1. 1
MSc Management Consulting Project
ANALYSING THE MARKET OPPORTUNITY CREATED BY
DIGITAL BUSINESS TRANSFORMATION AND TWO-SPEED IT
Team Members (CPM 23)
Alvaro Llanza
Anqi Zheng
Austin Raywood
Mark Varin
Olutayo Fawunmi
Tomas Zalatoris
Zhongmeihe Chen
Word Count: 2970
2. 2
Contents Page
Preface ............................................................................................3
Executive Summary.........................................................................4
Introduction......................................................................................5
Pressures and Motivation ................................................................5
Current Point of Digital Transformation ...........................................6
Future of Digital Transformation ....................................................12
C-Level Executive Dynamics.........................................................14
Vendor Analysis.............................................................................16
Recommendations.........................................................................18
Appendix 1: Industry-Specific Pressures .......................................20
Notes.............................................................................................23
3. 3
Preface
Unfortunately, the structure and the contents of the report outlined in the project proposal had
to be altered due to the unforeseen changes in our predicted workflow. We originally expected
to receive industry contacts from IBM, which had been agreed upon with the company’s
representatives, however, the timeframe of the project coincided with the holiday season and
the timing made it difficult to schedule any interviews. The team’s attempts to find contacts
proved fruitless, with all of our requests having been rejected for legal or professional reasons.
Additionally, Imperial Business School’s Corporate Partnerships Manager could not provide
much help within the timeframe either.
Due to the aforementioned facts, our analysis was limited to research from secondary-
sources. Consequently, sections originally intended to be included on operational efficiency
were completely excluded from the report since such information pertaining to particular
companies is largely unavailable. Changes in the companies’ business models were removed
as well, as the team would have to make numerous assumptions regarding recent industry
changes. Finally, the future of Digital Business Transformation had to be generalised due to
the unavailability of specific plans from participating companies.
Thus, our report places greater emphasis on pressures and motivations to digitise, the current
consumer-facing technological changes within the businesses under consideration (Figure 1),
and technology vendor analysis. However, the IBM CAMSS (Cloud, Big-Data Analytics,
Mobile, Security, and Social) framework is still utilised throughout.
Figure 1: Revised Analytical Framework 2
4. 4
Executive Summary
Businesses feel intense pressure to undergo digital transformation. The majority of
executives believe their businesses will be disrupted by digital technologies in the
near future. This is driven by several factors including a high-level of mobile device
market penetration and changes in overall consumer behaviour and the business
environment. Retail banks are feeling pressure from consumers, new fin-tech
competitors and from within, while Multi-Service Operators are being disrupted by
consumers who’ve begun to drop their pay television packages in favour of online
video platforms.
Currently, all major UK and US banks are rapidly digitising their offerings in an effort
to optimise costs, while improving operational efficiency and client service. The future
of retail banking is focused on the use of real-time analytics from multiple-channel
offerings to enhance customer experiences through highly-personalised content and
selected services.
Multi-Service Operators have been engaged in DBT for the past several years in an
attempt to retain and lock-in subscribers. The successful combination of these
technologies has allowed MSOs to respond aggressively to increasing pressure from
Online Video Distribution services such as Netflix & Amazon Instant. This
transformation has seen them begin to utilise cloud-based streaming, mobile
connectivity, and rigorous usage of big-data analytics, which may allow them to stem
the loss of subscribers within their MVPD divisions.
Competitors that lead in these sectors are characterised by their all-CAMSS mind-
set, their focus on digital business transformation, both organisational and
technological, and how they apply these to banking and MSOs. Different approaches,
whether pushing for universal platforms (Mulesoft, Accenture, Salesforce), or
catering specific services to specific issues (Amazon Web Services), have been
shown to provide solutions depending on the client’s needs.
5. 5
Introduction
Digital Business Transformation (DBT) has become one of the most important business topics
in a wide variety of industries. This is particularly true within banking & financial services, and
amongst Multi-Service Operators (MSO). 86% of executives in banking and 78% in
telecommunications believe that their businesses will be disrupted by digital technologies in
the near future.1
Pressures and Motivations
Going digital has become a matter of survival in our increasingly interconnected world.
Smartphone penetration in the US has reached 74.9%,2
and 70% in the UK.3
Tablet
penetration is also ever-increasing, with 50% in the UK,4
and 42% in the US.5
These trends have resulted in a change in consumer behaviour. People are used to having
digital applications for all aspects of their lives, and expect them all to work seamlessly. The
trend is already apparent with the so-called ‘cord-cutter’ movement threatening the traditional
value chain of MSOs, however, the same pattern is readily apparent in the banking industry,
where consumers are used to online and mobile banking.
