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Digital transformation of the
banking industry
Frank Schwab, FELABAN, Miami, FL, November 2017
Year 2000
E-Commerce hype
PayPal > 2x Deutsche Bank
Market cap in Billion USD, Nov 2017
35
Deutsche Bank
88
PayPal
59
Charles Schwab
1st wave
The world‘s largest accommodation provider
The world‘s largest taxi company
The world most valuable retailer
The world‘s l...
But
Top 100
Banks
Source: https://www.relbanks.com
88
2017
IBM Mainframe
Sun Server
Intel blade
Thin clients
Fat clients
AIX Server Server Farm
Investment
need
Interest business is falling away
Profits
Q3/2017
488 million user
52 orders per user per year
8.3 billion USD revenues (Q3)
50,000 employees
25 Bn USD
Alibaba‘ Singles‘ Day 11/11/17
sales
Alipay
> 10,000
FinTechs
Crowd
1 million EUR in 9 min 23 sec
Saturday afternoon, 2:30 pm
Fidor: Facebook Like interest
2015 2014
Peer to peer
Improve your Karma
Ideas
Networker
Social media
Opinion leader
Crypto
> 1,200 currencies
> 6,400 markets
Digital Gold – Nov 2017
183,000,000 kg 16,600,000 Coins
7,279 bn USD 118.8 bn USD
Fair value
1 BTC = 436,500 USD
Factor
70
Crypto currenciesAll money
83.6 T USD 200 Bn USD
Factor
400
Blockchain
Blockchain
Time
Public ledger
Transaction block
Smart contracts
Public ledger
Transaction block with condition
Condition
Examples
Stocks: dividend payment
ICO
Smart contracts – example: car finance
Disclosed funding in Bitcoin & Blockchain
in million USD
2013
93
2014
357
2015
524
2012
2
Source: CB Insights
2016
550
num...
AI
^
Amelia, Quelle: IPSoft
IT Service Desk Agent
SEB Bank
3 weeks
700 employees
4,000 requests
Robo
Advisory
Overrated
Gartner Hype Cycle
Overrated
underestimated
Gartner Hype Cycle
Mobile
Cloud
Possible IT infrastructure savings
-80%
Traditional
Bank IT
Cloud
Banking Services
Cost efficient scalable infrastructures
API
API = Application Programming Interface
A browser is for a person the same... ... as an API for a computer
{
“headline": “...
APIs make the Internet machine readable and often they
are the foundation of a successful E-Commerce business
The club of ...
Netflix tripled the number of API calls per day between May 2012
and December 2015. At the same time the share price incre...
PayPal > 2x Deutsche Bank
Market cap, Nov 2017
[in Billion USD]
35
Deutsche Bank
88
PayPal
Deutsche Bank PayPal
Customer 2...
Plattform
New banking services built on new technologies
Crowd P2P Crypto
Cloud API
^
AI MobileBlockchain Platform
Processes
100% STP
< 60 seconds
Humans
Technology
Business
Design Thinking
Great Banking Services
feasible
viable
desirable
Text based
Static
Lack of visual experience
Can it be done
differently?
Highly visual
Bold photos
Dynamic
content
Modern
design
Requirements
Design
Traditional Waterfall Model
Implementation
Test
Maintenance
Agile development
Specs Tasks
Release
Deployment
14 Days
Daily
IT redefines banking
= new KPIs
IT costs per user per year in USD
200
Tier 1/2 Bank eBay
7,4
Facebook
3,8
Google
3,4
FinTech
4-10
Customer acquisition costs in USD
50 - 250
Traditional bank FinTech
5 -25
New leadership style
commands influences
blames empowers
takes credit gives credit
hierarchic network
Quo vadis?
Credit
Assets
Payments
Banking Services
R I P
Traditional banking under siege
Telecom
provider
Internet
giants
FinTechs
Traditional
banking
Traditional
Retailer
Design thinking New leadership
New KPIs100 % STP
Framework for digital banking
All just hype?
36
BPO; 396 Insurance; 1.515
FinHCIT; 2.087
FinMgmtSol; 4.173
IB / Wealth; 4.702
Banking/Lending; 9.296
Payments/Ecommerce
; ...
Customer
PaymentsAssets
Loans
Deposits
PayPal has grown as an e-commerce payment provider for eBay.
Now PayPal builds successive products, acceptance points and ...
Diffusion of innovation
Longer than you think
Faster
than you
think
time
Diffusion
2030: Banking disrupted
New
Traditional
BankingService
Technology NewLegacy
Niche
Financial
infrastructure
provider
Er
Suc...
Frank@FrankSchwab.de
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
Digital transformation of the banking industry
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Digital transformation of the banking industry

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From traditional to digital banking
Significantly changing basic conditions
New customer expectations and journeys
New digital products: crowd, P2P & crypto
New game changing technologies, processes and concepts: Cloud, API, blockchain, AI, platform, eco-systems, 100% STP
New types of leadership

Published in: Business
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Digital transformation of the banking industry

