Slides from August 2015 webinar on the relevance of Fintech strategy for Broker Dealer firms. Webinar covered why Broker Dealer incumbents need a FinTech Strategy to survive industry disruption and how to create one

1. presents
@S2EConsulting
www.linkedin.com/company/S2E-Consulting-llc
www.facebook.com/S2EConsulting
www.S2EConsulting.biz
info@S2EConsulting.biz
August 27, 2015

2. Copyright
©
S2EConsul3ng,
LLC.
The presenter has spent more than a decade in the US Financial
Services industry, and had built a successful corporate career that
traversed multiple functional areas before turning an entrepreneur.
2
@S2EConsul3ng
#S2EWebinar
• 13+ years in US financial services: American
Express, Ameriprise Financial, Charles Schwab,
LPL Financial
• Career in Finance, Corporate Strategy,
Marketing, Practice Management and
Technology areas
• Program/ Product/ Segment/ Business
Management and Growth
• Advised CXOs of large organizations as well as
Executive Directors/ Owners of small to mid-
sized businesses
• MBA from Indian Institute of Management
Bangalore
Sandhya Krishnamurthy
Founder and CEO, S2E Consulting

3. Copyright
©
S2EConsul3ng,
LLC.
Today, we’ll discuss why every Broker Dealer incumbent needs to
have a FinTech strategy and share a step-by-step approach to
creating one.
3
@S2EConsul3ng
#S2EWebinar
§ ‘FinTech’ and ‘FinTech Strategy’: Our perspective
§ 3 Reasons why IBDs (you) need a FinTech strategy
ü Robo-advisor landscape
ü Incumbent actions
§ Developing a FinTech strategy: A step-by-step approach
§ Resources available
1
2
4
3

4. Copyright
©
S2EConsul3ng,
LLC.
‘FinTech’ refers to the role of software in the financial services
institution’s business model. Though the ‘Radical view’ is no longer
radical, for now, we will stick with the ‘Current view’ of FinTech.
4
@S2EConsul3ng
#S2EWebinar
RESTRICTIVE/ TRADITIONAL
VIEW
“… use software to refresh their
interactions with customers by re-
engineering their front end, middle
office and back office.”
CURRENT VIEW
“...use software to refresh their
interactions with customers and to
compete with upstart technology
disruptors.”
RADICAL VIEW
“…will be modeled after the Silicon
Valley startup paradigm that fully
leverages technology ..across all
aspects of their operations”
Source: Pascal Bouvier, General Partner at Route 66 Ventures; http://finiculture.com/defining-fintech-the-ultimate-rorschach-test/

5. Copyright
©
S2EConsul3ng,
LLC.
5
@S2EConsul3ng
#S2EWebinar
A deliberate decision taken by the financial services organization on
the future role of technology, especially software, as a business
(revenue) driver to effectively compete in the market place and
identification of an approach with “big rocks”/ levers to reach that
desired state.
FinTech Strategy:

6. Copyright
©
S2EConsul3ng,
LLC.
6
@S2EConsul3ng
#S2EWebinar
“Four of today’s top 10 in each
industry will be displaced by digital
disruption in the next five years…..”
Digital disruption not seen as worthy of
board-level attention: 45% of companies
Not taking a proactive approach to digital
disruption: 75% of companies
Source: http://www.imd.org/uupload/IMD.WebSite/DBT/Digital_Vortex_06182015.pdf
- Global Center for Digital Business Transformation (DBT Center)
Financial Services Executives acknowledge that the threat of digital
disruption is real, but are not doing enough to address it.

7. Copyright
©
S2EConsul3ng,
LLC.
Why IBDs Need A FinTech Strategy:
# 3 Reason
7
Get ready for tomorrow’s
world
AKA
Digital Network Evolution
@S2EConsul3ng
#S2EWebinar
#3
#2
#1

8. Copyright
©
S2EConsul3ng,
LLC.
Web 1.0: Access
1985 – 1999
Access, Information,
Ecommerce
1: M
Business to Consumers
Web 2.0: Sharing
2000 – 2010
Caring and Sharing
1:1
Consumers to
Consumers
Web 3.0: Value
2010 – 2020
Mobile network, Internet
of Things and 3D printing
M:M
Machine to Machine
Web 4.0:
Immersion
2020 – 2030
Web as a an extension
M:1
Machines to consumers
After the first two generations of the digital network evolution, we
are now in the 3rd generation, where high mobile penetration, IoT
and 3D printing are redefining money and exchange of value.
8
@S2EConsul3ng
#S2EWebinar
Source: “The future of money, trade and finance” - Chris Skinner at USI Events 2015

