2.  Ubiquitous distribution
 Unique expertise (such as credit underwriting)
 Regulated institutions that supply credit
 Largely responsible for the lifeblood of economic
growth
 Sovereign insurance for deposits
 Gateways to the world’s largest payment systems
 Consumers are reluctant to change, established
and enduring brands are bulwarks of stability

3.  Last time was driven by the advent of a
commercial internet and resulted in the
dot.com boom (and bust)
 8 years between Netscape IPO (1995) and
PayPal acquisition by Ebay
 450 launches of whom only 5 survive (as
stand-alone entities) today
 PayPal is the exception that proves the rule
 It is tough to disrupt banks!

4.  The number of FinTech start ups today globally is
2000+
 In April 2015 this number was 800
 Globally $23B of venture capital and growth
equity has been provided to FinTechs over the
past 5 years
 $12B in 2014 alone
 They select a niche element of the transaction
process and then create an alternative that is
more efficient and automated than traditional
products offering convenience, smoother
processes and potentially lower costs

5.  Post financial crisis had a negative impact on
banks
 Mobile devices as distribution channels
 Smartphones enabled payment as well as
personalised customer service
 Massive increase in widely accessible, globally
transparent data (so called “Big Data”)
 Blockchain technology
 Significant decrease in the cost of computing
power
 McKinsey estimates that banks earn an attractive
22% ROE from origination to sales, but the
provision of credit generates only 6% ROE
 Disintermediation opportunities!

6. Products exist/are being developed:
 Account management
 Consumer finance
 Mortgages
 SME lending and financing
 Payments
 Wealth management
These areas alone account for 40-60% of bank
revenues!

7. Banks realise that:
 Stiffening competition for some years
 Innovation is required to continue being market
leaders
 B2B space is relatively green-field, but with great
potential
 Now is the time to get involved if they are to
influence market developments and set industry
standards
 BUT it will probably be impossible for them to
cater to all their customer’s needs

8.  It will continue to be an increasingly
competitive market
 Small players will struggle with a single, niche
offering
 Distribution channels are key: Ebay reduced
PayPal’s customer acquisition costs by 80%
 Market consolidation will occur
 Long term success will require a combination
of market insight and experience that
Fintechs are unable to provide alone

9.  Use data driven insights holistically: banks have unique
insight here but “big data” is now available and banks
no longer have a monopoly on information
 Create a well designed, segmented, and integrated
customer experience, rather than “one size fits all”, for
distribution.
 Build digital marketing capabilities that are equal to e-
commerce offers. Keep people informed (declines only
exist in the world of credit)
 Reduce costs through digitally enabled operations
 Keep abreast of, leverage and deploy the next
generation of technologies
 Rethink legacy organisational structures to support a
digital environment
And the answer is: Form partnerships!

10. For banks:
 Reduction in physical distribution costs
 Innovative use of data - many will fail but
some will improve decisioning
 Segment specific propositions
 Leveraging existing infrastructure in different
forms of “co-opetition”
 Managing risks and regulatory stakeholders

11. For FinTechs:
 Payment market expertise
 Regulatory experience
 Distribution channels – access to client base
and the ability to scale up
 Access to existing payments infrastucture
 Public trust and confidence in new products

12.  E invoicing will enable a high capture rate
 EDI solutions are improving
 Tax collection has a real interest in efficiently
and accurately gathering tax dues in real time
 Discounts can be offered on all approved
invoices with discounts calculated
 No longer the “whole turnover” model
beloved in the UK – picking and choosing – of
invoices and suppliers