(A detailed analysis of specific pressures and motivations in banking and MSOs can be found
in Appendix 1)
Though these challenges present a serious threat, companies that can successfully digitally
transform their customer experiences can gain up to 26% higher profitability rates.6
Going
through this transformation focuses on enhancing the company’s offerings while drastically
reducing costs. Thus, these disruptive changes are also creating opportunities for new or
expanded revenue streams and efficiency gains.
6. 6
Current Point of Digital Transformation
Retail Banking Institutions
Our research focused on several of the largest US & UK banks, including Bank of America,
Barclays, Citibank, HSBC Bank plc, J.P. Morgan Chase & Co., Lloyds Banking Group,
Nationwide Building Society, The Royal Bank of Scotland, Santander Group, and Wells Fargo.
The graph below (Fig. 2) illustrates how banks, both the majority and leaders, engage with
digital offerings for their businesses in terms of CAMSS framework.
Figure 2: Capabilities of Leaders and the Majority with their Customer Experience
7. 7
Major Retail Banking Developments (CAMSS)
Cloud
Currently, all of the banks are investing into improvements of their online, mobile
and payment apps: which reflects the fact that online and mobile usage is increasing,
while reducing visits to brick-and-mortar branches.
Leaders use cloud services for advanced functions, for example: Citibank uses
smart ATMs that remember customer preferences,7
while Barclays offers ‘Cloud It’,
a secure cloud storage solution for documents.
Analytics
Big-Data Analytics software is primarily utilised to analyse consumer data to create
personalised experiences. Santander’s integrated Cardlytics software works with
numerous retailers to provide personalised offers for shoppers, using the data it
receives from their bank statements.8
Separately, JPMorgan uses analytics to
develop models, algorithms and platforms for product recommendations and content
personalisation.9
Leaders in Analytics: Wells Fargo has developed new analytical ATM software
which anticipates customer’s preferred transactions, image deposits, instantly
issuing debit cards and eReceipts.10
Mobile
From 2014-2015, the UK & US banking systems started shifting from card-based
‘chip & pin’ payments, and have begun to embrace NFC contactless payments,
especially with the advent of Apple Pay & Google Pay on smartphones.
Moreover, all selected banks save for HSBC have recently developed Apple Watch
apps for Apple Pay payments, which is now accepted at thousands of participating
merchants.
Regarding personal payments, 90% of selected banks, excluding Santander, have
implemented P2P-payment-solutions (most commonly V.me by Visa), which allows
users to pay either friends or tradesmen using just their mobile numbers or email,
without disclosing any sensitive financial details.
Citibank has gone further and developed their own Digital Wallet: ‘Citi Wallet’, and
‘Citi Coin’, a Bitcoin-derivative or ‘altcoin’, based on original block-chain ledger
technology.11
While in the UK, Barclays is leading the way in wearable payments
with the debut of ‘bPay’, a contactless payment wristband which is accepted at
contactless NFC-enabled merchant terminals.
Social
All selected banks use social media (Facebook, Twitter) for corporate
communication, promotions, and answering consumer questions (for example Citi -
twitter @AskCiti); LinkedIn is additionally used for hiring and communication.
Social media is also used for other purposes, i.e. Santander Brazil uses Instagram
for inspirational cultural images.12
Nevertheless, Barclays is clearly leading the way
in social, for instance one of their latest developments includes payments over
Twitter via ‘Pingit’,13
and Face-to-Face video banking as opposed to visiting a
branch.
8. 8
Security
Security for banks is one of their major considerations and this is reflected by the
complexity of recent advancements. As much as 60% of the selected banks:
Barclays, Nationwide, J.P. Morgan, RBS, Wells Fargo and Bank of America have
experimented with fingerprint scanning technology for authentication.
While the leaders in this category, have tested vein (Wells Fargo, Barclays & Bank
of America, 30%)14
, voice (Wells Fargo & Barclays, 20%)15
and even heartbeat
authentication via the ‘Nymi Band’ (Lloyds Banking Group & Halifax, 10%)16
for
withdrawing cash, logging-in to online banking or authorising transactions.
Figure 3: Major Retail Banking CAMSS Developments
The retail banking industry is facing a number of challenges in their digital transformation
journey. First, rebuilding their operating model is fundamental in technology transformation
competition. Digital banking development has to leverage three dimensions: client centricity,
openness to innovations and organisational flexibility.17
Similarly, new competitors are
emerging, leveraging technologies to offer products and services traditionally provided by
banks. Some of these companies have already achieved significant scale (e.g., PayPal), or
are large non-financial companies venturing into the financial services sector (e.g., Google).
Furthermore, banking digitalisation requires developing a more flexible banking infrastructure.
The accumulation of thousands of existing minor software patches and variations results in
unnecessary complexities which can cause the reduction of system agility, security, an
increase in risk and cost, and most importantly, the damage of customer loyalty. Finally,
changing organisational culture is a key challenge for traditional banks since digitalisation
forces a shift from being product-centric to customer-centric. Banks need to increase their
personal engagement by encouraging forward-focused thinking, technological openness and
empirical approaches to digital systems.
