Smarter Digital Banking: Leveraging New Capabilities with Big Data

1. Smarter Digital Banking:
Leveraging New Capabilities
with Big Data
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3. Featured Presenter
Our speaker today is:
Marc Andrews
Vice President,
Global Big Data Industry
Team,
IBM

4. Smarter Digital Banking
Using Big Data to Transform the Banking Experience
© 2012 IBM Corporation

5. Agenda
• Market Forces Driving Action
• The Future of Digital Banking
• Pursuing Next Generation Capabilities
5

6. Market Forces Dictate Action
Other banks have
plans to deliver
…profit margins in Europe’s banking industry will remain under pressure as
enhanced mobile
the sovereign debt crisis curbs client activity and competition increases.
Pressure on margins and higher capital requirements “are the new normal.”
and online
…Executives at New York-based
capabilities resulting margin compression JPMorgan expectmillion decline in
the to cause a $400
low rates and
Continued margin consumer and business banking net incomethreat of
Large this year…
pressures and disintermediation
Online Innovation Plans
reduced profitability Plans
Mobile Innovation
by non-traditional
in traditional banking financial service
products providers
As a result of new global, regional, and national regulations, and
absent any mitigating action by banks or material changes in the
economic and competitive environment, return on equity for
retail banking Europe’s four largest markets is
Banks must continue to
…intense competition and low interest rates are causing margin pressure
expected to fall on average from about 10 percent to
6 percent, a decline of 41 percent…But individual banks can
revenues and profits over the 12-18 month outlook
deliver new, innovative digital
that will likely further erode the banks' already-weak rebuild ROE…substantial business-model realignment is
the single most important lever.
period…[one of] the main drivers of the outlook are margin pressure for pursue alternative
services and
banks, owing to intense competition, low interest rates and limited loan
growth…
revenue streams
6

7. Mobile is the deciding factor when switching banks
For customers already using mobile banking, mobile banking features are the
most important deciding factor (32%) when switching banks, more
important than fee (24%) or branch location (21%) or services (21%)
• Mobile banking adoption expected to approach 50% by 2016
– Was 15% in beginning of 2012
– Between age 18-34: 30%
– Between age 35-54: 15%
• 39% say mobile offerings were important in their decision to switch banks
• Mobile banking users who switched banks in the past year:
– 32% chose mobile banking as preferred attribute
– 24% fee level
– 21% branch convenience
– 21% customer service
– 9% deposit rate
• Opportunities for differentiation are opening for banks
Source: Alix Partners, http://www.alixpartners.com/en/MediaCenter/PressReleaseArchive/tabid/821/articleType/ArticleView/articleId/203/Smartphones-Rapidly-
7 Transforming-Mobile-Banking-From-New-Concept-to-Tablestakes-According-to-AlixPartners-Study.aspx, Feb 22, 2012

8. Key Capabilities That Must Be Considered
Access core banking services
from anywhere, anytime
with an ease that delights
integrated across all channels
Provide new services that extend beyond
traditional banking to help customers
make the most of their time and money
Drive outbound communication
and interaction when “customer”
considers valuable –
relevant, timely and helpful
8

9. CUSTOMER JOURNEY
Part 1
Pierre, a native Parisian, goes out shopping one Saturday
9

10. Bouygues3G 10:00 AM
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12. Bouygues3G 10:48 AM
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16. Bouygues3G 11:32 AM
OFN Offers
30% off
30% off any entrée over €30
Just present this offer and barcode to
the merchant and pay with your OFN
card to redeem.
Bon appetite!
30% off any entrée over €30
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17. Data Monetization Opportunity via Mobile
What consumers are interested in using their mobile phone for
Biggest gap
17 Source: Consumers and Mobile Financial Services, Federal Reserve System, Mar 2012 Source: The CMO Site, Getting the Most from Mobile Marketing

18. Bouygues3G 12:58 PM
Logout Payments
Pay Mobile & Email
merchants payments
Mobile Facebook
check deposit friend payments
Order
foreign currency
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19. Bouygues3G 12:59 PM
Logout Make a Payment
Payee Guillaume Audebert
+33 6 23 44 87
Message For train ticket to Geneva
TAP TO EDIT AMOUNT
€ 70
+ €5 + €10 + €20 + €50
Send Payment
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20. Bouygues3G 1:06 PM
Logout Payments
Pay Mobile & Email
merchants payments
Mobile Facebook
check deposit friend payments
Order
foreign currency
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21. Bouygues3G 1:07 PM
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Camera
Make sure the entire cheque is inside the blue box and
touch the “Take Photo” button when you are ready
Take Photo
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Deposit Details
Deposit
OFN Current Account
to
Amount 70,00
Currency Euro (€)
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23. CUSTOMER JOURNEY
Part 2
Pierre travels to Geneva for the weekend
23

