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LIFE FINANCEHIERARCHY:NEW APPROACH@Kozlov_SergeyNadra Bank Board MemberDirector of Retail BusinessPhD in EconomicsJune 3, ...
MOVIE: ASSAULT ON WALL STREETA security guard for an armored truck,Jim is a blue-collar New Yorker whoworks hard to earn a...
FINANCIAL CRISIS: BANKING VS. CASH1. Raise your hand who wants tolose all your life savings due tosome financial instituti...
20 YEARS AND 3 CHANCES TO LOSE ALL LIFE SAVINGSDate Consequences of Financial Crisis in Ukraine and Russia1990-1992- Fall ...
LIFE FINANCE HIERARCHYLifeFinanceRemote BankingBranch BankingMoney ExchangeNatural ExchangeExperienceServiceUtilitySurviva...
LIFE FINANCE DEFINITIONLife Finance (personal finance) refers to the financial decisionswhich an individual or a family un...
LIFE FINANCE HIERARCHY PRINCIPALS5 levels of Life Finance are ranked, according to theorder in which they influence human ...
LIFE FINANCE HIERARCHY BY COUNTRIESLevelGDP per capita(current US$)*CountriesRemoteBanking> 30 00030 countries: Norway, Sw...
The more you know about financial institutions andbanks the less TRUST you haveCountry TRUST LevelRwanda 91% Natural Excha...
M-PESA CASE: FROM NATURAL EXCHANGETO MONEY EXCHANGEUTILITY
A CENTURY AGO: FROM MONEY EXCHANGETO BRANCH BANKINGSERVICE
15 YEARS FROM NOW: FROM BRANCH BANKINGTO REMOTE BANKINGE X P E R I E N C E
THE FUTURE IS HERE: FROM REMOTE BANKINGTO LIFE FINANCEPersonal
VALUE CHAIN: EVOLUTION OR REVOLUTION?Level Value Extractor CommodityLife Finance Life Finance Providers(Internet Start-ups...
UKRAINE: INTERNET AND MOBILE REVOLUTIONTechnology drives the speed of changebut does not determine the system0%10%20%30%40...
TECHNOLOGY DOES NOT REPLACE THE TRUSTM2 to M1 Money Supply Ratio0%100%200%300%400%500%600%2005 2006 2007 2008 2009 2010 20...
BACK FROM BRANCH BANKING TO MONEY EXCHANGE120001300014000150001600017000180001900020000210002005 2006 2007 2008 2009 2010 ...
UKRAINE: SELL BRANCH BANKINGBEFORE YOU SELL REMOTE BANKINGBACK TO CASH: Due to 2008-2009 economic crisis decreasein the nu...
@Kozlov_Sergey@Kozlov_SergeyNadra Bank Board MemberDirector of Retail BusinessPhD in EconomicsTHANK YOU! QUESTIONS?www.fac...
P.S. WHO IS THIS MAN?
P.S. LEV GUMILEV: ANCIENT RUS’ AND GREAT VALLEYAberration ofProximity -significantexaggeration ofrecent events incompariso...
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Life Finance Hierarchy: New Approach

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Presentation about Life Finance Hierarchy as a new approach which defines the future of banking and rise of New Life Finance Providers.
Presented by Sergey Kozlov on BANK 3.0 Discussion Panel, 2nd International Banking Conference & Exhibition from 3-7 June 2013 in Kiev, Ukraine.

