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DFS21_Main Stage_Steve Butcher_Microsoft_211130
Microsoft provides digital and modern banking solutions to help financial institutions address changing customer expectations, risks of disruption, and other industry forces driving change. Key areas of innovation include digital client engagement, self-service capabilities, omni-channel experiences, hyper-personalization, third-party distribution, and technology platform modernization using approaches like APIs, partner collaboration, selective modernization of core systems, and acting like a challenger digital bank. Case studies highlight how Microsoft Services helped launch new digital banking platforms in Portugal and Italy that attracted new customer segments through modern experiences and a unique focus on sustainability.
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DFS21_Main Stage_Steve Butcher_Microsoft_211130
- 1. Microsoft and FinancialServices Digital and Modern Banking Solutions Steve Butcher – Global Industry Architect, Financial Services and Insurance stbutche@microsoft.com Microsoft Industry Solutions
- 2. Changing customer expectations Threat ofdisruption and disintermediation Distribution channels Increasing risks Fast growing data Fraud and cybercrime Forces at work driving change in Financial Services accelerating of banks think removing friction from the customer journey is the most important trend in retail banking 54% of bank executives plan to upgrade their IT infrastructure to cut cost and improve efficiency 37% projected risk technology spending $72B of Generation Y customers use non- traditional banks; retailers looking to be customer interface 37% of banks think cyber risk is the top threat in the Financial Services industry 25%
- 3. Key areas wherewe are seeing customers innovate to complete their digitization Digital Client Engagement Empower Employees Self Service Omni-Channel Hyper- personalization 3rd Party Distribution RM of the Future Technology Platform Modernization Digital Colleague Enablement Next Best Conversation Customisable Reporting Customer Insights Intelligent process Improvement API Driven Next Gen Platforms Cloud Native Micro Services Data Driven BEST IN CLASS Chat Bots Single Customer View Citizen developer tools Experimentation platform Cognitive Services
- 4. EMPOWER LIFESTYLE &BUSINESS EXPERIENCES, NOT PRODUCTS
- 5. Connected Digital Banking MARKETPLACE Amarketplace experience that enables intelligent brokering of products and services from bank to customer, partner to customers, but also customer to customers FINANCIAL SERVICE DIGITAL CORE Financial platform to enable embedded finance to empower the life events and business sustainment and growth. As a digital platform would include real- time product adaptability, dynamic pricing, and other market leading capabilities MOBILE, BOTS WEB, VOICE, APIS Intelligent and digital customer experience enablement via all digital types, including mobile, web, voice, and APIs INSIGHTS Data & AI driven platform making available loyalty and rewards for the customer via shared data consortium Customer incentives & merchant offer promotions/ conditions Understanding the needs of the customer and addressing these through products and services from providers in the ecosystem ECOSYSTEM MANAGEMENT Ability to manage an ecosystem of partners from recruitment, licensing, partnering, and referrals, as well reciprocal access to the transactional data of the partners to feed back into the “data as a service” model ROBO ADVISORY & AUTOMATION Automatic interpretation of content on forms to speed up processing of forms for cross border payments. Automatic reconciling of payments received against accounts to achieve straight through processing, automatic identification of counterparty risks. DATA AS A SERVICE Data & AI platform driven business promoting customer profiling and tailor-made solutions to the customer needs whatever their level of business or accessibility to technology
- 6. Modernisation and DigitalTransformation Commonapproaches… Transform with APIs Build APIs for internal and external use. Reference standard API models such as the BIAN for internal and external service definitions. Enhance supporting internal processes with RPA, AI and more. Deeper Partner Collaboration Partner with Fintechs using APIs or other integration strategies to deliver compelling experiences and features through partner technologies. Evaluate fintech investments. Modernize Selectively modernize core systems. Deploy a new (real-time) payments platform. Use middleware tools to facilitate new mobile, internet banking and corporate portal features. Use RPA to enhance process times. Build real-time data hubs / data lakes. Act like a Challenger Digital Bank Born in the Cloud Create an agile cloud design with a new set of supporting processes able compete with neo banks.
