Primend Ärikonverents - Keynote: Surviving, Differentiating and Dominating on...
Wall Street Tech Conference_2015_Pooneh Mohazzabi
1. Digital Realities Shaping Customer
expectations in the banking Industry
June 1, 2015
Pooneh Mohazzabi
2. The journey of the
future
May 29, 2015
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PwC
3. PwC
Megatrends
Five forces shaping our lives and our world
Sources: PwC, 2014 US CEO Survey, January 2014
1 2 3 4 5
These represent some of
our biggest challenges
and opportunities
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4. PwC
Digital technology is top of mind for US CEOs
Base: 162 (US CEOs): 1, 393 (IT and business leaders globally).
Sources: PwC, 2014 US CEO Survey, January 2014; PwC’s Digital IQ 2014 10 Technology Trends for Business, January 2014.
86% of
US CEOs say
technological
advances will
transform their
business over
the next five
years
Where companies are investing to grow (%)
39%
Cyber
Security
44%
Socially
Enabled Biz
Processes
41%
Business
Analytics
On-demand
Services
25%
Sensors
20%
3-D
Printing
11%
Wearables
6%
Robotics
15%
39%
Mobile Customer
Engagement
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5. Over the last few years, business has changed at an astonishing rate. This change has been triggered by
the explosion of digital technology in four key areas…
Each has had a significant impact on businesses
and, more importantly, on the expectations and
behaviour of their customers and employees.
Among these customers and employees is a
group of people who are more tech-savvy than any
other demographic.
By 2020 there will be an entire generation
who has grown up in a digital world. This
generation requires products and services to
be available anytime anywhere, personal,
demand accurate, seamlessly delivered and
continually innovative.
Digital is now at the stage where it is both
disrupting and changing established business
models; an opportunity for some, a threat
for others.
2020 AND BEYOND
“Digital Natives” become the
majority consumers
2013-2020
“Digital Converts” take over from
“Traditional Consumers” as the
largest customer segment.
We call them digital natives.
Social Media Smart devices,
sensor technology,
wearable tech
Big data &
analytics
Cloud
computing
Business is changing at an astonishing rate and so are
customer expectations
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6. The way we communicate
The way we search
The way we shop
The way we pay
The way we learn
The way we play
The way we work
The way we make friends
The way we stay in touch
The way we belong
The way we capture memories
The way we share
The way we connect
The way we get our voice heard
This Digital Age is changing the way companies have to
achieve business change, on virtually every front …
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7. Digital is making new levels of Customer Centricity possible.
This means that you can achieve advantage and compete in
new ways
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9. Significant shift in customer expectations
(convenience and personalization)
Customer expectations are higher than ever; today’s
customers expect tailored and intelligent products and
services delivered to them at their convenience (the right
time and the right place).
Disruptive business models enabled by
digital technologies
New digitally enabled businesses are changing the retail
and telecoms industries. They are raising expectations
from existing players and forcing them to rethink their
value proposition and competitive advantage.
Empowered customers looking for enablement
Customers look for organizations to enable them to
achieve personal objectives by using their products and
services. Conversations and sharing of experience s
through social media and other digital forums continues to
highly influencing customer decisions.
70%...
… of US consumers bought
products directly from
manufacturers in 2013
compared to 52% in 2012.
All industries will be impacted.
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10. PwC
Draft
Disrupt or be disrupted?
79%Of smartphone users are
using devices to shop at
least once a month
Of enterprise IT spend is
outside of the CIO’s budget47%
Predicted number of
connected devices by
the year 2020.
50 Billion
higher revenue growth forecast for
companies who prioritize innovation
to a greater extent than their peers.10%
11. 2003 2004 2005 2006 2007 2008 2009 2010 2011
11
40%
20
0
Growth (‘000%)
Netflix sales:
up 43,101% from 1999
$2.2 billion
0
20102009200820072006200520042003
1,000
1,500
1,250
500
750
250
Growth (‘000%)
11.7 billion
Songs sold on iTunes:
up 1,169,900% from 2003
2003 2004 2005 2006 2007 2008 2009 2010 2011
0
200
600
800
400
Growth (‘000%)
$14.9 billion
Amazon sales:
up 808% from 19991)
200520042003
900
2008
600
1,200%
2006
300
2007 20102009
0
Cellphone text messages sent:
up 1,200,243% from 2000
1.9 trillion
Growth (‘000%)
Pieces of mail shipped by USPS
Projected loss, fiscal year 2011: $6 billion
170.6 billion $2.3 billion
Songs sold on CDs
(12 songs per CD)
Borders sales
Filed for bankruptcy,
February 2011
Blockbuster sales
Filed for bankruptcy,
September 2010
$ 4.1 billion
1) Revenue figures for 1999 and 2000 are the company’s total sales; all other years’ figures reflect sales in its media division, which includes books, movies, and music.
