The document presents insights from a Gartner webinar on current trends in fintech, emphasizing the increasing interconnectivity of banking and retail, and the adoption of technology in payment systems. It discusses key trends such as the rise of mobile and non-bank payment alternatives, the evolving role of government in financial inclusion, and the low understanding of bitcoins within the payments industry. Recommendations are provided for financial institutions to align their strategies with emerging technology and consumer behavior in the changing landscape.

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This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other intended recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Rajesh Kandaswamy
Research Director, Gartner
Twitter: @rajeshkan
Trends in Fintech – Observations From Money20/20 25 November 2014

4. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
T-Mobile offers Debit card
3
Bitcoins
PayPal to be spun-off
PayPal buys Braintree
Paym Launched in UK
Square Cash + Snapchat
9000+ attendees at Money20/20

5. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
T-Mobile offers Debit card
4
Bitcoins
PayPal to be spun-off
PayPal buys Braintree
Paym Launched in UK
Square Cash + Snapchat
9000+ attendees at Money20/20
In The Past 12 Months....
Public Company With The Largest Market Capitalization In The World Has
Entered Payments
World’s Largest Retailer Has
Announced That It Will Offer Banking And Payments

6. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Presentation Outline
Forces Impacting Banking and Payments
Key Trends
1.Banking And Retail Are More Interlinked Than Ever Before
2.Technology To Transform Branches & ATMs Are Ready, But Adoption Lags In Mature Markets
3.Security Solutions Extend To Make Better Use Of Outside Technologies And Data
4.Bimodal Thinking By Clients Provides Entry Points for New Technology Providers
5.Mobile Payment Companies Acknowledge Apple Pay, But Impact Analysis Does Not Go Far Enough
6.Non-Banks Are Growing With Complementary And Substitute Products
7.Governments Look At Mobile to Improve Financial Inclusion
8.Understanding of Bitcoins Remains Low, Even Among Payment Companies
Recommendations
Suggested Reading
Q & A
5

7. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Banking & Payments Are Impacted By Large Forces
6
Consumer
Other Countries
Banking & Payments
Investors
Non-banks
Social Media, Mobile, Sharing Economy
SEPA, AliPay
Revenue vs. Risk
T-mobile, Walmart

8. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Banking And Retail Are More Interlinked Than Ever Before
7
Banking &
Payments
Retail &
Other Merchants
Payments
Credit
Disputes
Security
Offers
Mobile
Analytics
Big Data
Cloud
Bio-metrics
Bitcoin
Loyalty
How well are your external offerings and internal operations aligned to take
advantage of this growing overlap?
Our future is in Payments, Commerce and Lifestyle Services – Kenneth Chenault, CEO, American Express at Money2020

9. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Poll #1: Usage Of Bank Branches
In the last 6 months, I have visited a bank branch (not for ATM)….
8
1.Never
2.Less than 3 times
3.Less than 6 times
4.More than 6 times

10. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Technologies
Technology To Transform Branches & ATMs Are Ready, But Adoption Lags In Mature Markets
9
Are your solutions working with consumer trends or are they working against
them?
Do digital channels create an ‘Adverse Selection’ issue for banks? –Jane Fraser, CEO, Citi US Consumer & Commercial Banking at Money2020
Customers are migrating to mobile and online channels
Banks are not successful in selling products on digital
BRING THE CUSTOMER BACK - ATMs, Branches and POS
FOLLOW THE CUSTOMER – Home
and Outside
?

11. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Bio-metrics
Channels
Security Solutions Extend To Make Better Use Of Outside Technologies And Data
10
Data
Richer Use of Telecom And Network Data
Richer Data From Banks and Retail
Security
Increased use of mobile, cloud and digitization will drive demand for security
solutions
Payment
Retail
Card

12. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Bimodal Thinking Provides Entry Points for New Technology Providers
11
What are such bi-modal opportunities at your clients? How can you best serve them?
Mode 2 is exploratory, emphasizing agility and speed.
Having two modes of IT, each designed to develop and deliver information
information- and technology-intensive services in its own way.
Mode 1 is traditional, emphasizing safety and accuracy.
Mode 1 Product
Mode 1 Product
Mode 1 Product
Mode 2 Product
Price/ Unit (r)
Total Units (n)
Increase in volume might not justify reduced price
New product – less volume, simpler service needs
Areas where new technology providers have emerged:
Card Processing
Core bank Processing

13. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Poll #2: Mobile Payments
Will I use my mobile phone to pay for purchases instead of cash or a plastic card (retail store, restaurants, vending machines, parking, etc
etc.)?
12
1.I already use it and expect to use more in the future
2.I have not used it, but expect to use in the future
3.I do not plan to use mobile for payments at all

14. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Mobile Payment Companies Acknowledge Apple Pay, But Impact Analysis Does Not Go Far Enough
13
If you are in mobile payments, which of your assumptions need to be
revisited? Changing Narrative Since Apple Pay
•
• More Understanding of Security Aspects of Mobile Payments
More Expectations on Retailers to Support Mobile Payments
1. Silver Lining Mentality
– ‘Apple Pay leaves 60% of the market open’
2. Not Factoring In New Information - ‘Mobile Payments cannot succeed without Loyalty, Coupons and Offers’
Old Belief - Loyalty & Offers
New Information - Usability & Security 3. Not Revalidating Earlier Assumptions – ‘We are focused only on payments at the retail store since that market is much larger’

15. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
How Millenials And The Unbanked Impact Banking and Payments
Banks Are Struggling to Increase Revenue, But Risk-Averse
Under-banked and Unbanked Remain Growing Millennials / Gen Y Population
Technology Has Changed Consumer Lives
Minnennials / Gen Y adopt technology at a
higher rate
Both do not use banking products, do not visit branches and have less discretionary income
Technology enables reaching
consumers anytime and
anywhere at less cost.

16. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Non-Banks Are Growing With Complementary And Substitute Products
15 High-Tech
Retail
Alternative Fin. Services
Bank Substitutes
Other
Payments, Consumer Lending, Small Business Lending, Money Transfer, Bill Payment, PFM,
Student Loans
Check
Cashing, Payday Loans, P2P Payments, Money Transfer
Small Business Lending, Debit &
Prepaid Cards, Mobile Money
Check Money, Debit
Cashing, Small Business Lending, Consumer Lending, Mobile & Prepaid Cards
Debit Cards, PFM, Bill Payment,
ATM Access
Is your strategy to serve non-banks Accidental or Intentional?

17. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Governments Look At Mobile to Improve Financial Inclusion
16 COUNTRIES





 Brazil – Payment Institution
India – Cash-out provisions for non- banks
Pakistan – Reduced limits for accounts
China – Large presence of non-banks
Nigeria, Indonesia – Bank-centric mobile money
US – retail-led (nearly 70 million unbanked/underbanked)
M-Pesa Succeeds in Kenya
Awareness of Mobile’s Potential
Moderate Success Elsewhere
Realization of Need for Additional Support
TRENDS


out provisions,
 Larger role for Mobile Network Operators
Success is mostly in remittances, followed by payments
Legislative push– cash-payment banks, cost of cash
Inhibitors
Telecom and banking structure
Lack of credit information
Lack of suitable products
Need low-value payment systems
Do you operate in any of the geographies where mobile money will have a
large impact? How you do you plan to serve the mobile money operators?

18. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Understanding of Bitcoins Remains Low, Even Among Payment Companies
17
Awareness has Improved, But Little Understanding of….
Key Aspects of How it Works
Areas of Applicability
Regulatory Direction is Evolving Among Agencies. Challenges in Balancing Consumer Protection and Encouraging Innovation
If you are in payments, have you done an assessment on how Bitcoins can
impact your clients and your products?
1. Dies or Fades Away
2. Some Adoption
3. Large-scale Adoption
4. Technologies Get Adopted
Regulation
Speculation
Perception
Some areas: Remittances, Non- returnable goods
Tech-savvy customer
Online payments
P2p transfers & remittances
Bank Support
Favorable legislation
Block chain technology
Federated transaction validations

19. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Recommendations
18
Look which segments of emerging non-banks could be of interest
2.to you. Assess if your go-to-market approach is suitable to serve these clients.
Ensure that your innovation investments uncover both new business value and provide technology innovation. Do not settle for
3.incremental value-only offerings or technology-only offerings that do not link to business value.
Monitor Fintech companies in functional and technology areas
1.that are relevant to you. They are a source of ideas, potential partnerships and could be emerging clients.

20. CONFIDENTIAL AND PROPRIETARY
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Suggested Reading
Market Insight: A Banking Industry Primer, 2014, G00261044
Market Trends: Banking, Worldwide, 2014, G00258490
Market Trends: Emerging U.S. Nonbanking Consumer Financial Services Providers, 2013, G00258599
Cool Vendors in Consumer Financial Services, 2014, G00262583
Competitive Landscape: Business Service Providers, Banking and Securities, North America, 2014, G00269231
Competitive Landscape: Business Service Providers, Banking and Securities, Western Europe, 2014, G00269319
Market Trends: The Rising Importance of the Business Buyer — Fact or Fiction?, G00258700
Marketing Essentials: How to Develop and Assess a Vertical Market Strategy, G00171151
Bimodal IT: How to Be Digitally Agile Without Making a Mess, G00268866
Are Mobile Biometrics Ready for the Enterprise?, G00259859
19

21. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. 20
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