Forward Thinking: Involve everyone in the bank in digital service training to provide
explicit understanding about new technologies and services.
Technological Openness: Build employee curiosity surrounding new digital
services, technologies and practices.
Empirical Approaches: Employees are thoroughly trained in new technologies and
can subsequently build digital awareness.
9. 9
Multi-Service Operators (ISPs, MVPDs, & Telecoms)
Most UK & US-based MSOs have already deeply entrenched themselves into digital business
transformations. AT&T, BSkyb, British Telecom, Comcast, Time Warner, and Virgin Media
have all either already embraced, or are in the process of embracing, most the topics focused
on within the CAMSS framework. For the most part, MSOs have either developed their own
in-house solutions for their services, or have outsourced to large vendors such as Amazon
Web Services. As the industry continues to consolidate, e.g. Charter’s recent purchase of
Time Warner Cable or AT&T’s recently approved acquisition of DirectTV, which has in turn
created the world’s largest cable company,18
these tech developments will continue to be
spread to smaller-and-smaller regional providers.
Figure 4: Multi-Service Operator (MSO) Breakdown
The most significant pressure for MSOs currently is their ability to lock-in and retain pay-
television subscribers who are constantly being lured by the prospect of viewing content on
Subscription-based Video-On-Demand platforms. MSOs traditional response to competing
with OVD content, has been to simply start offering their own VOD content packages. This
requires embedding the platform not just within an OTT box, instead it requires cloud-based
storage capabilities that allow viewers to quickly and easily watch what they want, when they
want, and most importantly how they want. “Amid Pay-TV subscription declines, MSO’s are
seeing early signs that the improved UIs are curtailing defections, driving VOD uptake and
increasing channel viewing. Since the industry is becoming more broadband-centric, cable
providers can use their branded UIs wherever customers connect with them, be it through a
set-top gateway box, a smart-TV, mobile phone or other Internet-connected device.”19
Equally important has been the use of dynamic analytic metrics that track usage and can offer
targeted advertising and programming suggestions. Proper use of analytics is a key method
of driving customer satisfaction, as MVPDs can now directly suggest new content to
subscribers, increasing their brand loyalty. This can be seen as a direct response to S-VOD
services which have long-used analytics to determine consumer palettes and make relevant
programming suggestions.20
Mobile platforms have also become a key point of integration, with several MVPDs allowing
their customers to not only control their DVRs from their devices, but going so far as to allow
them to view content via their devices. For instance, BT provides its TV Everywhere service
via an app. Similarly, Sky offers services like Sky Go and Sky Sports Mobile.
10. 10
In the US, Comcast has taken these developments to heart by launching a VOD platform that
gives their customers freedom in how they consume their choice of content. Comcast’s X1
DVR platform allows viewers to download their choice of content from the cloud, record live
television, integrates a number of popular apps, as well as stream live television and VOD
choices to their mobile devices.
The strategic goal of centring the home’s entertainment on a single ‘operating system’, with a
cable television and internet service package at its core, has been mirrored by Comcast’s
competitors as well. This has shifted ISPs from exclusively being infrastructure-as-a-service
companies to additionally being platforms-as-a-service, bringing these organisations more in
line with OTT providers by utilising their hardware to take the place conventionally occupied
by media centre PCs.
Multi-Service Operator Offerings
MSOs Cloud-Based Systems Big Data Analytics Mobile Platforms
Comcast
Cable (US)
The X1 & X2 DVR platforms
utilise cloud-based storage to
allow users to stream content on-
demand.
Comcast’s Stream S-VOD
platform uses a cloud-based
micro-service architecture to
allow users to stream their
favourite content.
Comcast utilises
Amazon Web Services
analytics platforms to
track usage and
create personalised
content and
advertising selections.
The Comcast X1
app allows users to
stream content from
their DVR and watch
live television on
their connected
mobile devices.
Time
Warner
Cable (US)
TWC DVRs allow users to
access a wide variety of on-
demand content from their
proprietary cloud servers.
Time Warner Cloud Solutions
allows users to store their data.
Time Warner Cable
Media compares
online and cable TV
viewership to
established
demographics to
support ad sales.
The TWC app
allows streaming
from DVRs to
connected mobile
devices.
AT&T U-
Verse (US)
U-Verse On-Demand uses
AT&T’s VPC system to stream
content direct to subscriber
DVRs.
AT&T Cloud Services stores
users’ data.
AT&T Flurry Analytics
tracks users’ mobile
data usage.
AT&T’s U-Verse app
allows users to
control their DVRs
from their devices.
AT&T is the second-
largest mobile
provider in the US,
with 121.8 million
global subscribers.