Published in: Economy & Finance, Business
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Life Finance Hierarchy: New Approach

  1. 1. LIFE FINANCEHIERARCHY:NEW APPROACH@Kozlov_SergeyNadra Bank Board MemberDirector of Retail BusinessPhD in EconomicsJune 3, 2013
  2. 2. MOVIE: ASSAULT ON WALL STREETA security guard for an armored truck,Jim is a blue-collar New Yorker whoworks hard to earn a living. His wagessupport himself and his wife Rosie, who ison the upswing recovering from a near-fatal illness. Yet things start to fall apartafter Rosies health insurance stopscovering her treatment and Jims lifesavings are lost via a disastrousinvestment his stockbroker had advisedhim to make. As a row of professional andpersonal dominoes falls, Jim is confrontedby the realization that, after beingabused and exploited by financialinstitutions for far too long, he has onlyone choice: to strike back.http://youtu.be/8Y-NqShTj5w
  3. 3. FINANCIAL CRISIS: BANKING VS. CASH1. Raise your hand who wants tolose all your life savings due tosome financial institution?3. Raise your hand who do care whetherit was remote (mobile) or branch bankingwhen you have real threat of loosing allyour life savings?“This is not a game for me. This is my LIFE!”Jim “ASSAULT ON WALL STREET”2. Raise your hand who prefer bankingvs. cash in circumstances of severefinancial crisis?
  4. 4. 20 YEARS AND 3 CHANCES TO LOSE ALL LIFE SAVINGSDate Consequences of Financial Crisis in Ukraine and Russia1990-1992- Fall of Soviet Union to 15 independent states including Ukraine and Russia- Frozen savings in Sberbank of USSR- Hyperinflation of more then 1000 timesResult: total loss of life savings by majority of former USSRpopulation1997-1998- Collapse on stock exchanges- Local currencies devaluation (2-3 times for Hryvnia and Ruble)- States defaults- Massive bank bankruptcies in RussiaResult: partial loss of life savings due to devaluation and depositslost in banks which went bankrupt2008-2009- Collapse on stock exchanges- Hryvnia devaluation from 5 to 8 hryvnias per dollar- Banks bankruptcies with deposits compensated by Deposit InsurancesystemsResult: partial loss of life savings due to devaluation and delays indeposit repayments
  5. 5. LIFE FINANCE HIERARCHYLifeFinanceRemote BankingBranch BankingMoney ExchangeNatural ExchangeExperienceServiceUtilitySurvivalPersonal DataChannelLocationTransactionNeed FocusFoodIncomepercapitaFinanceComplexity
  6. 6. LIFE FINANCE DEFINITIONLife Finance (personal finance) refers to the financial decisionswhich an individual or a family unit is required to make to obtain,budget, save, and spend monetary resources over time, taking intoaccount various financial risks and future life events. Whenplanning Life Finances the individual would consider the suitabilityto his or her needs of a range of banking products (checking,savings accounts, credit cards and consumer loans) or investment(stock market, bonds, mutual funds) and insurance (life insurance,health insurance, disability insurance) products or participation andmonitoring of individual- or employer-sponsored retirement plans,social security benefits, and income tax management.Source: http://en.wikipedia.org/wiki/Personal_finance
  7. 7. LIFE FINANCE HIERARCHY PRINCIPALS5 levels of Life Finance are ranked, according to theorder in which they influence human financialbehavior, in hierarchical fashion.So long as lower levels are not covered, they exist asa driving or motivating force for financial behavior.Jump from Natural Exchange or Money Exchangelevels to Life Finance is not possible unless there isa relevant shift in per capita income level.
