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How To Become A Digital Bank: Efficient, Agile and Adapting To Customer and Technology Changes

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Branches are expensive and un-wieldy but they’re where 95% of new product sales happen. See how Dell’s Digital Transformation approach can lower the cost of doing business. Learn more at: …

Branches are expensive and un-wieldy but they’re where 95% of new product sales happen. See how Dell’s Digital Transformation approach can lower the cost of doing business. Learn more at: http://del.ly/DellBanking

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  • Financial Institutions need to develop a mix of “Bricks and Clicks” in the New Digital Era. Branches are up to 400% more expansive for transactions compared to OnlineNext Gen Consumers want to engage differentlyRecent proliferation of new channels and servicesAny Where, Any Time Banking is a key driverFlat Business Growth has renewed emphasis on customer retention & satisfactionCash is still an important component of Financial Transactions
  • Core challengesCostReducing Revenue Leakage through Relationship based pricing applicationSecurities Back office Transformation to improve integration & performanceCompliancePayment System Transformation while complying with Payments Systems DirectiveCompliance Frameworks and SolutionsCustomer RetentionEnterprise wide Loyalty programs to enhance customer retentionChannel Integration to grow and differentiate
  • Delivering Digital transformation engagements for leading global banks across the globeDell’sResearch & Innovations across hardware, software and devices and their automation and optimizationCollaboration with leading Industry Analysts for industry insights and joint point of views
  • Channel integration is still the biggest challenge…banks have not been able to achieve a seamless integration between Traditional (Branch, Call Centre, ATM) and Digital channels (Mobile, Internet)….Mobile is the most imp channel – Fastest growing with low cost / txn for banksMobile also offers contextual cues of customer’s preferences and behavior on the go…400M+ Mobile Banking users across the globe. BofA has 12.5M mobile banking customers and Wells Fargo has 9M mobile banking customersMobile banking users are 61% more profitable than offline customers and 83% customers reported higher satisfaction levels using Mobile Banking applications as compared to customer interactions on other channels such as Call Center40% customers may move to a competitor, if bank doesn’t provide mobile services
  • Digital transformation is in complete without back-office optimization….banks need to take care of un-availability due to batch maintenance, manual processing and unwieldy customer processes and systems…. The more reliance on a channel, the more dissonance if underlying system is unavailable and slow Need to Prioritise key customer facing processes for automation & re-engineering…BBVA are moving to real-time processing thru core banking refreshWhile TD Bank is offering Instant Card Issuance with personalization at the branch itself…
  • Fukushima Disaster happened on 11th march 2011 and changed perspective of some of the large Civil Nuclear programs running in large countriesGermany will shut down all its nuclear power plants by 2022 and Switzerland, Sweden, Spain and Italy are also following suit…Barclays has a strategy that customer can reach any desired product and services in 2 clicksBBVA is focusing on automation of customer servicing platforms and services to improve response time and processing speeds.
