometimes decades Influences our view of the world Influences our values Influences our thinking Changes demand for products and services
  16. 16. How to identify?
  17. 17. 11 Mindsets to identify trends
  18. 18. The Future is embedded in the presence
  19. 19. Resistance to change falls if benefits are real
  20. 20. 11 Mindsets to identify Mega Trends 1.  While many things change, most things remain the same 2.  The future is embedded in the present 3.  Focus on the score of the game 4.  Understand how powerful it is not to be right 5.  See the future as a picture puzzle – your idea guided by a few fixed stars combined into a single vision 6.  Don’t get so far ahead people don’t know you’re leading 7.  Resistance to change falls if benefits are real 8.  Things we expect to happen always happen more slowly 9.  You don’t get results by solving problems, but by exploiting opportunities 10.  Don’t add unless you subtract 11.  Don’t forget the ecology of technology – ask what’s enhanced, diminished, or replaced
  21. 21. Mega trends in Banking Increase of regulatory requirements
  22. 22. Regulation SolvV SOX AML Basel II Basel III Basel I MiFID II WpHG BörsG MiFID I
  23. 23. Basel III – Additional Core Tier 1 Capital Requirements European Banks In Billion $ 2.330 2010E 2.990 2015F 660 Source: McKinsey
  24. 24. Basel III – Additional Core Tier 1 Capital Requirements US Banks In Billion $ 1.790 2010E 2.610 2015F 820 Source: McKinsey
  25. 25. By Juni 2012 European Banks need additional 106 Billion Euro Tier 1 Core Capital 30 5.1 1.3 4.1 2.9 14.7 8.8 Source: European Banking Authority EBA, October 2011 in Billion Euro 26.1 7.8 1.4 3.6
  26. 26. Return on Equity (ROE) 2007 2010 Europe 16,7% 7.9-9.2% 2015E 7.4-8.6% Source: McKinsey
  27. 27. Increase of Cost Pressure
  28. 28. European Banks cut jobs -500 -700 -900-2,750 -2,350 -3,500 -3,500 -30,000 -15,000 -2,000 -2,000 -3,000 November 2011
  29. 29. Mega trends in Banking Increase of regulatory requirements Consolidation
  30. 30. Number of US Banks (1990 to 2011) Source: FDIC 6.000 7.000 8.000 9.000 10.000 11.000 12.000 13.000 14.000 15.000 16.000 1990 20112000
  31. 31. Number of German Banks (1990 - 2011) Source: Deutsche Bundesbank 1990 20112000 0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500 5.000
  32. 32. For Banks? Need to be M&A ready to survive
  33. 33. COMMERZBANK Integration of Dresdner Bank becomes more expensive ... ... IT drives total integration costs from 2.0 to 2.5 Billion Euro ... Source: manager magazin online, November, 25th 2009
  34. 34. For IT Provider? Less potential customers
  35. 35. Mega trends in Banking Increase of regulatory requirements Legacy technology Consolidation
  36. 36. Withholding tax Several 100.000 bank customers need to wait a couple of month to finalize their tax statements. The reason: Some banks failed to change their IT systems. Source: May 2010, Financial Times Deutschland
  37. 37. 000100 IDENTIFICATION DIVISION. 000200 PROGRAM-ID. HELLOWORLD. 000300 000400* 000500 ENVIRONMENT DIVISION. 000600 CONFIGURATION SECTION. 000700 SOURCE-COMPUTER. RM-COBOL. 000800 OBJECT-COMPUTER. RM-COBOL. 000900 001000 DATA DIVISION. 001100 FILE SECTION. 001200 100000 PROCEDURE DIVISION. 100100 100200 MAIN-LOGIC SECTION. 100300 BEGIN. 100400 DISPLAY " " LINE 1 POSITION 1 ERASE EOS. 100500 DISPLAY "Hello world!" LINE 15 POSITION 10. 100600 STOP RUN. 100700 MAIN-LOGIC-EXIT. 100800 EXIT. "Hello world!"