- 7. Microsoft - 7 Theelectric light did not come from the continuous improvement of the candle Oren Harari
- 8. How Microsoft Services helped launchmoey! Portugal’s first digital-banking platform “Microsoft guided us every step of the way, bringing in the right people with the right expertise at the right time.” — Ricardo Madeira, Head of Digital Banking, Crédito Agrícola Challenge • A rural, aging customer base meant the bank needed to tap into new market segments • Young urban customers want modern banking solutions like apps and online banking • IT team and vendors unfamiliar with best practices for digital-native solutions • Initial deployment resulted in massive data storage needs and high consumption costs Strategy • Design and deploy a digital-native platform – composing first party and partner services – for example, the bank partnered with Meniga to offer personal financial management capabilities • Lean on Microsoft Services expertise for the global architecture, choice of technologies, and training all devs on cloud best practices • Streamline collaboration by bringing all devs together in one location • Minimize resource usage while maintaining performance Results • 15,000 users between the ages of 18 and 40 opened an account within months • Development and deployment are smooth a little over a year after initial vision sessions • Crédito Agrícola developers have been trained and are able to support the platform • Consumption levels have been made sustainable
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- 10. Flowe and Microsoft Servicesbuild a banking platform committed to sustainability "Microsoft Services has a vast reservoir of knowledge and capabilities. They helped us achieve excellence in the design and development of the platform and app.” — Roberto Sommacal, Experience Design Perspective Practitioner, Flowe Challenge Strategy Results • Wanted to attract millennial customers with a unique and modern banking experience • Faced competition from digital-only challengers • Needed to comply with regulatory requirements around data privacy and security • Wanted to integrate third-party apps and platforms • Create a highly differentiated value proposition from other banks by integrating sustainability and personal health into its app • Integrate Azure AI to review customer data and test behavioral nudges • Build a flexible platform that can be integrated with third-party solutions • Launched a secure banking app that provides behavioral nudges to increase sustainability and personal health based on in-app and third-party data • Microsoft Azure, carbon neutral since 2012, enabled Flowe to get certified fast as a carbon neutral company, supporting its mission and value proposition
- 11. Case Study: Howa new banking experience can accelerate sustainable finance Scenario: Flowe sought to launch a digital banking platform with a sustainability/personal health profile targeting millennials, offering P2P payments, savings, microcredit, and credit card services Solution: Built 100% on Azure with Azure Kubernetes Service, Azure DevOps, and Azure AI/ML as key components, with support from Microsoft partners Results: Launched in less than 12 months, expected to break even within 3 years, currently more than 66,000 customers Gained market share in millennial segment Benefits: Launched offering competitive with digital challengers Flexible platform that can integrate with third-party solutions Offers sustainability options to customers to offset carbon impact Learn more about this customer story
- 12. Looking In the right direction Boldregardless of size “If I had asked people what they wanted, they would have said faster horses.” ― Henry Ford That has never been achieved before Experiences that deliver impact and value
- 13. The platform isjust one part of the solution Itrequireschangeofmindset,cultureandoperations,afullorganisationtransformation 2 Culture of Growth 3 Business Transformation 4 Modern Technology Create evergreen, modern platforms and associated skills for self-sufficiency Leverage the three-horizon model to frame and add agility to the journey Cultivate a culture of growth that covers innovation, agility and design using the One Microsoft model 1 Rapid Innovation & Experimentation Identify and rapidly pursue immediate ideas at pace to create proof points
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- 16. Microsoft’s mission isto empower every person and every organization on the planet to achieve more. © Copyright Microsoft Corporation. All rights reserved.