BSkyb (UK)
Sky offers content to be
downloaded to DVRs via their
platform advertised as ‘Catch-Up
TV’.
BSkyb’s ‘The Cloud’ Wi-Fi
program provides hotspots
across the UK for Sky
Broadband users.
Sky IQ helps
advertisers reach the
best time slots and
audiences for their
spots.
The Sky GO Extra
app allows
subscribers to
download content
from their DVRs,
and allows for offline
viewing.
The Sky Sports app
streams exclusive
clips and live scores
and updates.
11. 11
British
Telecom
(UK)
BT offers on-demand content
streamed from its built-in cloud
capabilities.
BT Cloud stores users’ data.
BT Analytics tracks
viewer usage and
content selection.
BT Sport app allows
subscribers to watch
broadcast clips and
access live data.
Virgin
Media (UK)
Virgin Media Anywhere allows
users to stream live television
and on-demand content.
VM Cloud allows users’ to store
their data.
Virgin Media Business
offers analytics
services to
businesses.
VM Analytics tracks
viewership.
Virgin Media
Anywhere allows
users to stream
content on their
mobile devices.
Figure 5: Multi-Service Operator Offerings
12. 12
Future of Digital Transformation
Retail Banking
From a demand-driven perspective, most customers expect banks to invest in online banking,
their branches, ATMs, and mobile banking (which grew by 20% since 2012)21
. EY has
discussed the future of the ATM (Fig. 6) below:
Figure 6: Where consumers believe their primary bank providers should be investing & The Future of
ATMs
Source: Accenture, (2013). Banking 2020: As the Storm Abates, North American Banks Must Chart a New
Course to Capture Emerging Opportunities.
EY, (2013). Building the Bank of 2030 and Beyond: The themes that will shape it.
Similarly, on the supply side, retail banks aim to fulfil needs by focusing on Customer
Interfaces/ Channels, Products, Customer Needs Identification, and their Core Platforms.22
This fits with the customer-centric approach to innovation, with an equilibrium in online and
mobile banking. However, EY estimates efficiency percentage points for branch
transformation to be 4, whilst digital transformation to be 2.6, as shown below (Fig. 7). This
emphasises the need for banks to innovate in both the traditional aspects of banking and
digital.
7%
12%
20%
21%
38%
43%
Social Media
Call Centre
Mobile Banking
ATM
Branch
Online Banking
Digital Traditional
Where consumers believe their primary bank providers should be investing.
13. 13
Figure 7: Where Banks Want to Innovate & the Estimated Impact of Certain Opportunities for a typical
Retail bank
Sources: PWC, (2014). Retail Banking 2020 Evolution or Revolution?
McKinsey & Company, (2014). The future of US retail-banking distribution. Retail Banking Insights.
Big-Data analytics will be used to enhance core products and build trust between banks and
customers. Insights can be attained from both structured and unstructured data (cross-
channel bank customer interaction data) as derived from mobile platforms, online
engagement, location tracking, purchase decisions, social media, etc… Such highlights will
lead to highly-specified product offerings on a per-customer level.23
Finally, banks can tailor
services to the ‘2-speed of the end-user’: preferences and past actions & real-time.24
Due to their broad customer segments, banks are focused on digitising a multi-channel
operation, in order to give customers choices in how they bank.25
Similarly, the future
welcomes increased self-customisation of UIs on digital platforms to enhance customer
experiences by meeting their specified needs. According to Bluepoint, banks will use mobile
data: “…for marketing purposes, for fraud prevention, and to give the consumer what they
want almost before they know they want it.”26
Including customised alerts and access to real-
time information services. Mobile has enabled more competitive platforms from OS operators
(e.g. Android), payment facilitators, and other fin-tech services.
Currently, social media is being used passively, and is driven by customer quarries and service
issues. However, in the future, banks will proactively engage with customers on product
preferences, while creating buzz for new products and driving traffic to specific promotions.27
The future of security is in biometrics (fingerprint, facial scanning software, or voice
recognition) integrated through various transactional processes (e.g. at ATMs and call-centre
verification).28
However, banks will still utilise a two-factor verification process: pin-verification
and physical objects (e.g. NFC / debit card). Finally, these future targets will be enabled
through rationalisation in the cloud.
54%
54%
44%
50%
43%
60%
50%
40%
Products
Customer
Interfaces /
Channels
Core Platforms
Customer
Needs
Identification
US
14. 14
Multi-Service Operators
Looking to the future, certain ISPs are greatly interested in integrating mobile telecoms into
their service portfolios with Comcast rumoured to be looking to acquire T-Mobile29
, while AT&T
and its U-Verse network already claim 21.9 million connected devices with 121.8 million mobile
phone service subscribers.30
As mobile data connections move from 4G to 5G, and devices
gain higher resolutions and processing speeds, the use of internet-connected devices for the
consumption of visual media will only continue to increase.31
BT now expects the global
number of connected objects to reach 50 billion by 2020.32
Interestingly, Comcast has recently decided to launch an S-VOD option of their own called
Stream. Offered at $15 per month as part of a Comcast internet subscription, the service will
offer users access to a variety of content, via a cloud-based DVR, without requiring a
traditional cable package. However, the platform is limited to a single cable network (HBO),
and subscribers will not be able to stream the content to their televisions.33
This is perhaps
the boldest attempt by a provider to stay in line with current distribution trends, and its success
or failure in reaching critical mass will undoubtedly affect whether other providers begin to
launch proprietary OVD services of their own.