Source: Company Sec filings, Apple Figures, Bloomberg, U.S. Postal Service, Nielsen Soundscan, Informa Telecoms & Media, Fortune
TextsMail
Texts vs. Mail
Netflix vs. Blockbuster
NFBB
Amazon vs. Borders
iTunes vs. CDs
Borders Amazon
CDs itunes
Traditional industries and business models are dying
Digitization impact on industries
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12. 6.3 7.2 7.6
12.5
25.0
0
10
20
30
40
50
50.0
In billions
202
0
20152010200
3
0
20
40
60
20132012
Connected TVs
2016E20142011
Tablets
2015
Smartphones
• Tripling of smartphone users expected between 2011 and
2016 (in 2012, 28% of all mobile phone contracts were
smartphone contracts)
• Other mobile devices such as tablets complement the use
of the mobile internet
• Increasingly faster acceptance of these new mobile
devices by customers (iPad acceptance rate since product
launch is three times higher than that of the iPhone)
• Disruptive new technologies possible at any time due to fast
innovation cycles (e. g. smart glasses)
More connected devices than people
Total connected
devices
World
population
0.08 1.84 3.47 6.58
Connected devices
per person
Tablets, Smartphones and TVs Expected Users
of Technology Innovations Germany, in Mn
Source: Google Mobile Search Moments, eMarketer, HIS Press, Gartner, Morgan Stanley, Apple, IDC, Cisco, Informa, Strategy& analysis
A world with more connected devices than people –
and continued exponential growth
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13. 0%
5%
10%
15%
20%
25%
30%
12/09 12/1212/08 12/14E12/1112/10 12/13E
15%
In 5/13
10%
In 5/12
0.9%
In 5/09
6%
In 5/11
2.4%
In 5/10
2013F 2015F
60%
2011 2014F
0%
2012
40%
20%
26
%
0%
2%
4%
6%
8%
10%
12am 4am 8am 12am8pm4pm12pm
Smartphone TabletComputer
Mobile Search As Share of Search
(Estimate1), Worldwide, in %)
Mobile Search
Overtakes
Desktop!
Trend-line
Mobile Internet Traffic as % of Total Traffic Device Usage by Time of Day Share of
Browser-based Page Traffic, Germany, in %, 2013
1) All retail categories, except autos, foodservice, gas stations
Note that PC-based Internet data bolstered by streaming. Source: StatCounter Global Stats, Gartner, Forrester, eMarketer, S&P; Ipsos; RKG; BIA Kelsey; Strategy& analysis
Mobile is becoming the main way to access the internet
Mobile: gateway to the digital world
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14. 14
0.1
1.0
10.0
100.0
1,000.0
10,000.0
100,000.0
1,000,000.0
1975 1980 1985 1990 1995 2000 2005 2010 2015
Apple II
Commodore 64
PC Total
TRS 80
NeXT
Amiga
Atari ST
Macintosh
Nokia Symbian
(phones, sold)
RIM (phones, sold)
Android
(phones, sold)
iPad
iPhone
Windows
Mobile
UnitsShipped(K,LogScale)
Inflection Point:
Smartphones + Tablets > PCs
Rise of Personal Computing PC and Macintosh Duopoly
Era of Mobile
Smart Devices
Source: Strategy& research, Strategy& analysis
Technology cycles accelerate – Adoption rates explode
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15. PwC
To effectively compete in the digital market, companies are being forced to rethink
their own organizational structure to better align demand and fulfillment capabilities.