9. Copyright
©
S2EConsul3ng,
LLC.
Web 1.0: Access
1985 – 1999
Access, Information,
Ecommerce
1: M
Business to Consumers
Web 2.0: Sharing
2000 – 2010
Caring and Sharing
1:1
Consumers to
Consumers
Web 3.0: Value
2010 – 2020
Mobile network, Internet
of Things and 3D printing
M:M
Machine to Machine
Web 4.0:
Immersion
2020 – 2030
Web as a an extension
M:1
Machines to consumers
Mobile network penetration now allows people previously left out of
the financial system to get included; FinTech disruptor
organizations are designed to operate in this new ‘digital’ paradigm.
9
@S2EConsul3ng
#S2EWebinar
Turning point:
- “mobile financial inclusion”
- Restructuring of financial
system for digital data
distribution globally
Source: “The future of money, trade and finance” - Chris Skinner at USI Events 2015

10. Copyright
©
S2EConsul3ng,
LLC.
Web 1.0: Access
1985 – 1999
Access, Information,
Ecommerce
1: M
Business to Consumers
Web 2.0: Sharing
2000 – 2010
Caring and Sharing
1:1
Consumers to
Consumers
Web 3.0: Value
2010 – 2020
Mobile network, Internet
of Things and 3D printing
M:M
Machine to Machine
Web 4.0:
Immersion
2020 – 2030
Web as a an extension
M:1
Machines to consumers
It you don’t have a FinTech strategy to distribute digital data
globally, you’ll be left behind of what comes next: Internet of Things.
IoT will enable a value chain defined by effective use of data.
10
@S2EConsul3ng
#S2EWebinar
Turning point:
- “mobile financial inclusion”
- Restructuring of financial
system for digital data
distribution globally
What’s next in 5 yrs:
- IoT => value driven by
digital data
- Devices transact on your
behalf; provide data for
personalization
Source: “The future of money, trade and finance” - Chris Skinner at USI Events 2015

11. Copyright
©
S2EConsul3ng,
LLC.
Web 1.0: Access
1985 – 1999
Access, Information,
Ecommerce
1: M
Business to Consumers
Web 2.0: Sharing
2000 – 2010
Caring and Sharing
1:1
Consumers to
Consumers
Web 3.0: Value
2010 – 2020
Mobile network, Internet
of Things and 3D printing
M:M
Machine to Machine
Web 4.0:
Immersion
2020 – 2030
Web as a an extension
M:1
Machines to consumers
Many large, forward thinking, financial services institutions have
realized that their business model needs to be ready for this future
and have started investing in their evolution.
11
@S2EConsul3ng
#S2EWebinar
Turning point:
- “mobile financial inclusion”
- Restructuring of financial
system for digital data
distribution globally
What’s next in 5 yrs:
- IoT => value driven by
digital data
- Devices transact on your
behalf; provide data for
personalization
Is your business model equipped to effectively use real time
data to provide personalized experience?
Source: “The future of money, trade and finance” - Chris Skinner at USI Events 2015

12. Copyright
©
S2EConsul3ng,
LLC.
12
@S2EConsul3ng
#S2EWebinar
“Digital Darwinism is unkind to those who wait”
– R ‘Ray’ Wang; Author, ‘Disrupting Digital Business’ (HBR Press)

13. Copyright
©
S2EConsul3ng,
LLC.
Why IBDs Need A FinTech Strategy:
# 2 Reason
13
Compete effectively in the
market place
@S2EConsul3ng
#S2EWebinar
#3:
Get ready for tomorrow’s world
#2
#1

14. Copyright
©
S2EConsul3ng,
LLC.
FinTech Sector scan shows close to 1150 FinTech disruptors.
About 100 disruptors operate in the Retail Wealth Management
space with 60 more in the Institutional Wealth Management space.
14
@S2EConsul3ng
#S2EWebinar
Source: Venture Scanner; https://venturescannerinsights.files.wordpress.com/2015/04/fintech-visual-map5.jpg

15. Copyright
©
S2EConsul3ng,
LLC.
When compared to the overall US Wealth Management market
size, these disruptors look small. But most are less than 5 years
old and show growth potential – if backed by funding and clients.
15
@S2EConsul3ng
#S2EWebinar
Company AUM Started in
$2.5 Bn 2010
$2.6 Bn 2011
$1.5 Bn 2009
$600 MM 2010

16. Copyright
©
S2EConsul3ng,
LLC.
Funding and deal sizes in the FinTech space have continued to
grow the last few years; Several Financial Services and non-
Financial Services incumbent Corporate VCs are actively investing.
• VentureScanners:
– Total Funding: $19.7 Bn
• CB Insights:
– YoY Funding growth: 45.83%
– YoY Deal growth: 16.41%
– Corporate VC backed deals up
75% between 2011 and 2014
• Financial Services CVCs:
– Goldman Sachs, J P
Morgan, Citi Ventures
• Non Financial Services
CVCs:
– Google Ventures
16
@S2EConsul3ng
#S2EWebinar
Source: CB Insights