24. Swisscom3G 11:21 AM
1
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your OFN card. Please click OK to confirm
the transaction or alert us.
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25. Swisscom3G 11:21 AM
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Please Enter Your Pin
* * *
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26. Swisscom3G 11:22 AM
Logout Fraud Alerts
Account Number: 12345678
Sort Code: 11-22-33
An attempted charge was made in Switzerland
(Watch Emporium). Please approve or reject the
transaction.
Reject Approve
Please let us know how long you will be in
Switzerland:
2 days 6
Inform us
Call Call Me
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27. Mobile Payments
Transaction value and volumes expected to grow in
North America by more than 3X in next 3 years
Mobile Payment Transaction Value (billions of dollars)
2010 2011 2012 2013 2014 2015
North America $4.3 $14.2 $30.2 $53.8 $80.4 $109.4
Worldwide $58.9 $105.9 $171.5 $255.8 $352.7 $472.8
Mobile Payment Transaction Volumes (millions of transactions)
2010 2011 2012 2013 2014 2015
North America 105 347 736 1,261 1,934 2,694
Worldwide 2,007 3,580 5,707 8,468 11,806 15,993
Source: Gartner, “Forecast - Mobile Payment, Worldwide 2009-2016”, May 2012
27

28. Hana Bank – Mobile Wallet for Everyone
• Balance
• Top Up
• Send/Receive
• Dutch Pay
• Wheel of Fortune
• Give Allowance
• Remote ATM Withdrawal
Includes non-Hana Bank account holders & unbanked customers
Cell phone number as a bank account
Online transfer or ATM to top up balance
Multiple Money Transfer Options
Direct Purchase or Mobile Gift Certificate
(15K+ stores)
28

29. CUSTOMER JOURNEY
Part 3
Pierre spends a lazy Sunday morning at home reviewing his finances
29

30. 10:00 AM
iPad
3
OFN

31. iPad 10:00 AM
OFN – Virtual Branch powered by
Accounts
Payments & Transfers
Spending Manager
Financial Manager
Locator
Digital Vault
Alerts 3
Jul 2, 2012 4:10 PM CET
Based on our analysis of your typical
spending, you may not have
sufficient funds in your current
account.
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
Talk or chat with us now…

32. iPad 10:00 AM
OFN – Virtual Branch powered by
Jul 2, 2012 4:10 PM – You may not have sufficient funds in your current account
Accounts
Based on our analysis of your typical spending, you may not have sufficient funds in your current account. We’ve reviewed
what others have done to come up with some suggestions about how we can help you resolve this situation – please click on
Payments & Transfers an option below to find out more, or feel free to contact us directly to discuss.
Your typical non-discretionary monthly spend: € 4500,00
Spending Manager
Remaining current account balance: € 3431,90
Financial Manager Recent spending
Date Merchant Location Amount Available Balance
03/07/12 15:30 Watch Emporium Geneva, Switzerland - 2895,00 € 3431,90
Locator
02/07/12 13:00 Villa Spicy Paris, France - 150,00 € 6326,90
02/07/12 11:00 Fnac Paris, France - 1023,10 € 6476,90
Digital Vault
Recommendations based on your peer group and communities
Alerts 3 74% of 25% of 13% of
peers peers peers
Jul 2, 2012 4:10 PM CET
Based on our analysis of your typical OFN Smart Sweep Overdraft Personal Loan
spending, you may not have
sufficient funds in your current
account.
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Talk or chat with us now…
Based on comparison with your
communities, you may be able to Video Conference Talk to Agent Chat
save money on your utility bill.
2 3 7
minutes available now available now

33. iPad 10:02 AM
OFN – Virtual Branch powered by
Back Video chat with Customer Service End Call
Accounts
Payments & Transfers
Spending Manager
Financial Manager
Locator
Digital Vault
Alerts 3
Jul 2, 2012 4:10 PM CET
Based on our analysis of your typical
spending, you may not have
sufficient funds in your current
account.
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
Currently chatting with Paul Bellanti…