  • Traditional banking players have been challenged by new entrants but banks have not been worried. With faster adoption of Digital, these new entrants are gaining acceptance:1. Paypal growing by 46%, conventional banks such as DBS are growing by less than 6%2. Customer base of MPESA (18M) alone in emerging market is more than the combined customer base of top banks in Singapore (DBS, OCBC, UOB), which is an advanced Digital economyGoogle wallet has doubled the usage over last 2 years as compared to banks that are growing at rate of 6.5% YoY.Large traditional banks such as DBS (Singapore), USAA (US) and ICICI (India) have struggled to keep pace, growing at less than 10% CAGR
  • For content questions contact Cameron Jenkins/Wendy WilliamsOnline and Back-office Application Re-hosting using Dell tool-set resulting in significant improvements in trading performance and scalabilityCustomer challenges:Low trade execution speed due to legacy technology base Inability to integrate with multiple systems due to hard-coded interfaceArchaic hardware stack failing under increasing load due to increased trade volumesDell solution:Re-hosting of trade processing applications using DELL ToolkitsDeveloped and tested online interfaces capabilities with 74 brokers, clearing members and depository agentsLarge re-hosting program completed in a short time-frame of 15 monthsMain points• Dell Application Modernization Services helped eliminate costly IBM mainframe and enhance IT agility at Singapore Exchange. • Critical clearing and deposit application environment migrated to agile, industry-standard environment • Batch window cut in half.Dell Services has completed of an application modernization project with Singapore Exchange (SGX). The legacy migration project helped SGX double the speed of a critical application, significantly lower annual operating costs and better position its IT systems to align with future business initiatives.With a market capitalization of more than US$5 billion, SGX is among the world's largest exchanges and is Asia’s second-largest listed exchange. The exchange already offers the region's longest trading hours and was looking to streamline IT operations and lower cost-per-transaction rates, while better preparing to address future market growth.SGX chose Dell (then Clerity Solutions) to provide end-to-end application modernization services and mainframe re-hosting technology as part of a multi-million USD modernization project. Dell helped migrate SGX's entire mainframe complex, including key applications like clearing and settlement, third-party tools and utilities, and server and storage resources to a flexible open systems environment with minimum customer impact. Before selecting Dell’s mainframe re-hosting solution, SGX evaluated three options: rewriting its mainframe applications; upgrading its mainframe; and re-hosting its applications to a modern, open platform. The exchange opted to re-host its application environment. Mainframe re-hosting offered the most cost-effective solution and involved less risk than rewriting.In addition to Dell Mainframe Re-hosting software, Dell Enterprise COBOL was leveraged in the project to migrate SGX's IBM CICS applications, batch JCL code, COBOL programs, and VSAM data intact. This approach avoided costly code changes and enable SGX clients to continue accessing its systems without reconfiguration.This 15-month project concluded in October, enabling SGX to implement an agile, industry-standard platform as part of its endeavor to future proof its IT systems. The exchange has now moved to “phase two” of the project, which will deliver the ability more easily and rapidly facilitate the introduction of new SGX products.
  • Customer challenges:Launch of new Faster Payments service in UK to reduce the floatLimited domain knowledge and functional expertise across this new business model for payment processingRepackage the Faster Payments solution as a Productized offering to be offered in emerging geographies such as Singapore, Malaysia etc.Understanding of local instruments and regional regulations while implementing the Faster Payments solution in new geographiesDell solution:Involved in bespoke development, maintenance & testing of core applications - Payment Engine, Messaging Engine, Exception Management Application, Reference Data Application etc.Functional and domain expertise in payments area to support VocaLink in launch of this innovative business model that is being replicated by other countriesDevelopment, Testing and on-going support of Faster Payments EngineAugmenting the core skill requirements in emerging geographies leveraging Dell’s global presence and business/technology skill setCustomizing the solution for regional requirements, testing to ensure error free roll-over and implementation

Transcript