Perhaps the largest change MSOs will undergo is the growth of fibre-optic infrastructure which
can allow customers access to gigabit speeds. For instance, Comcast recently claimed their
new fibre network would be “available to about 18 million homes by the end of [2016]”34
. This
stands as a major development in the growth of online services, as Steve Patterson of CIO
notes, “The cloud is only as good as the network. Gigabit Internet will enable solutions such
as virtual desktop infrastructure and cloud storage that enhance reliability and security”35
. As
speeds continue to grow, the opportunities for new businesses and services to reach new
users does as well. For instance, BT has recently begun offering 4K Ultra-HD broadcasts of
sporting events via BT Sport for select customers on their fibre networks.
C-Level Executive Dynamics
Leadership has an integral role in digital transformations, with all major initiatives being top-
down and driven by C-level executives. Boards of directors are ensuring that transformation
is integral to their strategies, primarily lead by the CEO. However, within banking, the decision-
making process and the responsibility is given to the Chief Operations and Technology Officer
(COTO), previously COOs. 50% of selected banks describe use COTOs, and the 50% give
the responsibility to either the COO, the CIO, or a regional head. This revision reflects
changing responsibilities, and how banking institutions perceive technology as an increasingly
important part of their business. This represents an elemental starting point for the digital
transformation journey.36
Based on the qualitative data specifying the roles and
responsibilities, this executive in the C-Suite typically makes the buying decision. However,
the internal delegation of specific activities may skew the data marginally.
15. 15
Figure 8: C-Level Executives who make the Buying Decision and perform Implementation in Banks
Implementation amongst banks depends on their organisational structure (service sectors or
global reach). When structured into services, implementation is often carried out by a divisional
director (e.g. Strategic Transformations Director), who works with other director heads to
channel acquired technology into various services. However, banks with a location-based
structure, have established regional non-group COOs or section CIOs to drive the
implementation. The smallest percentage (10%) is a situation when the firm has a division just
for digital capabilities.
Figure 9: C-Level Executives who make the Buying Decision and perform Implementation in MSOs
50%
20%
10%
10%
10%
Buying Decision
Chief Operations and
Technology Officer
Chief Operating Officer
Chief Information Officer
Regional Head
CEO
50%
20%
20%
10%
Implementation
Director (Digital)
Divisional/ Regional COO
CIO/ section CIO
Digital Division Head
50%
33%
17%
Buying Decision
Chief Technology Officer
Chief Operating Officer
Senior Executive VP
67%
33%
Implementation
Executive VP (Division Head)
Chief Technology Officer
16. 16
Within MSOs, technical decisions are made by a variety of executives often situated in several
departments. Often, those with direct control over technical decisions lack C-Level titles,
instead they are often referred to as technology officers or Executive Vice Presidents. As ISPs
and MVPDs are technology-centric organisations, who require the latest in high-speed
networks and dynamic software, technology decisions are often run through numerous senior
executives before being decided upon. Therefore, it is advisable to initially reach out to the
highest-ranking members of those organisations, with COOs and CEOs being preferable to
tech officers. Success depends on the alignment of strategy and its ability to channel through
the organisation are crucial. The added layers of bureaucracy theoretically facilitate successful
implementation by increasing the level of governance.37
Vendor Analysis
Several patterns have been identified when analysing IBM’s competitors. In the first instance,
several companies have grouped their offerings under one universal platform. Mulesoft’s
‘Anypoint’ platform offers streamlined operations through cloud-based technology, thus
upgrading outdated legacy systems.38
Amazon Web Services (AWS) runs their entire
operation in the cloud, whilst offering multiple individual solutions for whatever the client’s
needs, from analytics to security solutions.39
Some firms offer platforms that specialise on one
or two metrics of CAMSS, whilst additionally providing other solutions. “SAP Hana” by SAP
focuses on real-time analytics, processing, and application platform capabilities, whilst offering
mobile and cloud solutions as well.40
Software AG also provides a universal platform, however
mobile and security solutions are not as widely represented within their solutions, and they
subsequently offer them separately.41
Similarly, several companies provide specific solutions to specific problems, such as CA
Technologies or Oracle. CA Technologies has created CA API Management, combining APIs
and big-data analytics and ensuring the creation of a ‘data lens’ into big-data libraries.42
Oracle’s FLEXCUBE is a multi-delivery channel platform that empowers the client with a self-
service proposition.43
Nevertheless, regardless of the structure of the offering, all firms offer
their clients the possibility to upgrade their current IT-architecture to one ruled by cloud-based
platforms, big-data analytics, and mobile integration. Social and security, the remaining
metrics of CAMSS, do not feature as prominently. Mulesoft and SAP offer such solutions for
both the financial and MSO industries, though certainly not on the same level of commitment
as shown by Salesforce with their Customer Success Platform44
, or by Software AG with Aris
Connect.45
With regards to retail banking and MSOs, CA Technologies provides services applicable to
many of their problems, such as CA Advanced Automation.46
Similarly, Oracle’s solutions are
universal in nature, but are not as integrated into a single platform as its competitors.
