1.
Backbase Webinar
Digital-First Banking
Key Trends That Will Impact Digital-First Banking
Jouk Pleiter & Tim Rutten || Twitter @backbase

2.
Regulated Industry

3.
By Popular Demand

4.
Little Girls Grow Up

5.
Software is Eating the World - The Rise of Digital Platforms
Platform Business
(scalable)
Traditional Business
(asset heavy)

6.
Digital Disruption - Software is Eating the World
10 years 10 years 10 years

7.
Digital Disruption - Serious Impact
Market share
Time
Incumbent
business models
New Digital
Business models
Incumbent
business
models are
threatened

8.
Digital Transformation - Where are we with Banking?
Market share
Time
Incumbent
business models
New Digital
Business models
Incumbent
business models
are threatened
Banking
Today?

9.
From 2018
Banking
Today
Digital
(on the side)
Connect 2018 - How do we become a Digital First Bank?
To 2025
Mission:
Digital First
Bank
Explore

10.
Customer
Experience
Business
Model
Execution
Speed
Digital First
Mission

11.
Customer
Experience
Business
Model
Execution
Speed
Digital First
Mission

12.
Digital First
Business Models

13.
We’re in the Fourth Industrial Revolution
Steam
1700s
Electricity
1800s
Computing
1900s
Digital
Today

14.
Size of Assets
Eco-System
Mixed PlatformTraditional

15.
4,000,000
350,000/year
$0/room
850,000
25,000/year
$210,000/room
# Rooms
Openings
per Year
Cost per Room
Platform Business: Global Roll-out at Low Cost
2017 Annual Report Hilton / 2018 AirBnB Data Facts

16.
Platform Business: Global Roll-out at Low Cost
Digital Platforms
(Scalable)
Traditional Business
(Asset-Heavy)

17.
Platform Business: Global Roll-out at Low Cost
Traditional Business
Linear Growth Exponential Growth
Digital Platform

18.
Scaling: Platform Business vs Linear Business
Profit ($)
Quantity of
Supply
Total
Addressable
Market

19.
Digital Transformation - Building new Business Models
Market share
Time
Building New
Digital Business
models

20.
Let’s get some inspiration
from the best

21.
9,99 per Month

22.
7,99 per Month

23.
Neo Banks: Value Aggregation
Partners
Payments
Insurance
Lending
Savings
Wealth
Partners
Pensions
Real estate
investing
Insurance
Line of credit
Wealth
Mortgages Payments

24.
7,99 per Month 9,90 per Month

25.
Scaling: Value Aggregation at Speed
Feb 2016
International
transfers
Transferwise
Feb 2016
Investment funds
Dimensional Fund
Advisors
May 2017
Term deposits
WeltSparen
Jun
2017
Insurance
Clark
Dec
2017
Consumer credits
Younited Credit
Savings
accounts
Raisin
Personal loans
Lending Works
Mar 2017 Pensions
Pension Bee
May 2017
Travel
Insurance
Thomas Cook
Jan 2018
Mobile
Insurance
Alianz
Oct 2017

26.
Personal
Loans
Credit
Cards
Mortgage Auto
Life
Health
OtherOtherSavings Wealth Mgmt
Checking
Payments
Borrow
Save
Protect
Spend
Offered by GS
Potentially offered or attributed
by GS
Scaling: Value Aggregation at Speed

27.
Scaling: Goldman Sachs Marcus
986528148
Number of months to $1B in total personal loans issued
Marcus by Goldman Sachs vs. select lending platforms

28.
Scaling: Goldman Sachs Marcus
Progress since launch (2016)
~2mm
Customers
$4bn +
Loans Originated
$29bn +
Deposits

29.
Digital First Business Models: Key Ingredients
Value Aggregation ScalingAsset-light

30.
It’s all about reaching
Break-Even

31.
and after that
Scaling

32.
Experiment with
New Business Models

33.
Let’s get some inspiration
from the best

34.
“World’s Best Digital Bank” (Euromoney 2018)

35.
“The best way to fight disruption is to
pre-empt it and disrupt ourselves”
Piyush Gupta - CEO DBS

36.
From 2018
Banking
Today
Digital
(on the side)
Connect 2018 - How do we become a Digital First Bank?
To 2025
Mission:
Digital First
Bank

37.
Game Plan 1
Digital Front-End
Digital Banking InterfaceCore Systems
Game Plan 2
Greenfield BankNew Digital BankLean Core
Game Plan 3
Value AggregatorLean Value Aggregator
FinTech Providers
FinTech Providers
Other Industries
Customer Digital FirstFinTech Providers
Other Industries
Game Plan 4
Digital Transformation
Reduce Core
Backbase: Business Model Agility