Even in technology functions, siloed thinking is giving way to better integrated,
customer focused organizations
Source: PwC customer research
Centralized Decentralized
$1B Online Publishing Company
Rapid move from paper to online business brought in cloud solutions to meet changing
market demands
Redesign of IT organization required for scalability, resulting significant
decentralization. IT now only supports Finance, Ops, and HR
Company moved from perpetual licensing model to a subscription based model
Subscription model kicked-off “cloudation” of the infrastructure, with some corresponding
decentralization of IT
Slower product cycles have not pushed the business to the cloud as quickly as some
other industries
Traditional business models remain – with a large central IT footprint – however
innovative auto-electronics product units require more agile IT
Rapid and effective product and application development to meet increasing demands of
the market growth requires entrepreneurship and innovation
IT is keeping a central function however moving to a service-oriented organizational model
to decentralize IT for digital products
$6B Cable Company
$4B Software Company
$16B Auto Electronics Company
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16. PwC
Across industries, we are observing a growing gap between
the business demand and IT delivery
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Forward thinking IT Leaders are challenging traditional assumptions around IT’s role in the
enterprise and it’s operating model
Forces Decreasing
IT Responsiveness
The Digital Divide
Increasing
rate of
business
change
Growing
consumerism
Increased ease
of leveraging
cloud based
applications
Forces Increasing
Business Needs
& Expectations
Inflexible
architecture
& legacy
technologies, &
“Technical
Debt”
Growing IT
skills gap Outdated
IT operating
model
Trend:
The disintermediation of
“big IT” and the rise
of business-unit
embedded IT
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17. New devices for almost everything come to market – It will
be imperative to anticipate demand
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18. The impact of digitization on the banking industry
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19. These market forces are creating both
opportunities and issues in achieving
profitable revenue growth
Customer
driven
economy
Customers are demanding ever higher
levels of service, pushing banking to catch up with
other industries.
Growing
market
The market is seeing a return to confidence with volumes
of business accelerating and most sectors predicting further
growth, but competition constraining growth
Regulation
Regulation is focusing on driving “better”
outcomes for customer, with increased transparency and
increased choice and competition
Digital &
emerging
technology
Technology is seen as an increasingly
important growth enabler with a particular focus
on digital distribution
Changing
demographics
Changing demographics is seeing 4
different generations in the market for the first time with
different expectations and needs
Powerful forces are reshaping the future of the financial
services industry and opportunity exists for those who can
capitalize on it
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20. Digital innovation will drive both
revenue growth and cost
reduction benefits for banks$
Customer relationship primacy is
the new source of value in banking
Digital is/will become the primary
relationship channel for
banking customers
New digital innovators are entering
and changing the banking ecosystem
Customers value – and are
prepared to pay for - new digital
offerings that meet their needs
Banks need to partner with new
ecosystems players (tech, data, etc.)
and move from “building it in-house”
to a “launch and learn culture”
PwC research identified 6 major conclusions for the
banking industry
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21. Digital will touch
every aspect of the
bank
From operations, client
management, product
development to risk
management. A
successful digital
strategy will showcase
how digital creates
value, granular
perspectives on
consumer behavior and
market dynamics.
Digitization will
become more
disruptive
Digitization will
require significant
changes to the
customer interaction
model, product
offerings and
transaction model.
Going forward, banks
need to develop a new
revenue model offering
new services and
products to meet
customer
requirements.
The digital channel
is a huge investment
The cost derives not
only from the
technology, but from
the added need for risk
controls and resources
to run everything (in-
house or otherwise)
and the need to
develop in-house
processes to engage
customers in a new
way. Outsourcing and
creeping
standardization are
bringing the digital
channel within reach
of more banks, but
there is still a
significant upfront
investment and plenty
of risk.
External pressure
from regulators
The banks are required
to demonstrate a
robust framework that
ensures each territory
has sufficient oversight
and that regulatory
requirements are being
adhered to at a local
and global level.
Evidencing awareness
and communication to
customers in line with
changing regulatory
requirements becomes
more of a challenge. It
is a challenge that can
be overcome by
orchestrating an
environment that
supports a consistent
view of clients, their
activities and the
regulatory changes that
affect them in the face
of a constantly evolving
regulatory climate.
The changing pace
of digital
Your customers today
want more and expect
more as they draw
from experiences both
in and out of Financial
Services. This makes it
an opportune time to
invest in digital
advances that will
provide a competitive
edge and directly
contribute to customer
loyalty, retention and
advocacy. Unlocking
value in client
onboarding and KYC
requires a way to
reduce the time it takes
to complete the client
onboarding process
while providing a good
customer experience at
one of the first
interactions a customer
will have with the bank.
How digitization will impact the banking industry
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22. The pace and impact
of digital innovation
The customer is driving
innovation. Customer-
driven innovation is
one of the few
remaining sources of
business
differentiation. Digital
is now a cost of doing
business; service
is already critical to
many clients, so the
service has to work,
always – and meet
their
evolving expectations.