Nevertheless, they do go into detail regarding digital transformation in retail banking.47
Accenture’s solutions are mainly centred on mobile platforms with their digital wallet48
and
their digitally connected products platform.49
Accenture also has a clear offering for retail
banking with their Core Banking Transformation.50
AWS’ service and solutions seem to be
adaptable to any industry requirement. For instance, AWS facilitated NASDAQ OMX’s jump
to cloud systems by developing FinQloud, entirely run on AWS. This system offered
NASDAQ’s clients streamlining of their operations and storage without the need for costly
capital infrastructure.51
But at the same time, AWS seem to provide specific and separate
upgrades, rather than all-encompassing improvements like Mulesoft or Salesforce.
17. 17
All firms approach the problem differently and all do so with varying results. There are certainly
benefits in going for specific services over universal platforms as some firms advertise.
However in many cases, upgrading to a better technological solution will not always fulfil the
customer’s needs since a more revolutionary approach is required. AWS’ solutions are
fundamentally isolated and take care of individual concerns, rather than the underlying nature
of the issue. If success is determined by the ability to fundamentally digitally transform the
business not just in IT, but also in an organisational sense, then Mulesoft, Accenture, or
Salesforce are the industry’s clear leaders. These firms promote platforms with solid
foundations from which it is far easier to innovate, and deliver specific agendas for the
transformation and evolution of digital business.
Figure 10: Competitor Vendor Analysis. Strength of firms' offerings in terms of CAMSS framework (rated
from 1-5)
18. 18
Recommendations
In our analysis, we primarily focused on the product-section of the ‘4Ps of Marketing’
framework and also created several suggestions for promoting IBM’s services amongst C-
level executives.
Retail Banking
For retail banking industry, the team uncovered several technology trends (Fig. 11) that have
to be pursued by IBM in order to stay competitive in this market.
Trends in CAMSS Adoption within Retail Banking
General
trends
Inseparability of CAMSS: it is increasingly hard to disentangle
technologies in CAMSS. Banks offer a solution where all of those
technologies create a seamless user experience.
Advent of cryptocurrency
Cloud
Personalised experience based on saved preferences (e.g.
Citibank’s ATMs) in conjunction with analytics
Analytics
End-user self-customisation of customer banking software
Real-time analytics
Mobile
NFC applications and P2P transactions converging
Wearables
Social
Transactions through social media
Deeper communication with consumers through social media or
similar services
Security
Biometrics security
Figure 11: Trends in CAMSS Adoption
We subsequently recommend building technological capabilities that will enable banks to use
those technologies to offer its clients seamless digital banking experience.
Multi-Service Operators
Many of the largest and most successful MSOs have already begun to engage in DBT.
Therefore, the focus should be centred upon smaller providers wishing to compete with the
majors. Moreover, MSOs will continue to search for smarter and more adaptive software and
middleware in order to improve their UIs. Perhaps the most important aspect will be big-data
analytics software utilised as advertisers request greater insight into consumer viewing habits.
Promotional Strategies
Given the disparity between the decision-maker in charge of strategy and purchases, and the
implementer, it is best to have a double-tailored promotion strategy to target both types of
executives. The decision-maker (mostly CTOs) drives the digital strategy and reports to the
CEO. On the other hand, the implementer (Digital Directors/Division Heads) drives the
integration process and deals with daily problems of DBT. Below are key issues considered
by both types of executives (Figure. 12).
19. 19
Promotional Strategies for Executives
Strategy & Buying Decision Executive52
Implementation Personnel
Technology Assessment
Understanding Risks
Transformational capabilities of
solutions
Ability to meet bottom-line initiatives
The client’s need to stay competitive
Ease of integration and advantage to
culture and overall strategy
Technical Advantages
Ease of systems Integration
Training of Staff (Talent Acquisition)
Figure 12: Promotional Strategies for Executives
Competitor Outlook
Based on the analysis, the team concluded that the optimal strategy given current competitive
environment would be to offer a universal solution. A complete package that incorporates all
elements of CAMSS and also facilitates organisational change. The team recommends
looking more closely at the social and security elements of CAMSS, since they seem to offer
the least competition. Moreover, it is important to offer technological change in conjunction
with organisational change since it is one of the biggest hurdles for companies going through
DBT.
