1. Mega trends in Retail Banking
3. International RISE Workshop (Jun 15, 2012)
Frank Schwab
http://www.rise-research.org/?p=438 http://www.FrankSchwab.de

2. Source: Berlin Institute for Population and Development
Development of Age Structure in Germany

3. Development of Age Structure in United States
Source: US Bureau of Census
1940 2000 2040

4. Development of Age Structure in China
Source: US Census Bureau, International Data Base (2007)

5. Reverse mortgage

6. Reverse mortgage
Borrower older than 62 years
Borrower must occupy the property as their principal residence
No minimum income or credit requirements
No payments are required on the mortgage
Not subject to income tax payment
Maximum lending limit of $625,000.00
Payment is taken as line of credit, lump sum, or monthly payments

7. R
E
V
E
R
S
E
L
O
A
N

8. Trend = General tendency or direction

9. How to know?

10. "There is no reason
anyone would want
a computer
in their home.“
Ken Olson,
president, chairman and founder of
Digital Equipment Corp., 1977

11. "Stocks have
reached what looks
like a permanently
high plateau.“
Irving Fisher,
Professor of Economics,
Yale University, 1929

12. Dow Jones Industrial Average (1900 to Present)
Source: StockCharts.com

13. It is difficult to make predictions,
especially about the future
Sir Winston Leonard Spencer-Churchill

14. Knowledge Society The Rise of BRIC
Female Shift
Change of Demographics
Globalisation
Information Technology
Climate change
Mobility
Environmental Awareness
Urbanisation
Internet
Individualisation

16. Characteristics of Mega Trends
Long term – impact > 5 to 10 years, sometimes decades
Influences our view of the world
Influences our values
Influences our thinking
Changes demand for products and services

17. How to identify?

18. 11 Mindsets to identify trends

19. The Future is embedded in the presence

21. Resistance to change falls if benefits are real

22. 11 Mindsets to identify Mega Trends
1. While many things change, most things remain the same
2. The future is embedded in the present
3. Focus on the score of the game
4. Understand how powerful it is not to be right
5. See the future as a picture puzzle – your idea guided by a few fixed stars combined into
a single vision
6. Don’t get so far ahead people don’t know you’re leading
7. Resistance to change falls if benefits are real
8. Things we expect to happen always happen more slowly
9. You don’t get results by solving problems, but by exploiting opportunities
10. Don’t add unless you subtract
11. Don’t forget the ecology of technology – ask what’s enhanced, diminished, or replaced

23. Mega trends in Banking
Increase of
regulatory requirements

24. Regulation
SolvV
SOX
AML
Basel II
Basel III
Basel I
MiFID II
WpHG
BörsG
MiFID I

25. Basel III – Additional Core Tier 1 Capital Requirements
European Banks
In Billion $
2.330
2010E
2.990
2015F
660
Source: McKinsey

26. Basel III – Additional Core Tier 1 Capital Requirements
US Banks
In Billion $
1.790
2010E
2.610
2015F
820
Source: McKinsey

27. By Juni 2012 European Banks need
additional 106 Billion Euro Tier 1 Core Capital
30
5.1
1.3
4.1
2.9
14.7
8.8
Source: European Banking Authority EBA, October 2011
in Billion Euro
26.1
7.8
1.4
3.6

28. Return on Equity (ROE)
2007 2010
Europe
16,7%
7.9-9.2%
2015E
7.4-8.6%
Source: McKinsey

29. Increase of Cost Pressure

30. European Banks cut jobs
-500
-700
-900-2,750
-2,350
-3,500
-3,500
-30,000
-15,000
-2,000 -2,000
-3,000
November 2011

31. Mega trends in Banking
Increase of
regulatory requirements
Consolidation

32. Number of US Banks (1990 to 2011)
Source: FDIC
6.000
7.000
8.000
9.000
10.000
11.000
12.000
13.000
14.000
15.000
16.000
1990 20112000

33. Number of German Banks (1990 - 2011)
Source: Deutsche Bundesbank
1990 20112000
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000

34. For Banks?
Need to be
M&A ready
to survive

35. COMMERZBANK
Integration of Dresdner Bank becomes more
expensive ...
... IT drives total integration costs from 2.0 to
2.5 Billion Euro ...
Source: manager magazin online, November, 25th 2009

36. For IT Provider?
Less
potential
customers

37. Mega trends in Banking
Increase of
regulatory requirements
Legacy technology Consolidation

38. Withholding tax
Several 100.000 bank customers
need to wait a couple of month to
finalize their tax statements. The
reason: Some banks failed to
change their IT systems.
Source: May 2010, Financial Times Deutschland

