Published on January 16, 2014
How to become a digital bank: efficient, agile and adapting to consumer and technology changes Sameer Kishore Vice President & General Manager Banking, Financial Services, Securities & Insurance 1 2013
Branches are expensive and un-wieldy 95% of new product sales happens at the branch Cost per transaction Online 80% adults use internet and 51% bank online Mobile Social Media 52% CAGR for 2.4B Social Mobile networking Banking accounts Transactions Financial Institutions need to develop a mix of “Bricks and Clicks” in the New Digital Era… 2 Confidential Services
Are Digital financial institutions only about new technology or business models.. Technology Business models Biometrics / Security Digital Vaults & Wallets Social media CRM Big data and analytics Gamification Smart ATM / Kiosks Concept branches Virtualization Pricing NFC / RFID Loyalty Single sign-on Cloud / SaaS Mobility Virtual cards Person-to-person payments Personal financial management 24x7 real time BPM, SOA 3 Digital Bank 2013
Digital Transformation begins with the customer… 2 1 Enhance customer experience thru technology Drive customer centricity through digital 3 Move to omnichannel 4 Integrate digital w/ human touch Digital Financial Institution 7 5 Provide contextual banking solutions 6 4 2013 Reduce complexity and improve profitability Integrate channels & upgrade service platforms
Dell’s view Digital Transformation is all about engaging customers, while radically improving operations, enabled by technology 5 2013
Solving financial institutions’ core challenges Retail, Wholesale Banking • Core Banking Modernization • Pricing & Billing • Loyalty Investment Banking Wealth Management • Securities • Wealth Back-Office Management Transformation Advisory • OTC Derivatives • Portfolio Trading Analytics Credit Organizations Payments & Cards • Loan Origination • Payments Transformation • Credit Information • Card System Services Transformation Insurance • Package Implementation • Distribution Management Digital Transformation Dell helps banks address key challenges of Cost, Compliance & Customer Retention 6 2013
Dell’s Digital Transformation approach based on experience, collaboration & innovation 10,000 product types Largest digital transformation program for Dell, ability to offer 10,000 product types across all channels & devices 2X improvements 2X improvements in real-time processing thru application modernization for one of the largest Stock Exchange Faster payments Enhanced Loyalty 7 Helped launch New Target Operating model for Europe’s large ACH Pan bank Rewards program across 39 countries, resulting in higher revenues and improved customer retention 2013
Key themes shaping digital financial institutions 8 2013
Mobile is the game-changer Tx Fulfillment across Channels Internet Tablet Mobile BPO ATM 62% own a mobile phone 52% CAGR for Mobile Banking with 12.5% of all e-commerce txns” expected to be carried out via mobile devices by 2015 $0.08 Cost/Tx on mobile as compared to $1.34 in branch 9 2013 Source: Temenos, Nielson, Bain report 2012
Performance improvement is key to digital success Effective digital adoption is required across the enterprise. A true digital bank cannot have: • • • • Delayed Customer On-boarding Batch/Maintenance Downtime Manual document processing Tools available for customers Modernizing core banking infrastructure to offer real-time processing functionality for checking and savings accounts. One of the first banks in US to offer Instant personalised Debit Card to new customer by Integrating the debit card issuing process with DDA account opening. 10 Bank Website 2013 Real-time processing resulted in 18% reduction in operating costs as compared to batch support – BBVA Q1, 2013
Speed of online interactions makes a difference Customer 0 initiates Seconds Transaction Web page 8 slow to Seconds load Web page 18 doesn’t Seconds load Interested Unhappy Annoyed 80% 30 customers Seconds quit Dissonant • Reducing # of clicks to the desired product or service • Faster response time and servicing on web and mobile • Focus on BPR, automating essential workflows, processes & internal communication • Leveraging mobile & tablets and other collaboration tools 11 2013
New entrants challenging traditional banking models Access holders & networks Defenders Banking incumbents Large Retail Banks Digital innovators Remittance Providers Card Issuers Card Networks Telcos 55M Customers; $61B Value of Txns Attackers Niche Technology Entrants Retail Giants Double Usage in 2 years of launch 6.5M Customers; 2.8M Cards PFM Solutions 12 2013 40M consumers, 600+ Financial Institutions Source: PWC
Customer’s digital interactions provides vital cues on preferences and behaviors Multi-channel Banking Contextual Banking 1.0 2.0 Transform Channel Pull Improve Processes Existing Model Push digital strategy Digitally transform the bank to reach the customer 13 2013 Omni channel Push Customer Engagement New Business Model Pull digital strategy Analyze customer’s context to pro-actively suggest services