20. 20
Appendix 1: Industry-Specific Pressures
Retail Banking Pressures
The banking industry is drastically changing due to this shift in customer expectations,
however the banking sector is being pressured from multiple fronts, as shown in (Fig. 1).
Figure 13: Disruptive Factors Impacting Banks
Source: Accenture (2015). Banking 2020: Capturing Emerging Opportunities - Summary - Accenture. [Online]
Firstly, within banks there is a strong external pressure to digitalise. Customer needs and
expectations have changed: going into branches to do daily banking has become increasingly
unpopular (in the UK, it’s down by 30% over the last 3 years), and now only 16% of customers
never use any form of online or mobile banking.53
In 2014, 45% of all UK consumers who
purchased a banking product did so online, and the trend is expected to accelerate to most
banking product purchases being done online within a few years.54
Moreover, new entrants
are threatening the banking industry. Non-banking payment providers (e.g. PayPal, iZettle),
digital lenders, and other fin-tech solutions can ‘disintermediate’ banks, taking away
customers and associated transactional data.55
There is also internal pressure to cut costs,
and improve efficiency and customer service.
Secondly, banks face stricter regulation, coupled with a slow economic outlook, which reduces
margins and burdens sustainable profit and shareholder value generation. Thirdly, the banking
industry is consolidating. Accenture estimated that in 2020, 15-25% of today’s 7000 US
financial firms will likely be gone.56
Moreover, the broader industry convergence creates
business opportunities and more competition. Finally, with the advent of online aggregators
such as the website MoneySuperMarket.com, offering a way to compare banking products,
consumers find it easier than ever to choose the best and cheapest products and services.57
21. 21
Multi-Service Operator (MSO) Pressures
Another interesting shift has been the response of MSOs to the increasing tide of digitalisation.
MSOs are typically made up of three primary business areas. They are Internet Service
Providers (ISP), Multi-Channel Video Programming Distributors (MVPD), and
telecommunication providers. In the US, several of these firms have faced recent setbacks.
For instance, attempts by those companies to enact fees on consumers for accessing specific
sites, such as Online Video Distributors (OVD), were curtailed by the FCC.58
The site most
commonly referenced in the debate was the Subscription-based Video-On-Demand (S-VOD)
platform Netflix, whose success (the site currently boasts over 40 million US subscribers
alone) has been seen as a direct challenge to cable TV viewership.59
This is compounded by
the vitriol most consumers have for their ISPs, as most of the top providers in the US
consistently rank amongst the lowest companies in customer satisfaction.60
In order to compete with increasingly successful Over-The-Top (OTT) services such as Netflix
& YouTube, MSO’s have taken several steps in order to digitalise their businesses and
increase customer value, with the long-term goal of retaining subscribers. As Delia Bushell,
MD of BT Television, notes: “People are spending more time online and less time on standard
linear TV viewing, so are now less willing to pay ‘full-fat’ TV pricing.” This comes at a time
when providers have become vulnerable to decreasing subscriber bases. US market research
firm The Diffusion Group (TDG) notes, “The number of Americans who pay for cable-like TV
products is declining, says a research forecast that claims subscriptions peaked at nearly 101
million in 2011 but will decline to less than 95 million by 2017”61
(as shown in the figure 2).
Thusly, DBT is simply a question of survival for MSOs.
Figure 14: US Paying Households
Source: Roberts, J. (2013). Pay TV will shrink for first time in history. [online] Gigaom.com.
Overall, these shifts have vast implications for businesses: not being digital means not being
where consumers are. However, there are also pressures from competitors and to a lesser
extent from employees. While employees push for innovation in the workplace by
22. 22
transferring their expectations as consumers to the workplace, competitors are disrupting
these industries traditional value chains and accelerating the pace of their business.62
Failure to digitalise leaves businesses vulnerable to industry disruptions, which can be fatal.
23. 23
Notes
1
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2
ComScore, Inc, (2015). U.S. Smartphone Subscriber Market Share. [online]
3
Deloitte, (2014). Mobile consumer 2014: the UK cut. [online] p.3
4
Deloitte, (2014). Global Mobile Consumer Survey 2014, The Pulse of the Mobile Generation (Dutch Perspective).
[online] p. 8
5
Pew Research Center, (2014). Mobile Technology Fact Sheet. [online]
6
Capgemini Consulting, (2013). Digital Transformation and the Finance Function: Time for Change. [online]
7
Citigroup, (2014). Citibank Unveils New ATM Experience in the U.S.. [online] Citigroup.com
8
Bowden, G. (2014). Santander becomes latest bank to join Cardlytics’ personalisation service. [online] Retail-
week.com.
