Ralph Silva of SBR Network discusses 6 pain points of the Financial Services Industry and the reasons to change.

1. The Financial Experience
Client Experience
The Human Story
Ralph Silva of SBR Network
CISCO Toronto Offices
April 2017

2. Boston Consulting
Bionic Banking
Blending digital technology and a human touch
to deliver the right products and services to
target customers: the bionic bank—The Boston
Consulting Group’s proposed definition
The Industry
An Analyst Perspective
KPMG
The Invisible Bank
Banks are making efforts to improve customer
service through use of exciting technologies
like robotics, artificial intelligence and block
chain, but the pace of change is slow and in
reality, I’d say banks are only 10% of their way
through their digital transformations.“
Currently, technology firms invest 10-20% of
revenues into research and development, for
banks it’s just 1-2%. With banks’ return on
equity under 5% it’s hard to see that changing
significantly in the short to medium term, but if
firms want to remain relevant, it has to.”
The CMA
The Open Bank
Alasdair Smith, chairman of the retail banking
investigation at the Competition and Markets
Authority (CMA) says:
““Open Banking will make a transformational
change to banking for personal customers and
small businesses. For the first time, innovative
and secure apps will provide personalised
services and information to cover all financial
needs in one place, and make it easy for
people to find out what bank account is best
for them.”
Barclays
Anthony Jenkins (previous CEO Barclays):
“The number of branches and people employed in
the financial services sector may decline by as
much as 50% over the next 10 years, and even in a
less harsh scenario I predict they will decline by at
least 20%.”.”

3. 6 Pain Points of the Financial Services Industry
The Reason To Change
Less than 10% of
customers have a single-
brand financial services
relationship
Client retention levels
have trended downward
for the past six years
Customers are
questioning all
advisory services
Brand management costs
have increased because of
negative sentiment toward
banking brands
Economic conditions have
increased risk profiles
across all lines of business
Customers have more choice
and multiple price discoveries
but fewer transactions
Cost of Client
Acquisition
Cost of Client
Support
Risk
Individual Share
of Wallet
Client Retention Trust

4. sridesik@cisco.com
Banks Are Catching Up Fast
Financial Services Working to Lead
Banks and Insurance Direct Human
Behaviour

5. Focusing On Customer Need
Relevance Comes From Time and Place

6. Connecting Everything
Clients Expect the Same from Finance and
Insurance

7. Immediate is the Only Speed
Customers Demand Now

8. Engagement
It Matters to the Customer

9. Video is The Common Thread
The Obvious Next Step

10. Not One Demographic
Banks and Insurance can’t ignore traditional
methods
Customer Services Measured
against Other IndustriesCustomers
Must Feel
Special
Meeting the
Expectations of different
Generations
Anytime Anywhere
Customers are evolving,
financial services providers
are struggling to understand.

11. Location-Based
Analytics
Virtual Expertise
Intelligent Contact
Center
Mobile
Experience
Branch-In-A-Box
Connected
Analytics
The
Exceptional
Service
Challenge
57%
Must switch from web
self-serve to voice
56%
Customers
have to
re-explain
issue
59%
Transferred
during
support
session
50%
Cumbersome
authentication
62%
Must contact
repeatedly to
resolve issue
Customer Happiness
It Can Be Targeted

12. Segmentation Must Evolve
Banks and Insurance Will Lead Once More
Age is Not Segmentation
AGE OF CONSUMER
10 15 20 25 30 35 40 45 50 55 60 65 70 75
Higher
education/
training
First
Job
Marriage
First
home
Births
Divorce
Career
change
Marriage
Parent
illness
Children’s
education
Career
change
Death of
parent
Grandchildren
Retirement
Death of
spouse
Life Events are Fluid

13. Understanding Humanity
Behaviours and Analytics
Dinner / Social Global Work
Car Technology
Stay at home
PetsDIYChildren
SportsShoppersTravellersUniverse of Customers
Behavioural Segments
Segment of 1?

14. Behavioral Segmentation
Putting Analytics to work
Example: Segmentation Applied to Products
Segment breakdown for Unsecured Personal Loans
Total Spend on Product
%ofFSSpendonthisproduct
Technology
Travellers
Shoppers
Sports
Children
DIY
Pets
Dinner
Social
Stay at
Home
Global Work Car
Less than 2
transactions

15. What is the Future Model
What do Banks Do?
100,000 workers
93 buildings
16 million square feet
Deep-water docks
100 miles of railroad
Electrical plant
Ore-processing facility
Hospital
Housing
Lumber mill
Ford’s River Rouge Plant in
1928
335,000 workers
13,000 programmers
$6 billion IT budget
100 Million
Customers
+85 Countries
510 Regulators
$1 Trillion daily
1928 Automotive Business 2017 Banking Business
HSBC in 2017
Outsourcing has
taken over in
every industry
but Financial
Services
Diversification Through Partners:
The Sourcing Story

16. Customer Intimacy
Operational Excellence
Product Innovation
Investments BankingInsurance
85%
12%
3%
80%
15%
5%
90%
7%
3%
(42%)
(30%)
(26%)
(36%)
(34%)
(12%)
(33%)
(36%)
(14%)
Legend:
% of all expenses allocated to three principle
targets.
• Management’s Desired Funding Allocation
• Actual Funding Allocation
What Needs to be Done Differently?
Listen To Senior Management
Management’s stated objectives are not being supported by investment.
The Challenge is not strategic targets, but execution of stated goals.
Operations departments must find ways to better align with management
goals.

17. The future is our history
Relationships, advice and brokers
The past The future
Old is New Again
Advisory Services: Saving an Industry

18. Banks Need To Learn from Others
Consistency and Professionalism
Consistency in expected
Customers Must Feel Special

19. A coherent
digital
distribution
strategy
Profitability
Flexibility &
Innovation
Integrated
cyber
security
strategy
A hybrid cloud
strategy + Agile Dev
Ops Capability
A modern digital
ready data
network
An engaged
and enabled
workforce
The Foundation
Investments in the Best Place

20. Simplicity Security Scalability Agility
• Products
• IT Infrastructure
• Vendor list
• Organizational design
• Decision making
• Systems & Processes
+ + +
• Best in class point
solutions v end to end
view
• Innovate with security
built in
• Mitigate increased
threat landscape
created by explosion
of end points
• Deploy innovation at
scale & at pace
• Build and deploy new
business models
• Integrate M&A activity
• Innovate at pace
• Exploit new models
• Develop new eco-
systems
• Respond to customer
behavior shifts
• Respond to new
entrants
The Foundation
The Four Key Initiatives

21. The Financial Experience
Client Experience
The Human Story
Ralph Silva of SBR Network
rsilva@ralphsilva.com
April 2017