17. Copyright
©
S2EConsul3ng,
LLC.
Wealth Management FinTech disruptor frontrunners have solid
backing from investors. With increased consumer acceptance and
funding, automated investment advice is here to stay.
17
@S2EConsul3ng
#S2EWebinar
Source: CB Insights; https://www.cbinsights.com/blog/fin-tech-startups-millennials/
Company AUM Select Investors
$2.5 Bn Bessemer Venture Partners,
Athemis Group, Menlo Ventures
$2.6 Bn DAG Ventures, Index Ventures, Greylock
Partners, The Social+Capital Partnership
$1.5 Bn Institutional Venture Partners, Venrock,
Crosslink Capital
$600 MM (Bring acquired by BlackRock) Sequoia
Capital, Canvas Venture Fund, Devonshire
Investors
N/A Doll Capital Management, Union Square
Ventures, Bain Capital Ventures
N/A Google Ventures, Index Ventures, Andreessen
Horowitz, NEA, Ribbit Capital
N/A Norwest Venture Partners, Foundation Capital,
Ignition Capital, Goldman Sachs
$110 Bn N/A

18. Copyright
©
S2EConsul3ng,
LLC.
Incumbents sense both threat and opportunity. Several Financial
Services and traditional FinTech incumbents have responded with
partnerships, acquisitions and their own ‘robo-advisor’ versions.
18
@S2EConsul3ng
#S2EWebinar
• 8/2015 BlackRock >
FutureAdvisor
Q4 2014
Q1 2015
Q2 2015
Q3 2015
• 10/2014 TD Ameritrade
Open access Platform Veo
• 10/2014 Fidelity <>
Betterment
• 12/2014 Fidelity <>
LearnVest
• 2/2015 Fidelity >
eMoney
• 3/2015 Northwestern
Mutual > LearnVest
• 3/2015 Envestnet >
Upside
• 3/2015 Schwab
Intelligent Portfolios
• 5/2015 Vanguard Personal
Advisor Services
• 5/2015 Envestnet >
Finance Logix
• 6/2015 Pershing <>
Marstone
• 6/2015 Schwab Institutional
Intelligent portfolios
• 7/2015 LPL announces its
robo advisor for Sep launch
• 8/2015 Envestnet >
Yodlee
• 8/2015 FIS> Sungard
Legend:
Incumbent Robo-advisor
Partnerships
Acquisitions

19. Copyright
©
S2EConsul3ng,
LLC.
Why IBDs Need A FinTech Strategy:
# 3 Reason
19
Meet your customers’ and
prospects’ expectations
@S2EConsul3ng
#S2EWebinar
#3:
Get ready for tomorrow’s world
#2:
Compete effectively in the marketplace
#1

20. Copyright
©
S2EConsul3ng,
LLC.
20
@S2EConsul3ng
#S2EWebinar
Image: Business Insider
Are you ready to provide relevant, real
time, contextual insight and advice to
highly mobile, social media active, P2P
engaged investors?

21. Copyright
©
S2EConsul3ng,
LLC.
Basically, developing your FinTech strategy involves deciding what
your FinTech capability should be to compete effectively and
identifying a sound approach to get to that desired state.
21
@S2EConsul3ng
#S2EWebinar
A
B
Your FinTech
capability (Today)
Your aspired FinTech
capability (Future)
Your approach
(and enablers)

22. Copyright
©
S2EConsul3ng,
LLC.
Should Broker Dealers only focus on ‘automated investment
advice’ as their FinTech area? With disruption blurring sector lines,
all FinTech areas need to be considered.
22
@S2EConsul3ng
#S2EWebinar
Source:
http://www3.weforum.org/docs/
WEF_The_future__of_financial_services.pdf

23. Copyright
©
S2EConsul3ng,
LLC.
Documenting Point A is straight forward. Identifying Point B needs
a little more work. Start by taking a closer look at your target
segment and by anticipating their future needs/ expectations.
23
@S2EConsul3ng
#S2EWebinar
TARGET
MARKET

24. Copyright
©
S2EConsul3ng,
LLC.
How will you solve for their need and deliver your value proposition
in this new digital paradigm? Like a future bank, a future wealth
management business cannot count on its current revenue drivers.
@S2EConsul3ng
#S2EWebinar
TARGET
MARKET
VALUE
PROPOSITION
BRAND
EXPERIENCE
“Vision of a future bank:
- Not see customer face to
face - only screens
- No margins on loans
- Free alternatives for
current bank offerings
elsewhere”
Chris Skinner, FS Club