Dell’s Digital Transformation framework: Assessment, experience, capabilities & path forward 14 2013
The path to next gen digital financial institution ENGAGE stakeholders Customer Reach • Channel Omnification • On-the-go banking • Preferred channels Increase speed • Applications modernization • Cloud / SaaS • Selective outsourcing Remote Access Tools • Remote deposit capture • Digital vaults and wallets • Decoupled debit cards Customer Experience • Unified experience • Self-service • Faster navigation Improve efficiency • Business process re-engineering • Process automation • Reduce operating costs Alternate Models • NFC / QR Codes / P2P • Advisory through PFM • Gamification Sales & Marketing • Analytics and contextual services • Predictive selling • Loyalty 15 ENABLE through technology Workforce Enablement • Digital sales tools • Deliver faster & better service • BYOD & remote availability Products & Pricing • Product Packaging & bundling • Simulations • Relationship based pricing 2013 EXTEND business models
Dell’s Digital Maturity Model 1 PHYSICAL 2 ONLINE Digital* Digital* Transactional Informational • Transactional services • Primarily physical channels • Digital payments • Digital channels for information & alerts 16 2013 3 SELF SERVICE Digital* Personalized • Self Service • Customer enablement • Basic social media & analytics • Online Chat 4 CONNECTED Digital* Engaged • Concept branches • Channel integration • Partial fulfillment • Max. services through digital channels *Digital level does not lend to eliminating physical branches 5 DIGITAL Digital* Innovative • 24x7x365 access to all services through digital channels • Focus on functional innovations and new operating models
Where is your bank’s digital maturity? Physical 17 2013 Online Self Service Connected Digital
Dell end-to-end portfolio for Digital Banking Applications Core banking Deposits processing Dell common channel gateway Cards processing r Dell system Integrator layer Wyse Application servers AppAssure 2013 Cash management Treasury Dell centralized services Enterprise risk Analytics & reporting Products & pricing Database servers Scalent Central bank SWIFT Workflow mgmt. Single CRM Dell CRM wrapper Local ACH / RTGS GL / bookkeeping Common processing across all payments and messages Exceptions & reconciliations Customer Product Contacts Card gateways Corporate connectivity Partner Dell Boomi Server virtualization 18 Loans processing Dell payments hub Single master data ATM Core applications — shared service Dell Boomi Authentication Dell Boomi Integrated multi channel Dell user interface layer External interfaces SecureWorks Outsourced / tool based Web / image servers Network FORCE Desktop mobility mgmt. Security Ocarina SonicWall SecureWorks KACE SecureWorks Security Channels Reuters, OFAC, credit bureaus
Singapore Exchange 2X performance improvement thru realtime processing Challenge • Modernize mainframe to cost-effective platform and facilitate easier introduction of new products Results • Improved batch performance 100%; doubled workload processing capabilities • Eliminated unsupported CSP programs • ROI - Delivering “orders of magnitude” of ongoing savings; project delivered in budget. “The application modernization services that Dell provided were delivered on time and within budget...” Bob Caisley, Chief Information Officer 20 2013
VocaLink 9B digital payments per year w/ new revenue models Challenge • Launch of new faster payments service in UK to reduce the float • Limited domain knowledge and functional expertise across new business model • Repackage faster payments solution as a productized offering for emerging markets including Singapore, Malaysia Results • New system capable of processing up to 100 million payments in 4 hours • 50% increase in productivity innovative automated tools • 100% SLA compliance for maintenance of heritage applications 21 2013
Conclusion Digital Transformation: • Not restricted to channels or technology only, needs to be a holistic transformation across back-office, staff and operations as well. • About building the right mix of “Bricks and Clicks”. • No silver bullet, it has to be unique strategy based on business drivers, customer segment, goals etc. 22 2013 Digital Transformation Roadmap
Q&A 23 2013
Let’s get started Engage with Dell Banking subject matter experts at the Solution Showcase Schedule a post-event whiteboard session to address your specific requirements. Contact your account team for details Gain hands on experience, see demonstrations at the Solution Showcase Schedule a visit to a Dell Solution Center near you: Austin • New York City • Washington D.C. Chicago • Santa Clara • Mexico City • Sao Paolo Go to www.Dell.com/banking 24 2013
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