9
Chase, (2015). Chase Careers. 1st ed. JPMorgan Chase & Co.
10
Wells Fargo, (2013). Wells Fargo Creates New Banking Store Format. [online] Wellsfargo.com.
11
Biggs, J. (2015). Citibank Is Working On Its Own Digital Currency, Citicoin. [online] TechCrunch.
12
Instagram, (2015). Santander Brasil (@santanderbrasil) • [online] Instagram.com.
13
Smithers, R. (2015). Barclays to allow payments with Twitter. [online] the Guardian.
14
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15
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16
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Computing.co.uk.
17
ATKearney. (2014) Going Digital: The Banking Transformation Road Map. [Online]
18
Finley, K. (2015). AT&T-DirecTV Merger Creates World’s Largest Pay TV Company. [online] WIRED.
19
Leddy, C. (2015). Heavy Reading Cable Industry Insider - Cloud-Based UIs Giving Cable a Welcome Makeover.
[online] Heavyreading.com.
20
Simon, P. (2014). Big Data Lessons From Netflix. [online] WIRED
21
Accenture, (2013). Banking 2020: As the Storm Abates, North American Banks Must Chart a New Course to
Capture Emerging Opportunities.
22
PWC, (2014). Retail Banking 2020 Evolution or Revolution?.
23
EY, (2013). Building the Bank of 2030 and Beyond: The themes that will shape it.
24
IBM, (2015). CTOs Uncensored: Perspectives on Digital Transformation from the Front Lines. CTOs
Uncensored.
25
BBA, (2014). The Way We Bank Now. BBA.
26
Tilbury, A. (2013). White Paper: The Future of Mobile Banking. BluePoint Solutions.
27
EY (2013)
28
BBA (2014)
29
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Community. [online]
24. 24
30
AT&T, (2015). By The Numbers. [online]
31
Amyx, S. (2014). Why the Internet of Things Will Disrupt Everything. [online] WIRED.
32
British Telecom plc, (2015). BT Annual Report 2015. [online] London.
33
Steel, E. (2015). Comcast Offers Its Alternative to Cable TV, Using the Web. [online] The New York Times.
34
Jenckes, M. (2015). Imagine Where 2 Gigabit Speeds Will Take You. [online] Corporate.comcast.com.
35
Patterson, S. (2015). Gigabit Internet access grows out of its niche. [online] CIO.
36
SAP, (2014). Conquering Disruption through Digital Transformation Technologies, Leadership Strategies, and
Best Practices to Create Opportunities for Innovation. SAP White Paper.
37
Capgemini Consulting, (2012). The Digital Advantage: How digital leaders outperform their peers in every
industry. Transform to the power of digital.
38
MuleSoft, (n.d.). Anypoint Platform. [online]
39
Amazon Web Services, Inc., (n.d.). AWS Products and Services. [online]
40
SAP, (2013). Technology Solutions. [online]
41
Software AG, (n.d.). Digital Business Platform Brands. [online]
42
CA Technologies, (n.d.). Big Data APIs. [online]
43
Oracle, (n.d.). Oracle FLEXCUBE. [online]
44
SalesForce, (n.d.). Cloud apps and platform. [online]
45
Software AG, (n.d.). ARIS Connect. [online]
46
CA Technologies, (n.d.). CA Advanced Authentication. [online]
47
Oracle, (2012). Oracle Banking Platform: A Transformational Solution for the Next Generation of Banking.
[online]
48
Accenture, (n.d.). Mobility Solutions - Financial Services. [online]
49
Accenture, (n.d.). Mobility– Communications, Media & Technology. [online]
50
Accenture, (2013). Core Banking Transformation Journey. [online]
51
Amazon Web Services, Inc., (n.d.). AWS Case Study: NASDAQ FinQloud. [online]
52
Smith, R. (2002). The Role of the Chief Technology Officer in Strategic Innovation, Project Execution, and
Mentoring. Titan Systems Corporation.
53
BBA, p. 4, 10
54
BBA, p. 12
55
BBA, p. 23-25
56
Accenture (2015). Banking 2020: Capturing Emerging Opportunities - Summary - Accenture.
57
Deloitte, (2014). Banking Disrupted: How technology is threatening the traditional European retail banking
model. [online]
58
Gryta, T. (2015). An Early Net-Neutrality Win: Rules Prompt Sprint to Stop Throttling. [online] WSJ.
59
Trefis Team, (2015). Netflix Q1 Earnings: The Stock Soars As Subscriber Numbers Impress. [online] Forbes.
60
Lieberman, D. (2015). Subscribers Still Hate Their Cable And Broadband Providers - Study. [online]
61
Roberts, J. (2013). Pay TV will shrink for first time in history. [online] Gigaom.com.