25. Copyright
©
S2EConsul3ng,
LLC.
What products and services will you use to deliver your value
proposition in that new paradigm? Decide on the role of software
products in that business model. That is your Point B.
25
@S2EConsul3ng
#S2EWebinar
TARGET
MARKET
VALUE
PROPOSITION
PRODUCTS &
SERVICES
BRAND
EXPERIENCE

26. Copyright
©
S2EConsul3ng,
LLC.
26
@S2EConsul3ng
#S2EWebinar
TARGET
MARKET
VALUE
PROPOSITION
PRODUCTS &
SERVICES
COST
STRUCTURE
REVENUE
STREAM
BRAND
EXPERIENCE
Your FinTech strategy will also inform several aspects of your
business model: potential cost structure, potential revenue stream
and potential changes in organization structure.

27. Copyright
©
S2EConsul3ng,
LLC.
You have several options for reaching your desired state of FinTech
capability; The option you choose will reveal the levers you need to
pull to get to the desired state.
27
@S2EConsul3ng
#S2EWebinar
ü Build/ enhance in-house
§ Innovation programs
§ Incubators
§ Accelerator (monitored outside)
ü Acquire
ü Strategic partnership
ü Corporate VC investment
More Control/
Involvement
Less Control/
Involvement

28. Copyright
©
S2EConsul3ng,
LLC.
Investment in these three areas is a requisite, irrespective of your
FinTech strategy since the future will be more digital data intensive.
Strategic IT should focus on security and computation accuracy.
28
@S2EConsul3ng
#S2EWebinar
1. Transformation into a data-driven
culture: Data analytics
2. Strategic IT Roadmap
3. FinTech 2016 Action Plan
Investment Areas
Leverage this webinar or invite us to your annual planning meeting to share this information

29. Copyright
©
S2EConsul3ng,
LLC.
Find ways to convert Capex into Opex to pay for future
investments.
29
@S2EConsul3ng
#S2EWebinar
1. Cloud Computing
2. Pay as you go (consumption)
3. POC discussions with vendors
1. Transformation into a data-driven
culture: Data analytics
2. Strategic IT Roadmap
3. FinTech 2016 Action Plan
Investment Areas Cost Efficiency Areas
Leverage this webinar or invite us to your annual planning meeting to share this information

30. Copyright
©
S2EConsul3ng,
LLC.
Since 2000, 52% of the
Fortune 500 have merged or
been acquired, gone
bankrupt, or just fallen off
the list.
75% of the current S&P 500
is expected to be replaced
by 2027.
30
@S2EConsul3ng
#S2EWebinar
Image:
4ever.eu
Source: Innosight; R ‘Ray’ Wang

31. Copyright
©
S2EConsul3ng,
LLC.
Several resources are available to help your transformation. At the
least, consider engaging a strategy and execution consulting firm
as a thought partner.
• Startup Researchers: CB Insights, Venture Scanner
• Technology Researchers: Gartner, Forrester
• Strategy Consulting Firms: Mckinsey & Co
• IT Consulting Firms: Deloitte, IBM, Accenture, Cognizant
• Thought Leaders:
– @PascalBouvier
– @FSClub
– @JimMarous
• FinTech Seminars and Conferences
• S2E Consulting
31
@S2EConsul3ng
#S2EWebinar

32. Copyright
©
S2EConsul3ng,
LLC.
Consider S2E Consulting as one of your resources. Here’s some
additional information about us.
• ‘Strategy’ to ‘Execution’ Consulting
• Financial services industry
• Small to Mid-sized businesses
• Funded FinTech, Financial Services Incumbents and Service
providers to Financial Services industry
• Partnerships with industry leading service providers
• Services:
– Business strategy planning
– Marketing strategy planning
– End-to-end program planning
– Execution planning
– Business Intelligence/ Analytics
– IT strategy roadmap
– Product strategy and development
32
@S2EConsul3ng
#S2EWebinar

33. Copyright
©
S2EConsul3ng,
LLC.
33
@S2EConsul3ng
#S2EWebinar
Contact us:
info@s2econsulting.biz
(510) 516 6443
Visit us:
www.s2econsulting.biz
Connect with us:
Twitter: @S2EConsulting
LinkedIn: S2E-Consulting-LLC
Facebook: S2EConsulting
We enable Financial Services businesses
to navigate and compete effectively in this
shifting industry landscape
Thank you for attending the webinar. S2E Consulting and our
partners will be happy to explore if we can help you. Contact us.