1.
Digital transformation of the
banking industry
Frank Schwab, FELABAN, Miami, FL, November 2017

2.
Year 2000

3.
E-Commerce hype

4.
PayPal > 2x Deutsche Bank
Market cap in Billion USD, Nov 2017
35
Deutsche Bank
88
PayPal
59
Charles Schwab

5.
1st wave

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.
But

8.
Top 100
Banks
Source: https://www.relbanks.com
88

9.
2017

10.
IBM Mainframe
Sun Server
Intel blade
Thin clients
Fat clients
AIX Server Server Farm

11.
Investment
need

12.
Interest business is falling away

13.
Profits

14.
Q3/2017
488 million user
52 orders per user per year
8.3 billion USD revenues (Q3)
50,000 employees

15.
25 Bn USD
Alibaba‘ Singles‘ Day 11/11/17
sales

16.
Alipay

17.
> 10,000
FinTechs

18.
Crowd

19.
1 million EUR in 9 min 23 sec
Saturday afternoon, 2:30 pm

20.
Fidor: Facebook Like interest

21.
2015 2014

22.
Peer to peer

23.
Improve your Karma
Ideas
Networker
Social media
Opinion leader

24.
Crypto

25.
> 1,200 currencies
> 6,400 markets

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.
Factor
70

28.
Crypto currenciesAll money
83.6 T USD 200 Bn USD

29.
Factor
400

30.
Blockchain

31.
Blockchain
Time
Public ledger
Transaction block

32.
Smart contracts
Public ledger
Transaction block with condition
Condition
Examples
Stocks: dividend payment
ICO

33.
Smart contracts – example: car finance

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.
AI
^

36.
Amelia, Quelle: IPSoft
IT Service Desk Agent
SEB Bank
3 weeks
700 employees
4,000 requests

37.
Robo
Advisory

38.
Overrated
Gartner Hype Cycle

39.
Overrated
underestimated
Gartner Hype Cycle

40.
Mobile

41.
Cloud

42.
Possible IT infrastructure savings
-80%
Traditional
Bank IT
Cloud
Banking Services

43.
Cost efficient scalable infrastructures

44.
API

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.
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.
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.
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.
Plattform

50.
New banking services built on new technologies
Crowd P2P Crypto
Cloud API
^
AI MobileBlockchain Platform

51.
Processes
100% STP

52.
< 60 seconds

53.
Humans
Technology
Business
Design Thinking
Great Banking Services
feasible
viable
desirable

54.
Text based
Static
Lack of visual experience

55.
Can it be done
differently?

56.
Highly visual
Bold photos
Dynamic
content
Modern
design

57.
Requirements
Design
Traditional Waterfall Model
Implementation
Test
Maintenance

58.
Agile development
Specs Tasks
Release
Deployment
14 Days
Daily

59.
IT redefines banking
= new KPIs

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.
Customer acquisition costs in USD
50 - 250
Traditional bank FinTech
5 -25

62.
New leadership style
commands influences
blames empowers
takes credit gives credit
hierarchic network

63.
Quo vadis?

64.
Credit
Assets
Payments
Banking Services

65.
R I P

66.
Traditional banking under siege
Telecom
provider
Internet
giants
FinTechs
Traditional
banking
Traditional
Retailer

67.
Design thinking New leadership
New KPIs100 % STP
Framework for digital banking

68.
All just hype?

69.
36

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.
Customer
PaymentsAssets
Loans
Deposits

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.
Diffusion of innovation
Longer than you think
Faster
than you
think
time
Diffusion

74.
2030: Banking disrupted
New
Traditional
BankingService
Technology NewLegacy
Niche
Financial
infrastructure
provider
Er
Successful
disruptors

75.
Frank@FrankSchwab.de