Changing customer
attitudes, behavior
and demographics
‘Everything (and
everyone) has gone
digital. Digital change
is requiring
organizations to
proactively transform
many aspects of what it
means to do business.
Therefore, banks need
to create propositions
that are designed with
the customer in mind
from start to finish –
not as an afterthought.
The next generation of
banking clients will
expect the digital
experience to be
seamlessly integrated
as part of the products
and services.
Technology
threatens the status
quo
Value’ is being
reinvented. Customers
are redefining the very
notion of value and
how it is delivered to
them. In order to
continually improve
client offerings, banks
must keep abreast of
the latest developments
in technology and
digital business,
innovate new ideas and
test them with clients.
Granular digital
data is opening new
sources of value for
business
Customers are leaving
behind a trail of data.
Companies are striving
to understand what
drives satisfaction and
loyalty. They must
learn how to transform
customer data into
market insight.
Helping clients
understand their
financial consumption
patterns and manage
their relationships with
banks could create
exciting new sources of
mutual value,
increased relationship
primacy and greater
share of wallet.
The digital
experience must be
tailored
Experience fuels
growth. Designing and
delivering a truly
exceptional customer
experience has become
the most dependable
way to achieve
sustainable, profitable
organic growth. Banks
need to therefore
deliver high quality
experiences for clients
that embody their
brand attributes.
How digitization will impact the banking industry
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23. Digital Banking offers a better customer experience as well as allowing banks to develop
a more efficient and effective operating model - enabled by digitization, optimization of
technology and its underlying processes
Digital technologies increase a bank’s connectivity—not just with customers but also with
employees and suppliers. This extends from online interactivity and payment solutions to mobile
functionality and opportunities to boost bank brands in social media.
Digital draws on big data and advanced analytics to extend and refine decision making.
Such analytics are being deployed by the most innovative banks in many areas, including sales, product
design, pricing and underwriting, and the design of truly amazing customer experiences.
Creates value by enabling straight-through processing—that is, automating and digitizing a
number of repetitive, low-value, and low-risk processes. Process apps, for example, boost productivity
and facilitate regulatory compliance, while imaging and straight-through processing lead to paperless,
more efficient work flows.
Digitization is a means of fostering innovation across products and business models.
Examples of this include social marketing and crowdsourced support, as well as “digitally centered”
business models.
There are several ways in which digital capabilities can
create value for banks:
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24. Client onboarding is a client’s first
experience with a provider and has the
potential to establish how the
relationship will develop.
It is therefore a critical stage for a
provider to engage with the client as
the first interaction will set the
foundations for long term loyalty and
satisfaction, reduce abandonment,
increase revenue, increase retention
and profitability through cross selling
opportunities – typically occurring
during the first 90 days as a new client
Digital Client onboarding
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25. A design based on the vision of front office practitioners, as well as a real understanding of client
needs and what it will take to serve them and deliver the ultimate customer experience
A framework for managing client consent and other regulatory policy changes in a timely and
seamless manner
A framework for managing and capturing consistent customer data
A method to capture accurate client data, by introducing self service functionality that captures
data directly from the client and verifies this data using public and internal data sources with
enhanced digital verification methods
Consistent client data that is used to inform other activities and processes down the line (e.g. sanctions
and AML) with greater accuracy to stand up to regulatory rigour
Multichannel offering to customers reducing the time spent on manual paper forms and freeing
RM’s to focus on relationships and sales
An innovative solution that ultimately serves to speed up client onboarding so clients are not left
“unattended” or fall out of the onboarding experience, meaning loss of revenue and income to the bank
The value digital client onboarding will bring to the bank
will be…
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26. Key Benefits of a digital Client Onboarding Program:
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Improves
client
experience
Delight the
customer
from the very
first
interaction
with the bank
Reduces
risk
Reduce risk
by allowing
banks to
demonstrate
compliance
e.g. via
client consent
Maintain
regulatory
compliance
controls
Maintain
regulatory
and
compliance
controls,
while being
able to better
manage risk
Reduces
operational
cost
Reduce
operational
costs by
automating
manual
processes
Reduces
churn
Reduce churn
by improving
client
satisfaction
and loyalty,
and
therefore adv
ocacy
Increase in
productivity
Increase
productivity
by freeing up
front office
and
management
time
Improves
quality
Improves
quality
control by
providing a
method to
standardize
best practice
client
onboarding
Provides audit
trail &
transparency
Provides an
audit trail of
customer
onboarding
activity to the
bank,
benefiting the
customer and
leading to
improved
transparency