  8. 8. LIFE FINANCE HIERARCHY BY COUNTRIESLevelGDP per capita(current US$)*CountriesRemoteBanking> 30 00030 countries: Norway, Switzerland, USA,Japan, Germany, France, UKBranchBanking> 10 000 and< 30 00033 countries: Greece, Estonia, Lithuania,Latvia, Poland, Russia, Brazil, KazakhstanMoneyExchange> 1 000 and< 10 00085 countries: Azerbaijan, Belarus,Turkmenistan, China, Ukraine, Armenia,Georgia, Moldova, Uzbekistan, India,KyrgyzstanNaturalExchange< 1 00031 country: Tajikistan, Cambodia, Nepal,Bangladesh, Rwanda* World Bank national accounts data, and OECD National Accounts data files for 2011
  9. 9. The more you know about financial institutions andbanks the less TRUST you haveCountry TRUST LevelRwanda 91% Natural ExchangeCambodia 87% Natural ExchangeNepal 81% Natural ExchangeBangladesh 81% Natural ExchangeNorway 73% Remote BankingChina 72% Money ExchangeIndia 70% Money ExchangeUzbekistan 66% Money ExchangeTajikistan 66% Natural ExchangeJapan 63% Remote BankingGeorgia 62% Money ExchangeKazakhstan 57% Branch BankingEstonia 55% Branch BankingArmenia 54% Money ExchangeKyrgyzstan 52% Money ExchangeCountry TRUST LevelAzerbaijan 50% Money ExchangePoland 50% Branch BankingSwitzerland 47% Remote BankingBelarus 47% Money ExchangeBrazil 45% Branch BankingGermany 38% Remote BankingUSA 37% Remote BankingMoldova 37% Money ExchangeRussia 33% Branch BankingFrance 32% Remote BankingLatvia 32% Branch BankingLithuania 29% Branch BankingUkraine 28% Money ExchangeUK 27% Remote BankingGreece 13% Branch BankingSource: GALLUP World 2012 http://www.gallup.com/poll/162602/european-countries-lead-world-distrust-banks.aspx#2
  10. 10. M-PESA CASE: FROM NATURAL EXCHANGETO MONEY EXCHANGEUTILITY
  11. 11. A CENTURY AGO: FROM MONEY EXCHANGETO BRANCH BANKINGSERVICE
  12. 12. 15 YEARS FROM NOW: FROM BRANCH BANKINGTO REMOTE BANKINGE X P E R I E N C E
  13. 13. THE FUTURE IS HERE: FROM REMOTE BANKINGTO LIFE FINANCEPersonal
  14. 14. VALUE CHAIN: EVOLUTION OR REVOLUTION?Level Value Extractor CommodityLife Finance Life Finance Providers(Internet Start-ups,Social Networks,Telecoms, etc.)Banking ServicesRemote Banking Banks Non-cash MoneyBranch Banking Banks Physical Money(cash, gold, etc.)Money Exchange Merchant GoodsNatural Exchange Seller and Buyer ItemLoss of TRUST in existing financial institutions and banksleads to raise of new Life Finance Providers
  15. 15. UKRAINE: INTERNET AND MOBILE REVOLUTIONTechnology drives the speed of changebut does not determine the system0%10%20%30%40%50%60%70%80%90%2004 2005 2006 2007 2008 2009 2010 2011 2012Internet Users, % of populationUkraine USA
  16. 16. TECHNOLOGY DOES NOT REPLACE THE TRUSTM2 to M1 Money Supply Ratio0%100%200%300%400%500%600%2005 2006 2007 2008 2009 2010 2011Ukraine + Foreign Currency Cash Ukraine USA
  17. 17. BACK FROM BRANCH BANKING TO MONEY EXCHANGE120001300014000150001600017000180001900020000210002005 2006 2007 2008 2009 2010 2011 2012Ukraine: Decreasing Number of Branches
  18. 18. UKRAINE: SELL BRANCH BANKINGBEFORE YOU SELL REMOTE BANKINGBACK TO CASH: Due to 2008-2009 economic crisis decreasein the number of branches connected with the switching ofcustomers from Branch Banking to Money Exchange ratherthen development of Remote Banking.TARGETING BRANCH BANKING: According to proposed LifeFinance Hierarchy Ukraine is on Money Exchange level.Further advance to Branch Banking will lead to increase in thenumber of branches.MIXED APPROACH: The key challenge for Ukrainian BankingSystem today is to restore TRUST and confidence. Branchesplay key role in this process as well as in the process ofadvancing customers further from Branch Banking to RemoteBanking levels.
  19. 19. @Kozlov_Sergey@Kozlov_SergeyNadra Bank Board MemberDirector of Retail BusinessPhD in EconomicsTHANK YOU! QUESTIONS?www.facebook.com/sergey.a.kozlovua.linkedin.com/in/kozlovsergey
  20. 20. P.S. WHO IS THIS MAN?
  21. 21. P.S. LEV GUMILEV: ANCIENT RUS’ AND GREAT VALLEYAberration ofProximity -significantexaggeration ofrecent events incomparison withearlier

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