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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
Source: Berlin Institute for Population and Development
Development of Age Structure in Germany
Development of Age Structure in United States
Source: US Bureau of Census
1940 2000 2040
Development of Age Structure in China
Source: US Census Bureau, International Data Base (2007)
Reverse mortgage
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
R E V E R S E L O A N
Trend = General tendency or direction
How to know?
"There is no reason
anyone would want
a computer
in their home.“
Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
"Stocks have reached what looks like a permanently
high plateau.“
Irving Fisher, Professor of Economics, Yale University, 1929
Dow Jones Industrial Average (1900 to Present)
Source: StockCharts.com
It is difficult to make predictions,
especially about the future
Sir Winston Leonard Spencer-Churchill
Knowledge Society The Rise of BRIC
Female Shift Change of Demographics
Globalisation
Information Technology
Climate change
Mobility
Environmental Awareness
Urbanisation
Internet
Individualisation
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
How to identify?
11 Mindsets to identify trends
The Future is embedded in the presence
Resistance to change falls if benefits are real
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
Mega trends in Banking
Increase of regulatory requirements
Regulation
SolvV
SOX AML
Basel II
Basel III
Basel I
MiFID II
WpHG BörsG
MiFID I
Basel III – Additional Core Tier 1 Capital Requirements
European Banks In Billion $
2.330
2010E
2.990
2015F
660
Source: McKinsey
Basel III – Additional Core Tier 1 Capital Requirements
US Banks In Billion $
1.790
2010E
2.610
2015F
820
Source: McKinsey
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
Return on Equity (ROE)
2007 2010
Europe
16,7%
7.9-9.2%
2015E
7.4-8.6%
Source: McKinsey
Increase of Cost Pressure
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
Mega trends in Banking
Increase of regulatory requirements
Consolidation
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 2011 2000
Number of German Banks (1990 - 2011)
Source: Deutsche Bundesbank
1990 2011 2000
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
For Banks?
Need to be M&A ready to survive
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
For IT Provider?
Less potential
customers
Mega trends in Banking
Increase of regulatory requirements
Legacy technology Consolidation
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
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!"
// C++ Hello World #include <iostream> int main() {
std::cout << "Hello, world!\n"; }
// WebService Hello World http://localhost/helloworld
Project, Application and Organisation Silos
IBM Mainframe
Sun Server
Intel blade
Tandem
Thin clients
Fat clients
AIX Server Server Farm
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
Complex
Complicated
Unproductive
Inflexible
Cost inefficient
Need to transform
Mega trends in Banking
Increase of regulatory requirements
Legacy technology
Changing customer behaviour
Consolidation
2011 2016 2012 2013 2014 2015
662 M
4.03 B
Source: Cisco, 2012
Number of internet capable mobile devices
72% Watching TV
Playing Video Games
Listen to music
Reading newspapers
Reading books
Internet
Smartphones are used always and everywhere
Sources:TheMobileMovementStudy,Google/IpsosOTXMediaCT,Apr2011Base:SmartphoneUsers(5013)Q.Ingeneral,whichofthefollowingmedia-relatedacOviOesdoyoudowhilealsousingtheInternetonyoursmartphone?
0 new friends in 5 days
86 new friends in 5 days
8 new friends in 1 minute
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
For Banks?
Increased competition from new entrants
For IT Provider?
Opportunity to offer new technologies
Mega trends in Banking
Increase of regulatory requirements
Legacy technology
Changing customer behaviour
Consolidation
What to do now?
How to do it?
To do all the time the same thing and to expect
different results is stupid
.
If you want something you never had, you need to do something you never did.
Change
New approaches
Text based
Static
Lack of visual experience
Can it be done differently?
Highly visual
Bold photos
Dynamic content
Modern design
Human
Technology
Business
Design Thinking
Experience
New Paradigms
User interface Functional Productivity oriented
More and more banks follow new paradigms towards IT
Distribu)on MiddleOffice BackOffice
Paper reduced by 90 %
Process costs reduced by 50 %
Dynamic work distribution
Implementation time reduced by 50%
Process costs reduced by 80%
User interface Functional Productivity oriented
Processes Fix coded Flexible
Services Application centric
Service- oriented
& packaged
More and more banks follow new paradigms towards IT
Reduce data centre costs by 50%
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
Requirements
Design
Traditional Waterfall Model
Implementation
Test
Maintenance
Service Creation
observe analyze prototype ideate market
Surface Banking
Natural Banking
Success = 1% Inspiration + 99% Perspiration
Do you want to learn more?
Frank@FrankSchwab.de
http://www.FrankSchwab.de
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