34. iPad 10:01 AM
OFN – Virtual Branch powered by
Back OFN Smart Sweep
Accounts
Linked Cash Account Linked Excess Account
Payments & Transfers
OFN Current Account Direct Savings
Account Number: 12345678 Account Number: 12345678
Spending Manager
Sort Code: 11-22-33 Sort Code: 11-22-33
Financial Manager
Minimum balance: € 4500,00 € 4500,00
Locator • If the balance in your Linked Cash Account drops below this amount, money will be automatically transferred
from the Linked Excess Account in order to maintain the minimum balance.
Digital Vault Maximum balance: € 7500,00 € 7500,00
• If the balance in the Linked Cash Account exceeds this amount, the amount in excess will be automatically
transferred to the Linked Excess Account
Alerts 2
Jul 2, 2012 5:30 PM CET
Change Linked Accounts Apply New Balance Limits
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
Currently chatting with Paul Bellanti…

35. Alior Bank – Launching a Virtual Bank
Virtual Branch interface provides …virtual teller can assist
New brand created
online teller interaction… with transactions
for “Virtual Bank”
Global Banking
Innovation Award
Mobile app enables customers to …and electronic payment is
take pictures of bills… automatically generated
35

36. iPad 10:01 AM
OFN – Virtual Branch powered by
OFN Personal Loan Form Send Close
Accounts
Personal Information Calculate and Review Confirm and Submit
Payments & Transfers
Spending Manager
My Views
Locator
Digital Vault
My Wall 1
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
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37. powered by
RUPERT
Pierre
PIERRE
M

38. iPad 10:01 AM
OFN – Virtual Branch powered by
OFN Personal Loan Form Send Close
Accounts
Personal Information Calculate and Review Confirm and Submit
Payments & Transfers
Pierre Rupert
Spending Manager
123-45-6789
My Views 14/05/1964
Locator
(416) 555-1212
Digital Vault
(647) 555-1212
pierrer@gmail.com
My Wall 1
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
IBM
14/05/2002
€250,000
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39. iPad 10:01 AM
OFN – Virtual Branch powered by
Back OFN Personal Loan Form Send Close
Accounts
Personal Information Calculate and Review Confirm and Submit
Payments & Transfers
Spending Manager
My Views €30,000
Locator
Digital Vault
My Wall 1
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
Talk or chat with us now…

40. iPad 10:01 AM
OFN – Virtual Branch powered by
Back OFN Personal Loan Form Send Close
Accounts
Confirmation and Agreement
Payments & Transfers
Spending Manager
My Views
Locator
Digital Vault
My Wall 1
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
Talk or chat with us now…

41. iPad 10:05 AM
OFN – Spending Manager powered by
Forecasting / Planning My Average Monthly Spending Recent Transactions
Average Monthly Spending Date Merchant Amount
Mortgage 03/07/12 Watch … -2895,00
Budget Planning
Utilities & insurance 02/07/12 Villa Sp… -150,00
Current Spend vs Budget 15% 25%
15% Food & Drink 02/07/12 Fnac … -1023,10
Accounts Timeline 10%
20% 15% Entertainment 02/07/12 Monopr… -347,48
Payments Map
Travel 01/07/12 Boulan… -315,24
Other 01/07/12 Paul … -5,74
My Communities +/- 01/07/12 Airbus … 14 231,00
30/06/12 Café R… -2,88
Auto-Profile Monthly Spend vs Peer
30/06/12 Patisse… -32,33
Advanced Profile
35% 28/06/12 Moulin … -149,83
Doctors
30%
25% Average Top Merchants Category
Spend
Spending Alerts 1 20% 1. Nina Ricci
Peer
Jul 2, 2012 7:30 PM CET
15% 2. Preen
3. Helmut Lang
Based on comparison with 10%
your communities, you may be
4. Miu Miu
able to save money on your 5%
utility bill. 5. Emilio Pucci
0% 6. Roberto Cavalli
Mortgage Utilities & Food & Drink Entertainment Travel Other
insurance
7. Dolce & Gabbana
8. Prada
Talk or chat with us now…