38.
Digital-First
Value Drivers

39.
DBS: Superior Returns from Digital
2017 Profit and Loss (S$bn)
Customers (m)
Income
Costs
Profit before allowances
Key Indicators
Income per Customer (s$’000)
Cost-income Ratio (%)
Return on Equity (%)
T
3.6
2.0
1.1
0.9
T
0.6
55
19
D
2.3
3.1
1.1
2.0
D
1.3
34
27
Total
5.9
5.1
2.2
2.9
T
0.9
43
24
Digital is material
39% of customers contribute
60% of income and 68% of
profit before allowances
Digital is more valuable
2X income per customer
20pp lower CIR
8pp higher ROE

40.
Digital-First Revenue Drivers
Lowering Costs Increasing Revenue
Costs
Costs to
Serve
Income per
Customer

41.
DBS: Digital Customers - Lower Acquisition Costs
DBS Investor Report November 2017
-43%
Traditional Digital
Consumer Banking
-54%
Traditional Digital
SME Banking

42.
DBS: Digital Customers - Higher Engagement
Online
Offline
Traditional Digital
16X
DBS Investor Report November 2017
Consumer Banking
Traditional Digital
6X
SME Banking

43.
DBS: Digital Customers - Higher Income
Income per Customer Consumer Banking
(2017)
1.6x
2.6x
3.4x
2.2x
1.5x
Other lending
Credit Cards
Mortgages
Wealth
Deposits
2x
DBS Investor Report November 2017
Traditional Digital

44.
DBS: Digital Customers - Higher Income
Income per Customer SME / Corporate Banking (2017)
DBS Investor Report November 2017
3.6x
2.3x
3.2x
1.4x
Treasury
Trade Finance
Cash Management
Loans
Traditional Digital
2x

45.
Traditional Digital
Higher Income / Customer
Higher Profit / Customer
Higher Cost-to-serve (absolute)
Profit
Costs
Revenue
DBS: Digital Customers - Higher Income & Lower Cost

46.
DBS: Low Cost/Income Ratio
45%
2015
43%
2017
<40 %
Aspiration
Singapore / Hong Kong
India, Indonesia, …
30%
DBS Investor Report November 2017

47.
Digital-First
Making the Leap

48.
Market share
Time
Incumbent Business
Models
New Digital
Business Models
Digital Transformation - Crossing the Chasm
Crossing
the Chasm

49.
Game Plan 1
Digital Front-End
Digital Banking InterfaceCore Systems
Game Plan 2
Greenfield BankNew Digital BankLean Core
Game Plan 3
Value AggregatorLean Value Aggregator
FinTech Providers
FinTech Providers
Other Industries
Customer Digital FirstFinTech Providers
Other Industries
Game Plan 4
Digital Transformation
Reduce Core
Backbase: Business Model Agility

50.
Digital-First Revenue Drivers
Lowering Costs Increasing Revenue
Costs
Costs to
Serve
Income per
Customer

51.
It’s all about eliminating Friction
Customer Needs
& Business Goals

52.
Where we need to be moving...
Business
Goals
Customer
Needs
Connected Experiences
10X
Better
2X
Income

53.
Where to Start?

54.
Priority Matrix: How to Create Value
Effort
Value
High
Low
Low High
~
~

55.
Effort
Value
High
Low
Low High
Priority Matrix: How to Create Value

56.
Committed
Product Plan
(6 months)
Sprint Planning: How to Create Value
Fast Track
With Backbase
Roadmap
(0 - 24 months)

57.
Backbase
Digital EcosystemDigitalBanking
Identity&Entitlements
ProcessOrchestration
MachineLearning
Digital Experience
Connected Experiences
Cloud
Core Ingredients
Banking Systems
FinTech Providers
Other Industries
Backbase: Industrialized Platform

58.
Design Sprint
PROTOTYPING
Building Minimal
Viable Product
Running the
Pilot
EXPERIMENTS
Pivot/Persevere?
DEFINE
EMPATHIZE
LAUNCH
Roll-out and
Scale Up
BUILD
LEARN MEASURE
Product
Market Fit
Business
Model Fit
LEARN
MEASURE
BUILD

59.
Key Takeaway

60.
Digital First Business Models: Key Ingredients
Value Aggregation ScalingAsset-light

61.
Becoming Digital First: Key Ingredients
Business Model
Agility / Scalability
Industrialized
Platform
Focus on Business and
Customer Value

62.
Business
Goals
Customer
Needs
Connected Experiences
10X
Better
2X
Income
Our Growth Path Together: Let’s Create Value

63.
Thank you

64.
Backbase Webinar
Digital-First Banking
Key Trends That Will Impact Digital-First Banking
Jouk Pleiter & Tim Rutten || Twitter @backbase