Creating the Future of Global Financial Services Ross Dawson Chairman, Future Exploration Network Author, Living Networks and Developing Knowledge-Based Client Relationships

Risk Relationships

Finite players play within boundaries Infinite players play with boundaries - James Carse

Finite players play within boundaries

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

Scenario thinking Source: Shell Global Scenarios to 2025

Forecasting and scenarios

Thinking about the future of drilling Source: Global Business Network & Peter Schwartz

Life is full of surprises Source: Global Business Network & Peter Schwartz

Networks are based on standards Senior executive interviews Financial services Disruptions-trends -uncertainties Develop preliminary strategic frameworks Explore past, present and future Workshop preparation Scenario Project - Process Map Catalysts for strategic conversation Develop scenario agenda Drivers of alternative futures Preliminary scenario frameworks Scenario team develops scenarios Application in divisional strategy process Group strategy implications Scenario Book Future Vision Workshop Ongoing annual group and divisional scenario-based strategy process Growth and success Scenario thinking Strategic capabilities Responsiveness

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

Driving forces Economic shift Demographic shift Greater expectations Commoditization Connectivity Integration Modularization New payment mechanisms New capital markets Value of relationships

Economic shift

Demographic shift

Greater expectations

Commoditization

Connectivity

Integration

Modularization

New payment mechanisms

New capital markets

Value of relationships

BRICs are overtaking Source: Goldman Sachs

Demographics is destiny

We expect more

Prices are being driven down Source: UK Office of National Statistics

Connected to financial advice

Integrated information flows

The modular economy

New payment mechanisms

New layers for capital markets

Relationships matter

Driving forces Economic shift Demographic shift Greater expectations Commoditization Connectivity Integration Modularization New payment mechanisms New capital markets Value of relationships

Economic shift

Demographic shift

Greater expectations

Commoditization

Connectivity

Integration

Modularization

New payment mechanisms

New capital markets

Value of relationships

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

Critical uncertainties Globalization National stability Regulation Privacy Volatility Industry structure New entrants Currencies IT Security Climate change

Globalization

National stability

Regulation

Privacy

Volatility

Industry structure

New entrants

Currencies

IT Security

Climate change

Is globalization inevitable?

The integrity of nations

Regulation drives industries and economies

Privacy, service, and pricing

Will complexity drive volatility?

Industry consolidation

Banks get new competitors

How many currencies?

Will IT systems be secure?

The impact of climate change

Critical uncertainties Globalization National stability Regulation Privacy Volatility Industry structure New entrants Currencies IT Security Climate change

Globalization

National stability

Regulation

Privacy

Volatility

Industry structure

New entrants

Currencies

IT Security

Climate change

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

Key dimensions Aggregation : Fragmentation to Consolidation Technology uptake : Traditional to Transformational

Aggregation :

Fragmentation to Consolidation

Technology uptake :

Traditional to Transformational

Scenario Framework: Global Financial Services in 2020 Consolidation Fragmentation Transformational Traditional New frontier Mega Services Agent economy Barriers Rising AGGREGATION TECHNOLOGY UPTAKE

New frontier Mega Services Agent economy Barriers Rising AGGREGATION TECHNOLOGY UPTAKE

New Frontier Strong global growth and availability of capital Deregulation and international cooperation India flourishes Google, eBay, and telecoms firms become major financial players Margin pressure across industry Rise of mobile payments and e-cash Shift away from branches Intensely customized service to all tiers of clients

Strong global growth and availability of capital

Deregulation and international cooperation

India flourishes

Google, eBay, and telecoms firms become major financial players

Margin pressure across industry

Rise of mobile payments and e-cash

Shift away from branches

Intensely customized service to all tiers of clients

New frontier Mega Services Agent economy Barriers Rising AGGREGATION TECHNOLOGY UPTAKE

Barriers Rising Rise of protectionism China splinters Euro breaks up Wealth disparities rise Investors demand focus Banks specialize/ global monolines Proliferation of intermediaries High margins for successful players Terrorism impacts financial markets and insurance

Rise of protectionism

China splinters

Euro breaks up

Wealth disparities rise

Investors demand focus

Banks specialize/ global monolines

Proliferation of intermediaries

High margins for successful players

Terrorism impacts financial markets and insurance

New frontier Mega Services Agent economy Barriers Rising AGGREGATION TECHNOLOGY UPTAKE

Agent Economy Fluid global economy Highly modular outsourcing across borders Governments lose control/ consumers gain control Consumers and business shift wholesale to online Agents seek best price for everything/ customer loyalty nil Constant product innovation Markets are volatile Customer service and call centers are automated

Fluid global economy

Highly modular outsourcing across borders

Governments lose control/ consumers gain control

Consumers and business shift wholesale to online

Agents seek best price for everything/ customer loyalty nil

Constant product innovation

Markets are volatile

Customer service and call centers are automated

New frontier Mega Services Agent economy Barriers Rising AGGREGATION TECHNOLOGY UPTAKE

Mega Services Rise of BRIC results in multiple superpowers Trade liberalization wins Global financial services consolidation Integration across financial services sectors Profitability high but cyclical High customer expectations Banks diversify into other personal services, partly through alliances Niche service providers emerge to support the market leaders

Rise of BRIC results in multiple superpowers

Trade liberalization wins

Global financial services consolidation

Integration across financial services sectors

Profitability high but cyclical

High customer expectations

Banks diversify into other personal services, partly through alliances

Niche service providers emerge to support the market leaders

Scenario Framework: Global Financial Services in 2020 Consolidation Fragmentation Transformational Traditional New frontier Mega Services Agent economy Barriers Rising AGGREGATION TECHNOLOGY UPTAKE

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

Key capabilities for success in 2020 Specialization Integration Scalable relationship management Cross-selling Responsive strategic re-positioning

Specialization

Integration

Scalable relationship management

Cross-selling

Responsive strategic re-positioning

Two layers of technology in organizations Ad-hoc networks Standardized processes

Shifting relationship channels

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

The flow economy

Opportunities for Indian FS Industry Best-of-breed modular services Adapting microfinance expertise Financial Services Virtual Operator support Global mobile payments Branded global Joint Ventures Support India’s success

Best-of-breed modular services

Adapting microfinance expertise

Financial Services Virtual Operator support

Global mobile payments

Branded global Joint Ventures

Support India’s success

Critical uncertainties Driving forces Implications Scenarios for financial services Opportunities Scenario thinking

We have a choice

Online resources “ Dawson has pulled off the nigh-impossible: improved on what was already a terrific book. Even more than before, this is essential reading for professional service firms.” - David Maister , author, Managing the Professional Service Firm www.rossdawsonblog.com Commentary, free chapters, and downloads at: “ I’m not sure that even Ross Dawson realizes how radical – and how likely – his vision of the future is.” - Seth Godin , author, Purple Cows

Create the future of financial services!