  1. 1. Digital transformation of the banking industry Frank Schwab, FELABAN, Miami, FL, November 2017
  2. 2. Year 2000
  3. 3. E-Commerce hype
  4. 4. PayPal > 2x Deutsche Bank Market cap in Billion USD, Nov 2017 35 Deutsche Bank 88 PayPal 59 Charles Schwab
  5. 5. 1st wave
  6. 6. The world‘s largest accommodation provider The world‘s largest taxi company The world most valuable retailer The world‘s largest telecommunication provider The world‘s most popular media company
  7. 7. But
  8. 8. Top 100 Banks Source: https://www.relbanks.com 88
  9. 9. 2017
  10. 10. IBM Mainframe Sun Server Intel blade Thin clients Fat clients AIX Server Server Farm
  11. 11. Investment need
  12. 12. Interest business is falling away
  13. 13. Profits
  14. 14. Q3/2017 488 million user 52 orders per user per year 8.3 billion USD revenues (Q3) 50,000 employees
  15. 15. 25 Bn USD Alibaba‘ Singles‘ Day 11/11/17 sales
  16. 16. Alipay
  17. 17. > 10,000 FinTechs
  18. 18. Crowd
  19. 19. 1 million EUR in 9 min 23 sec Saturday afternoon, 2:30 pm
  20. 20. Fidor: Facebook Like interest
  21. 21. 2015 2014
  22. 22. Peer to peer
  23. 23. Improve your Karma Ideas Networker Social media Opinion leader
  24. 24. Crypto
  25. 25. > 1,200 currencies > 6,400 markets
  26. 26. Digital Gold – Nov 2017 183,000,000 kg 16,600,000 Coins 7,279 bn USD 118.8 bn USD Fair value 1 BTC = 436,500 USD
  27. 27. Factor 70
  28. 28. Crypto currenciesAll money 83.6 T USD 200 Bn USD
  29. 29. Factor 400
  30. 30. Blockchain
  31. 31. Blockchain Time Public ledger Transaction block
  32. 32. Smart contracts Public ledger Transaction block with condition Condition Examples Stocks: dividend payment ICO
  33. 33. Smart contracts – example: car finance
  34. 34. Disclosed funding in Bitcoin & Blockchain in million USD 2013 93 2014 357 2015 524 2012 2 Source: CB Insights 2016 550 number of deals 5 47 143 161 132
  35. 35. AI ^
  36. 36. Amelia, Quelle: IPSoft IT Service Desk Agent SEB Bank 3 weeks 700 employees 4,000 requests
  37. 37. Robo Advisory
  38. 38. Overrated Gartner Hype Cycle
  39. 39. Overrated underestimated Gartner Hype Cycle
  40. 40. Mobile
  41. 41. Cloud
  42. 42. Possible IT infrastructure savings -80% Traditional Bank IT Cloud Banking Services
  43. 43. Cost efficient scalable infrastructures
  44. 44. API
  45. 45. API = Application Programming Interface A browser is for a person the same... ... as an API for a computer { “headline": “API“, “description“: “In computer programming, an application programming interface (API) is a set of routines, protocols, and tools for building software applications. An API expresses …“ }
  46. 46. APIs make the Internet machine readable and often they are the foundation of a successful E-Commerce business The club of API billionaires Daily API calls: 1 billion API calls from partners and customers increase brand, marketing and sales reach significantly – completely automated
  47. 47. Netflix tripled the number of API calls per day between May 2012 and December 2015. At the same time the share price increased from 10 USD to 49 USD. Share price in USD 10 49 2012 2014 x5 Number of API calls per day in billions 1.4 5.0 2012 2014 x3
  48. 48. PayPal > 2x Deutsche Bank Market cap, Nov 2017 [in Billion USD] 35 Deutsche Bank 88 PayPal Deutsche Bank PayPal Customer 25,000,000 169,000,000 APIs 0 > 25 Employees 100.000 8.000
  49. 49. Plattform
  50. 50. New banking services built on new technologies Crowd P2P Crypto Cloud API ^ AI MobileBlockchain Platform
  51. 51. Processes 100% STP
  52. 52. < 60 seconds
  53. 53. Humans Technology Business Design Thinking Great Banking Services feasible viable desirable
  54. 54. Text based Static Lack of visual experience
  55. 55. Can it be done differently?
  56. 56. Highly visual Bold photos Dynamic content Modern design
  57. 57. Requirements Design Traditional Waterfall Model Implementation Test Maintenance
  58. 58. Agile development Specs Tasks Release Deployment 14 Days Daily
  59. 59. IT redefines banking = new KPIs
  60. 60. IT costs per user per year in USD 200 Tier 1/2 Bank eBay 7,4 Facebook 3,8 Google 3,4 FinTech 4-10
  61. 61. Customer acquisition costs in USD 50 - 250 Traditional bank FinTech 5 -25
  62. 62. New leadership style commands influences blames empowers takes credit gives credit hierarchic network
  63. 63. Quo vadis?
  64. 64. Credit Assets Payments Banking Services
  65. 65. R I P
  66. 66. Traditional banking under siege Telecom provider Internet giants FinTechs Traditional banking Traditional Retailer
  67. 67. Design thinking New leadership New KPIs100 % STP Framework for digital banking
  68. 68. All just hype?
  69. 69. 36
  70. 70. BPO; 396 Insurance; 1.515 FinHCIT; 2.087 FinMgmtSol; 4.173 IB / Wealth; 4.702 Banking/Lending; 9.296 Payments/Ecommerce ; 13.543 2016: 36 Bn USD FinTech investments, globally Source: Financial Technology Partners in million USD 1.525 transactions 337 432 293 186 141 105 31
  71. 71. Customer PaymentsAssets Loans Deposits
  72. 72. PayPal has grown as an e-commerce payment provider for eBay. Now PayPal builds successive products, acceptance points and services 2000 2006 2010 2015 Online payments P2P Account Card Loans POS Cash
  73. 73. Diffusion of innovation Longer than you think Faster than you think time Diffusion
  74. 74. 2030: Banking disrupted New Traditional BankingService Technology NewLegacy Niche Financial infrastructure provider Er Successful disruptors
  75. 75. Frank@FrankSchwab.de

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