  • 1. How to become a digital bank: efficient, agile and adapting to consumer and technology changes Sameer Kishore Vice President & General Manager Banking, Financial Services, Securities & Insurance 1 2013
  • 2. Branches are expensive and un-wieldy 95% of new product sales happens at the branch Cost per transaction Online 80% adults use internet and 51% bank online Mobile Social Media 52% CAGR for 2.4B Social Mobile networking Banking accounts Transactions Financial Institutions need to develop a mix of “Bricks and Clicks” in the New Digital Era… 2 Confidential Services
  • 3. Are Digital financial institutions only about new technology or business models.. Technology Business models Biometrics / Security Digital Vaults & Wallets Social media CRM Big data and analytics Gamification Smart ATM / Kiosks Concept branches Virtualization Pricing NFC / RFID Loyalty Single sign-on Cloud / SaaS Mobility Virtual cards Person-to-person payments Personal financial management 24x7 real time BPM, SOA 3 Digital Bank 2013
  • 4. Digital Transformation begins with the customer… 2 1 Enhance customer experience thru technology Drive customer centricity through digital 3 Move to omnichannel 4 Integrate digital w/ human touch Digital Financial Institution 7 5 Provide contextual banking solutions 6 4 2013 Reduce complexity and improve profitability Integrate channels & upgrade service platforms
  • 5. Dell’s view Digital Transformation is all about engaging customers, while radically improving operations, enabled by technology 5 2013
  • 6. Solving financial institutions’ core challenges Retail, Wholesale Banking • Core Banking Modernization • Pricing & Billing • Loyalty Investment Banking Wealth Management • Securities • Wealth Back-Office Management Transformation Advisory • OTC Derivatives • Portfolio Trading Analytics Credit Organizations Payments & Cards • Loan Origination • Payments Transformation • Credit Information • Card System Services Transformation Insurance • Package Implementation • Distribution Management Digital Transformation Dell helps banks address key challenges of Cost, Compliance & Customer Retention 6 2013
  • 7. Dell’s Digital Transformation approach based on experience, collaboration & innovation 10,000 product types Largest digital transformation program for Dell, ability to offer 10,000 product types across all channels & devices 2X improvements 2X improvements in real-time processing thru application modernization for one of the largest Stock Exchange Faster payments Enhanced Loyalty 7 Helped launch New Target Operating model for Europe’s large ACH Pan bank Rewards program across 39 countries, resulting in higher revenues and improved customer retention 2013
  • 8. Key themes shaping digital financial institutions 8 2013
  • 9. Mobile is the game-changer Tx Fulfillment across Channels Internet Tablet Mobile BPO ATM 62% own a mobile phone 52% CAGR for Mobile Banking with 12.5% of all e-commerce txns” expected to be carried out via mobile devices by 2015 $0.08 Cost/Tx on mobile as compared to $1.34 in branch 9 2013 Source: Temenos, Nielson, Bain report 2012
  • 10. Performance improvement is key to digital success Effective digital adoption is required across the enterprise. A true digital bank cannot have: • • • • Delayed Customer On-boarding Batch/Maintenance Downtime Manual document processing Tools available for customers Modernizing core banking infrastructure to offer real-time processing functionality for checking and savings accounts. One of the first banks in US to offer Instant personalised Debit Card to new customer by Integrating the debit card issuing process with DDA account opening. 10 Bank Website 2013 Real-time processing resulted in 18% reduction in operating costs as compared to batch support – BBVA Q1, 2013
  • 11. Speed of online interactions makes a difference Customer 0 initiates Seconds Transaction Web page 8 slow to Seconds load Web page 18 doesn’t Seconds load Interested Unhappy Annoyed 80% 30 customers Seconds quit Dissonant • Reducing # of clicks to the desired product or service • Faster response time and servicing on web and mobile • Focus on BPR, automating essential workflows, processes & internal communication • Leveraging mobile & tablets and other collaboration tools 11 2013
  • 12. New entrants challenging traditional banking models Access holders & networks Defenders Banking incumbents Large Retail Banks Digital innovators Remittance Providers Card Issuers Card Networks Telcos 55M Customers; $61B Value of Txns Attackers Niche Technology Entrants Retail Giants Double Usage in 2 years of launch 6.5M Customers; 2.8M Cards PFM Solutions 12 2013 40M consumers, 600+ Financial Institutions Source: PWC
  • 13. Customer’s digital interactions provides vital cues on preferences and behaviors Multi-channel Banking Contextual Banking 1.0 2.0 Transform Channel Pull Improve Processes Existing Model Push digital strategy Digitally transform the bank to reach the customer 13 2013 Omni channel Push Customer Engagement New Business Model Pull digital strategy Analyze customer’s context to pro-actively suggest services