Editor's Notes
- #4 What areas do you see as being the most imperative? What are the priority areas for Lloyds? Are there areas where increased focus is needed? New business models and revenue streams. Value from being first Example Fidor. If you cannot be helped, they point you in the right direction
- #5 The message here is that the bank needs to focus on the experience over and above the product
- #6 I would say you could also include a platform for Automation. But I know there is not enough space left on the slide. So you could just mention it. Automation could cover things like KYC, automatic interpretation of content on forms to speed up processing of forms for cross border payments (which we have done at Standard Bank), automatic reconciling of payments received against accounts to achieve straight through processing, automatic identification of counterparty risks.
- #9 Story URL: https://customers.microsoft.com/en-us/story/794995-credito-agricola-services
- #11 Story URL: https://customers.microsoft.com/en-us/story/825789-flowe
- #12 Using AI to nudge users toward sustainability and well-being, Flowe sought to win over a new customer segment with a highly differentiated value proposition from other banks. Flowe, a startup founded by one of the largest Italian banks, Banca Mediolanum, collaborated with Microsoft Consulting Services to build an experience that’s more than a typical banking app, targeting millennial customers. Built on Azure and utilizing AI, Flowe integrates multiple types of customer data, and provides users with educational videos on sustainability, as well as how to eat well and exercise properly, also offering the typical services of a bank. Launched in less than 12 months Built 100% on Azure with Azure Kubernetes Services, Azure DevOps and Azure AI/ML as key components Track and offset carbon impact Flowe integrates data from a third-party app to provide information on C02 impact of every euro spent by users with the Flowe credit card. Users can also plant trees to automatically offset their carbon impact. Influence customer behavior By ingesting and analyzing the data of many aspects of customer behavior, Flowe can extract insights and target nudges to influence customers Additional Potential Project types: Risk, credit and Supply Chain Analysis Green Payments; Green Financing; Green Trade Solutions Green Assets; Green Funds; Opportunity Zones Identifying, tagging, and making ESG-related data discoverable New Funds, Bonds, other instruments focused on environment or social factors <CLICK>
- #15 Overview: The status quo for banks is changing Although banks have traditionally been considered pioneers of process automation, they now find themselves in the background of today’s consumer-led, digitized financial services landscape To strengthen the European Union economy, Regulators are bringing forward initiatives that will likely change financial services industry forever. These initiatives are: The European Second Payment Services Directive (PSD2) and The UK Competition and Markets Authority (CMA) Open Banking initiative The goals of the PSD2 and Open Banking regulations are to: Promote competition – Customers will have more choices Fuel Innovation – More providers (Third Party Providers) can devise new creative solutions Implement payments seamlessly and safely across boarders within the EU Increase consumer protection while providing more choices for services PSD2 and Open Banking are kick-starting the financial services revolution that will connect consumers, third party applications and banks in new ways using new business models Many banks are only beginning to take action on these regulations despite its massive repercussions it will have on their business. This revolution starts with the introduction of regulatory-driven APIs where banks need to expose account information and service payments to/from Third Parties. Beyond the regulation compliance, it quickly evolves into how banks’ participate in the broader API economy and what new business models they will adopt PSD2 will create the foundation for full openness of customer and product data across providers of financial services in the union. Data associated with deposits, payments, loans, and investments will be available to any firm that wishes to provide related services – independently of which firm holds the customer account This will evolve the existing value chain into new ones involving partnerships with Third Parties The key question banks need to think about is How will banks’ participate in a broader API economy? Banks will likely not own the end-to-end value change as they will bring Third Party Providers (TPPs) into their ecosystem Banking business models will transform to an open ecosystem of partnerships and new un-imagined capabilities The new era for banking will lead for new opportunities and challenges not seen before The role of Banking will be redefined: Incumbents may be relegated to the role of pure component/product supplier and be subject to fierce price competition and limited grip on the customer experience, while remain stuck with existing risk and capital requirements Incumbents will need to make some stark choices on how they wish to position themselves to capture future value Incumbents can develop their own aggregation and platform capabilities: for example, ING has launched the bank-agnostic Yolt personal financial management app in the UK. Others may decide to retreat from the edge altogether and instead focus on becoming hyper efficient, user-friendly product suppliers – aiming to integrate into as many alternative digital sales outlets as possible.