42. iPad 10:15 AM
OFN – Financial Manager powered by
Forecasting / Planning My Portfolio News Feed +/-
Portfolio Performance Value of My Portfolio Jun 26, 2012 1:45 PM CET
Asset Allocation (Start of period = 100) Italian, Spanish Government
Notes Slide on Debt Sales as
Return Calculator 500 German Bunds Drop
My…
Retirement Calculator
Jun 26, 2012 1:12 PM CET
Investment Research Oil Trades Little Changed as
0 Storm Threat to U.S. Gulf Crude
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Supply Fades
My Communities +/- Jun 25, 2012 10:59 PM CET
BRICs Biggest Currency
Auto-Profile Depreciation Since 1998 to
Advanced Profile
Value of My Portfolio vs Advanced Peers Worsen
(Start of period = 100)
Doctors
300
250 Investment Activity +/-
200 Company Last Position
Research Alerts 1 Trade
150 AAPL 347.48 +1.92
Jul 2, 2012 7:30 PM CET
100 BAC 315.24 -2.20
OFN Research has just
released a new report on CGREN 5.74 -0.04
Apple… 50
CRDA 2.88 +0.16
0
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 ERJ 32.33 +2.31
IBM 149.83 +1.01
MERR 2.85 -1.20
SLV 18.70 -4.12
Talk or chat with us now…

43. iPad 10:15 AM
OFN – Financial Manager powered by
Forecasting / Planning My Asset Allocation News Feed +/-
Portfolio Performance 5% Jun 26, 2012 1:45 PM CET
10% Cash
Asset Allocation Italian, Spanish Government
20% Notes Slide on Debt Sales as
20% Stocks & Shares German Bunds Drop
Return Calculator
15% 30% Gilts & Bonds
Retirement Calculator
Jun 26, 2012 1:12 PM CET
Investment Research
Structured products
Oil Trades Little Changed as
Funds Storm Threat to U.S. Gulf Crude
Supply Fades
My Communities +/- Jun 25, 2012 10:59 PM CET
Holdings vs Advanced Peer BRICs Biggest Currency
Auto-Profile Depreciation Since 1998 to
Worsen
Advanced Profile
35%
Doctors
30%
25% Investment Activity +/-
Current
1
20% Holdings
Company Last Position
Research Alerts Trade
AAPL 347.48 +1.92
15%
Jul 2, 2012 7:30 PM CET Advanced
BAC 315.24 -2.20
OFN Research has just 10% Peer
released a new report on CGREN 5.74 -0.04
Apple…
5% CRDA 2.88 +0.16
0% ERJ 32.33 +2.31
Cash Stocks & Gilts & Structured Funds ETFs IBM 149.83 +1.01
Shares Bonds products
MERR 2.85 -1.20
SLV 18.70 -4.12
Talk or chat with us now…

44. Banks Trying to Help Customers Save More Money
Citibank and Mint.com Provide Spending Categorization via Tablet Apps
SmartyPig and Erste Bank Provide Special Apps to Drive Savings
44

45. Pursuing Next Generation
Capabilities
45

46. Delivery Requirements for Success
designed to operate branch-free and
Digital Centric contact-center-lite to minimize
impact on existing infrastructure
enabling phased delivery of new
functionality in small incremental
Agile Development
cycles, leveraging existing
infrastructure and capabilities
to ensure communications and offers
Data Driven are relevant to customers and
deliver added value
46

47. Smarter Digital Banking – Technology
Conceptual
External
Payment
Gateway
Core Payments &
Core Banking
Systems &
Systems
Commerce
Payments
Processes
Enterprise Service Bus
Multi-Channel Consumer
Channel
Integration
Applications Platform
Marketing
Mgmt
Security
Business
Analytics
Big Data & Analytics
Data
Analytics
Infrastructure & Development
Rapid Development & Integration
47

48. Smarter Digital Banking – Technology
Descriptive
External
PaymentsPayment
& Commerce
Gateway
Multi-Channel Consumer Core • Payment Gateway
Core Banking
Applications Systems &
Systems • Wallet
• Baskets &Payments
Order Management
• Data Access Processes
• Personalised Content Delivery
• Secure, Real-Time, Two-Way
Communication
• Client Reporting Enterprise Service Bus
• Content Management
Channel
• Collaboration & Community Services Integration
• Electronic Forms / Signature Platform
Big Data & Analytics
Marketing
Mgmt
• Data Aggregation
Security
• Master Data Management
Business
• Advanced Analytics Analytics
Authentication
Authorization
• Campaign and Offer Management
• Process and Rules Management
• Performance Management
• Data
Customer Experience Management
Analytics
•
•
Infrastructure & Development
• On-Demand Scalability (Platform as a Service) • Diverse Device Testing • Development Lifecycle Management
• Multi-Device Mobile App Framework • Rapid Development & IntegrationDevices)
Endpoint Management (Apps and
48