  • 14. Dell’s Digital Transformation framework: Assessment, experience, capabilities & path forward 14 2013
  • 15. The path to next gen digital financial institution ENGAGE stakeholders Customer Reach • Channel Omnification • On-the-go banking • Preferred channels Increase speed • Applications modernization • Cloud / SaaS • Selective outsourcing Remote Access Tools • Remote deposit capture • Digital vaults and wallets • Decoupled debit cards Customer Experience • Unified experience • Self-service • Faster navigation Improve efficiency • Business process re-engineering • Process automation • Reduce operating costs Alternate Models • NFC / QR Codes / P2P • Advisory through PFM • Gamification Sales & Marketing • Analytics and contextual services • Predictive selling • Loyalty 15 ENABLE through technology Workforce Enablement • Digital sales tools • Deliver faster & better service • BYOD & remote availability Products & Pricing • Product Packaging & bundling • Simulations • Relationship based pricing 2013 EXTEND business models
  • 16. Dell’s Digital Maturity Model 1 PHYSICAL 2 ONLINE Digital* Digital* Transactional Informational • Transactional services • Primarily physical channels • Digital payments • Digital channels for information & alerts 16 2013 3 SELF SERVICE Digital* Personalized • Self Service • Customer enablement • Basic social media & analytics • Online Chat 4 CONNECTED Digital* Engaged • Concept branches • Channel integration • Partial fulfillment • Max. services through digital channels *Digital level does not lend to eliminating physical branches 5 DIGITAL Digital* Innovative • 24x7x365 access to all services through digital channels • Focus on functional innovations and new operating models
  • 17. Where is your bank’s digital maturity? Physical 17 2013 Online Self Service Connected Digital
  • 18. Dell end-to-end portfolio for Digital Banking Applications Core banking Deposits processing Dell common channel gateway Cards processing r Dell system Integrator layer Wyse Application servers AppAssure 2013 Cash management Treasury Dell centralized services Enterprise risk Analytics & reporting Products & pricing Database servers Scalent Central bank SWIFT Workflow mgmt. Single CRM Dell CRM wrapper Local ACH / RTGS GL / bookkeeping Common processing across all payments and messages Exceptions & reconciliations Customer Product Contacts Card gateways Corporate connectivity Partner Dell Boomi Server virtualization 18 Loans processing Dell payments hub Single master data ATM Core applications — shared service Dell Boomi Authentication Dell Boomi Integrated multi channel Dell user interface layer External interfaces SecureWorks Outsourced / tool based Web / image servers Network FORCE Desktop mobility mgmt. Security Ocarina SonicWall SecureWorks KACE SecureWorks Security Channels Reuters, OFAC, credit bureaus
  • 19. 19 2013
  • 20. Singapore Exchange 2X performance improvement thru realtime processing Challenge • Modernize mainframe to cost-effective platform and facilitate easier introduction of new products Results • Improved batch performance 100%; doubled workload processing capabilities • Eliminated unsupported CSP programs • ROI - Delivering “orders of magnitude” of ongoing savings; project delivered in budget. “The application modernization services that Dell provided were delivered on time and within budget...” Bob Caisley, Chief Information Officer 20 2013
  • 21. VocaLink 9B digital payments per year w/ new revenue models Challenge • Launch of new faster payments service in UK to reduce the float • Limited domain knowledge and functional expertise across new business model • Repackage faster payments solution as a productized offering for emerging markets including Singapore, Malaysia Results • New system capable of processing up to 100 million payments in 4 hours • 50% increase in productivity innovative automated tools • 100% SLA compliance for maintenance of heritage applications 21 2013
  • 22. Conclusion Digital Transformation: • Not restricted to channels or technology only, needs to be a holistic transformation across back-office, staff and operations as well. • About building the right mix of “Bricks and Clicks”. • No silver bullet, it has to be unique strategy based on business drivers, customer segment, goals etc. 22 2013 Digital Transformation Roadmap
  • 23. Q&A 23 2013
  • 24. Let’s get started Engage with Dell Banking subject matter experts at the Solution Showcase Schedule a post-event whiteboard session to address your specific requirements. Contact your account team for details Gain hands on experience, see demonstrations at the Solution Showcase Schedule a visit to a Dell Solution Center near you: Austin • New York City • Washington D.C. Chicago • Santa Clara • Mexico City • Sao Paolo Go to www.Dell.com/banking 24 2013
  • 25. 25 2013