  38. 38. // C++ Hello World #include <iostream> int main() { std::cout << "Hello, world!n"; }
  39. 39. // WebService Hello World http://localhost/helloworld
  40. 40. Project, Application and Organisation Silos
  41. 41. IBM Mainframe Sun Server Intel blade Tandem Thin clients Fat clients AIX Server Server Farm
  42. 42. Example Workflow NOS öffnen ► Kunde suchen NOS-Übersicht ► Partner / Adressen ► Anzeigen / Ändern ► Bestätigung ► Änderung der Telefonnummer? ► bestätigen / Ändern ► Ausdruck bestätigen ►zurück zur Übersicht NOS-Übersicht ► Produkt / Ändern ► Einlagen / Termingeldprolongation ► Daten ändern ► bestätigen ► zurück zur Übersicht Einmeldung in KIM ► Starten von KIM ► Anmeldung ► Kunden suchen ► neuen Eintrag wählen ► Daten einpflegen ► Abschluss anlegen ► Daten eingeben ► bestätigen ► zurück zur Übersicht ¨  Customer approaches service desk ¨  Customer informs the bank about address change ¨  Advisor notifies a due “time deposit” in the customer’s portfolio 37 Clicks
  43. 43. Complex
  44. 44. Complicated
  45. 45. Unproductive
  46. 46. Inflexible
  47. 47. Cost inefficient
  48. 48. Need to transform
  49. 49. Mega trends in Banking Increase of regulatory requirements Legacy technology Changing customer behaviour Consolidation
  50. 50. 2011 20162012 2013 2014 2015 662 M 4.03 B Source: Cisco, 2012 Number of internet capable mobile devices
  51. 51. 72% Watching TV Playing Video Games Listen to music Reading newspapers Reading books Internet Smartphones are used always and everywhere Sources: The Mobile Movement Study, Google/Ipsos OTX MediaCT, Apr 2011 Base: Smartphone Users (5013) Q. In general, which of the following media-related acOviOes do you do while also using the Internet on your smartphone?
  52. 52. 0 new friends in 5 days
  53. 53. 86 new friends in 5 days
  54. 54. 8 new friends in 1 minute
  55. 55. Wants to co-create products Expects better user experience Inform themselves online Trusts in advice of peers in online forums Uses social media to communicate Buys online The New Customer
  56. 56. For Banks? Increased competition from new entrants
  57. 57. For IT Provider? Opportunity to offer new technologies
  58. 58. Mega trends in Banking Increase of regulatory requirements Legacy technology Changing customer behaviour Consolidation
  59. 59. What to do now?
  60. 60. How to do it?
  61. 61. To do all the time the same thing and to expect different results is stupid
  62. 62. . If you want something you never had, you need to do something you never did.
  63. 63. Change
  64. 64. New approaches
  65. 65. Text based Static Lack of visual experience
  66. 66. Can it be done differently?
  67. 67. Highly visual Bold photos Dynamic content Modern design
  68. 68. Human Technology Business Design Thinking Experience
  69. 69. New Paradigms
  70. 70. User interface Functional Productivity oriented More and more banks follow new paradigms towards IT
  71. 71. Distribu)on Middle Office Back Office Paper reduced by 90 % Process costs reduced by 50 % Dynamic work distribution
  72. 72. Implementation time reduced by 50% Process costs reduced by 80%
  73. 73. User interface Functional Productivity oriented Processes Fix coded Flexible Services Application centric Service- oriented & packaged More and more banks follow new paradigms towards IT
  74. 74. Reduce data centre costs by 50%
  75. 75. Infrastructure Services Processes User interface Functional Productivity oriented Fix coded Flexible Application centric Service- oriented & packaged High variety Industrialised & low cost More and more banks follow new paradigms towards IT
  76. 76. Requirements Design Traditional Waterfall Model Implementation Test Maintenance
  77. 77. Service Creation observe analyzeprototypeideate market
  78. 78. Surface Banking
  79. 79. Natural Banking
  80. 80. Success = 1% Inspiration + 99% Perspiration
  81. 81. Do you want to learn more? Frank@FrankSchwab.de http://www.FrankSchwab.de

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