49. Smarter Digital Banking – Technology
Logical
External
Payment
Gateway
Core Banking 3rd party
Commerce
Systems Data
Payments
Enterprise Service Bus
Channel
Mobile Application Integration
Platform
Security Marketing
Services Mgmt
Process Business
and Rules Analytics Data Mgmt
Mgmt
Collaboration Data
Services Analytics
Infrastructure Management, Monitoring & Governance
Rapid Development & Integration
49

50. Smarter Digital Banking – Technology
Components
Commerce External 3rd party
Core Banking Systems Payment Data
Gateway Demographi
General Ledger c
Product
Catalog Payments Credit
Channel Scores
Deposits
Other(s)
Wealth
Integration
Loans
Cards
Shopping Financial Geographic
Platform Basket Network
Community Secure, Connectors Weather
Local Common Order
Collab. Real-Time
Analytics Data Management Wallet Social Media
Services Comms
Repository
On-Device Common
Wallet Notifications Channel
Caching Enterprise
Mobile Communication Services Service Core Banking Service Registry Service Mgmt & External
Bus Connectors & Repository Invocation Connectors
Data
Management
Context Augmented Audio /
Mgmt Reality Video Chat Handlers
Data Authentication Business Campaign Campaign Master
Local Secure Location Transformers Mgmt Data Mgmt
Rules Engine Insight
Connectivity Database Data Authorization
Support Collection Data Process Campaign Business Warehouse
Mappers Biometrics Models Scheduling Insight
App Native Credential Information
Mgmt Device Store Service Business Campaign Predictive Integration
Features Invokers Process Delivery Analytics
Manager Operational
Security Marketing Fraud Data Mgmt
Skin-able Reference Applications Presentation Services Management
Services Event Analytics Content
Detection Managemen
Data Text Performance
Community Electronic Analytics Management t
Caching Collaboration Forms / NLP Web & Exploratory
Services Data Mgmt
Image Mobile
Electronic Recognition Experience
Secure, Real- Signature Analytics Information
Time, Two-way
Content Lifecycle
Communications Business
Analytics Governance
Process and Analytics
Mobile Application Collaboration Rules Data Data
Services Management Analytics Management
Endpoint Management, On-Demand Scalability Infrastructure Management,
Monitoring & Reporting (Platform as a Service) Monitoring & Governance
Multi-Device Mobile App Collaborative Development Hybrid Integration – Cloud & Rapid Development
Diverse Device Testing Lifecycle Management & Integration
Development Framework On-Premise
50

51. Value Tree for Benefits of Smarter Digital Banking
Profit/Margin Expansion
New Revenue
Transaction fees Increase of assets
under management
PTI
New revenue sources
enabled by smarter digital Additional services to Additional services to
banking end-users third-parties
Other margin
expansion opps
 Direct profit impact of smarter New customer Cross sell existing
digital banking capabilities acquisition products
Cost Reduction
Reduction of client Reduction of average
loss rate transaction cost
New cost reduction
opportunities enabled by
smarter digital banking
Reduction of
expansion cost
Other Benefits
Support of government
Social impact agenda
Other indirect benefits
enabled by smarter digital
banking
Brand benefits
(marketing)
51 Key Indirect/qualitative measure Direct/quantifiable measure

52. Potential Ways to Get Started
• Establish Vision and Priorities
o Consider business model and digital capabilities
• Assess Current Capabilities and Gaps
o Data and technology required to deliver capabilities
• Develop a Roadmap
o With phased delivery and supporting business case
• Prototype/Pilot Selected Use Cases
52

53. Questions?
Submit questions to the presenter via the on-screen text box
Marc Andrews
Vice President,
Global Big Data Industry
Team,
IBM

54. Thank you for attending
Please visit our sponsor and any of the resources below:
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Smarter Digital Banking: Leveraging New
Capabilities with Big Data
http://www.ibmbigdatahub.com/blog/smarter-digital-banking-leveraging-
new-capabilities-big-data
Big Data in Banking Whitepaper:
http://public.dhe.ibm.com/common/ssi/ecm/en/imw14653usen/IMW14653
USEN.PDF
Study: The Real World Use of Big Data
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NA&S_PKG=Q412IBVBigData&S_TACT=109HF63W&S_CMP=_bdhub