11. THE WHY OF INNOVATION
Banking
&
Finance
Natural Resources &
Environmental Disruption
Disruptive Trends
Society
Non-Bank Digital Entrants &
Technological Disruptions
12. THE WHY OF INNOVATION
â"Banking is essential,
banks are not."
- Bill Gates
"Are banks an endangered
species?"
- Ralf Hammers, CEO of
ING Group
The Emergence of Non-
Traditional Competitors
Non-Bank Digital Entrants & Technological Disruptions
13. THE WHY OF INNOVATION
1.8 2.1 2.4
4
12
19
-5
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015
Billions US$
Source: Citi & CB Insights | Citi GPS: Global Perspectives & Solutions | March 2016
Total
Investments
from 2010 to
2015:
41.3 Billion
US$
14. THE WHY OF INNOVATION
Source: CB Insights | The Pulse of Fintech Report, Q2 2016
15. THE WHY OF INNOVATION
SMB Tools
Consumer
BankingPayments
&Transfers
Banking
Infrastructure
Security
Retail
Investments
Lending &
Financing
Research &
Data
16. THE WHY OF INNOVATION
SMB Tools
Consumer
BankingPayments
&Transfers
Banking
Infrastructure
Security
Retail
Investments
Lending &
Financing
Research &
Data
17. THE WHY OF INNOVATION
Digital Currency
3%
Equity Crowd Funding
2%
Institutional Tools
3%
Lending
46%
Money Transfer
3%
Payment
23%
Savings & Wealth
10%
Insurance
10%
Source: Citi & CB Insights | Citi GPS: Global Perspectives & Solutions | March 2016
Investments by
Business Area
18. THE WHY OF INNOVATION
Nonbank digital entrants
MESSENGER
Fintechs Tech Giants
19. THE WHY OF INNOVATION
Nonbank digital entrants
20. THE WHY OF INNOVATION
Nonbank digital entrants
Low Overhead
High Returns
Low Cost
Fast
Consumer & Business Project Financing
21. DISRUPTION IN THE DOMINANT
MARKET POSITION OF BANKS & DFIs
THE WHY OF INNOVATION
22. THE WHY OF INNOVATION
Disruption?
40
40
15
Standard & Poor's Moody's Fitch
Credit Rating
&
Credit
Scoring
23. Non-Bank Digital Entrants & Technological Disruptions
SPEED
10 terabits per second
Measuring Time
Nanosecond (one billionth
of a second) & femto-
seconds (one millionth of
a billionth of a second)
Age of trillion bits (terabit)
per second
communications
Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0
THE 4TH INDUSTRIAL REVOLUTION
Water/
Steam
Electric Computing
Automation
Internet of
Things
(IoT)
Digitization of the manufacturing sector (Smart Factories)
THE WHY OF INNOVATION
24. Non-bank Digital Entrants & Technological Disruptions
Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0
Water/
Steam
Electric Computing
Automation
Internet of
Things
(IoT)
Digitization of the manufacturing sector (Smart Factories)
Mechanical Production
Mass Production
Electronics in Production
Cyber-Physical Systems
Inter-connecting
physical & virtual world
THE WHY OF INNOVATION
25. UNEP â TEEB OFFICE
The Economics of Ecosystems
& Biodiversity
Ecosystem
Fossil Fuels
Minerals
"Mineral and fossil fuel
data based on known
reserves currently
economical to extract,
assuming fixed
percentage increase in
usage per year."
OIL = 37 YEARS
COAL = 42 YEARS
GAS = 35 years
TANTALUM = 45 YEARS
AGRICULTURAL LAND
= 69 YEARS
2. Natural Resources & Environmental Disruption
THE WHY OF INNOVATION
26. 2. Natural
Resources
0 10 20 30 40 50 60 70 80
Years
Phosphorus Tantalum Titanium Copper Indium Antimony
4 years left
8 years left
13 years left
28 years left
40 years left
2016 2026 2036 2046 2056 2066 2076 2086 2096
Drugs, Batteries
Touchscreens, Solar Panels
Medals, Jewellery
Aircraft
Mobile phones
Fertilizers 72 years left
"Mineral and fossil
fuel data based on
known reserves
currently
economical to
extract, assuming
fixed percentage
increase in usage
per year.â
Source: UN TEEB
(UNEP â TEEB
OFFICE
The Economics of
Ecosystems
& Biodiversity)
THE WHY OF INNOVATION
27. 2. Natural
Resources
0 5 10 15 20 25 30 35 40
Years
Coal Oil Gas
2016 2026 2036 2046 2056 2066 2076 2086 2096
31
years left
33
years left
38
years left
"Mineral and fossil
fuel data based on
known reserves
currently
economical to
extract, assuming
fixed percentage
increase in usage
per year.â
Source: UN TEEB
(UNEP â TEEB
OFFICE
The Economics of
Ecosystems
& Biodiversity)
THE WHY OF INNOVATION
28. 2. Natural Resources & Environmental Disruption
NATURAL
RESOURCES
DESIGN CONSUMPTION WASTE LANDFILL
THE WHY OF INNOVATION
31. THE WHY OF INNOVATION
ï§ World savings is more
than US$ 20 trillion
ï§ Global Luxury Market:
US $ 1.2 trillion in 2015*
Annual Growth: 14.8 %*
ï§ Annual Advertising
Expenditure exceeds
US$ 0.5 trillion
ï§ Loss of Bio Diversity
Where is the Money?
Re-thinking Priorities
ï§ Prioritizing Projects
ï§ Embedding Sustainability
into Decision-Making
Role of Banks & DFIs
Financing for Sustainability
ï§ Climate Change
ï§ Air, Water and Soil
Pollution
ï§ Deforestation
ï§ Loss of Bio Diversity
To name but a fewâŠ
Environmental Challenges
Need commitment & financial
resources
Natural Resources & Environmental Disruption
* Deloitte â Global Fashion & Luxury market â Private Equity and investors survey 2016
32. Natural Resources & Environmental Disruption
âIf all the insects were to disappear from the earth,
within 50 years all life on earth would end.
If all human beings disappeared from the earth,
within 50 years all forms of life would flourish.â
- Jonas Salk
THE WHY OF INNOVATION
33. Society
Society
End of traditional jobs and
hierarchy
Era of Startups/ New
Entrants
Age of Entrepreneurship
Speed
Flexibility
Reliability
Security
Customization
Expectations Any time
Anywhere
Any device
THE WHY OF INNOVATION
Demographics
Aging Population
Millennials
Centennials
34. THE WHY OF INNOVATION
Disruptive Trends
ECONOMY
Concentration of
Wealth & PowerâAlways-Onâ Economy
62
Individuals =
35. THE WHY OF INNOVATION
Disruptive Trends
62
Individuals =
388
177
159
92 80
62
0
50
100
150
200
250
300
350
400
450
2010 2011 2012 2013 2014 2015
Concentration of Wealth
Billionaires taking over the world
Source: Oxfam Report | An Economy For the 1%: How privilege and power
in the economy drive extreme inequality and how this can be stopped
36. THE WHY OF INNOVATION
Disruptive Trends
62
Individuals =
Source: Oxfam Report | An Economy For the 1%: How privilege and power
in the economy drive extreme inequality and how this can be stopped
Politics &
Governance
38. âą Concerned about customer loyalty
âą Impact of global economy on their
business
âą New Entrants Disrupting Business
Models
âą Next 3 years will be more critical for their
industry than the previous 50
âą The differing wants/needs of Millennials
will change their business
65%
72%
86%
86%
88%
Leading with Responsibility
2016 Global CEO Outlook â KPMG International