39. 000100 IDENTIFICATION DIVISION.
000200 PROGRAM-ID. HELLOWORLD.
000300
000400*
000500 ENVIRONMENT DIVISION.
000600 CONFIGURATION SECTION.
000700 SOURCE-COMPUTER. RM-COBOL.
000800 OBJECT-COMPUTER. RM-COBOL.
000900
001000 DATA DIVISION.
001100 FILE SECTION.
001200
100000 PROCEDURE DIVISION.
100100
100200 MAIN-LOGIC SECTION.
100300 BEGIN.
100400 DISPLAY " " LINE 1 POSITION 1 ERASE
EOS.
100500 DISPLAY "Hello world!" LINE 15 POSITION
10.
100600 STOP RUN.
100700 MAIN-LOGIC-EXIT.
100800 EXIT.
"Hello world!"

40. // C++ Hello World
#include <iostream>
int main()
{
std::cout << "Hello, world!n";
}

41. // WebService Hello World
http://localhost/helloworld

42. Project, Application and Organisation Silos

43. IBM Mainframe
Sun Server
Intel blade
Tandem
Thin clients
Fat clients
AIX Server Server Farm

44. Example Workflow
NOS öffnen ► Kunde suchen
NOS-Übersicht ► Partner / Adressen ► Anzeigen / Ändern ► Bestätigung ►
Änderung der Telefonnummer? ► bestätigen / Ändern ► Ausdruck bestätigen ►zurück
zur Übersicht
NOS-Übersicht ► Produkt / Ändern ► Einlagen / Termingeldprolongation ►
Daten ändern ► bestätigen ► zurück zur Übersicht
Einmeldung in KIM ► Starten von KIM ► Anmeldung ► Kunden suchen ► neuen
Eintrag wählen ► Daten einpflegen ► Abschluss anlegen ► Daten eingeben ►
bestätigen ► zurück zur Übersicht
¨ Customer approaches service desk
¨ Customer informs the bank about address change
¨ Advisor notifies a due “time deposit” in the customer’s portfolio
37 Clicks

45. Complex

46. Complicated

47. Unproductive

48. Inflexible

49. Cost inefficient

50. Need to transform

51. Mega trends in Banking
Increase of
regulatory requirements
Legacy technology
Changing
customer behaviour
Consolidation

53. 2011 20162012 2013 2014 2015
662 M
4.03 B
Source: Cisco, 2012
Number of internet capable mobile devices

54. 72% Watching TV
Playing
Video Games
Listen to
music
Reading
newspapers
Reading
books
Internet
Smartphones are used always and everywhere
Sources: The Mobile Movement Study, Google/Ipsos OTX MediaCT, Apr 2011
Base: Smartphone Users (5013)
Q. In general, which of the following media-related acOviOes do you do while also using the Internet on your smartphone?

55. 0 new friends in 5 days

56. 86 new friends in 5 days

57. 8 new friends in 1 minute

58. Wants to
co-create
products
Expects
better user
experience
Inform
themselves
online
Trusts in advice
of peers in
online forums
Uses social
media to
communicate
Buys
online
The
New
Customer

59. For Banks?
Increased competition
from new entrants

60. For IT Provider?
Opportunity to offer
new technologies

61. Mega trends in Banking
Increase of
regulatory requirements
Legacy technology
Changing
customer behaviour
Consolidation

62. What to do now?

63. How to do it?

64. To do all the time
the same thing
and to expect
different results is
stupid

65. .
If you want something you never had, you need
to do something you never did.

66. Change

67. New approaches

68. Text based
Static
Lack of visual
experience

69. Can it be done
differently?

70. Highly visual
Bold photos
Dynamic
content
Modern
design

71. Human
Technology
Business
Design Thinking
Experience

74. New Paradigms

75. User interface Functional Productivity
oriented
More and more banks follow new paradigms towards IT

76. Distribu)on Middle Office Back Office
Paper reduced by 90 %
Process costs reduced by 50 %
Dynamic work distribution

77. Implementation time
reduced by 50%
Process costs
reduced by 80%

78. User interface Functional Productivity
oriented
Processes Fix coded Flexible
Services
Application
centric
Service-
oriented
& packaged
More and more banks follow new paradigms towards IT

80. Reduce data centre costs by 50%

81. Infrastructure
Services
Processes
User interface Functional Productivity
oriented
Fix coded Flexible
Application
centric
Service-
oriented
& packaged
High
variety
Industrialised
& low cost
More and more banks follow new paradigms towards IT

82. Requirements
Design
Traditional Waterfall Model
Implementation
Test
Maintenance

83. Service Creation
observe analyzeprototypeideate market

85. Surface Banking

86. Natural
Banking

89. Success = 1% Inspiration + 99% Perspiration

90. Do you want to learn more?
Frank@FrankSchwab.de
http://www.FrankSchwab.de