Keynote: why are Innovations critical for Banks & Insurances? A perspective on the Financial Services industry: the amount of changes will only accelerate. - Exponential technologies are driving change; convergence of several disciplines from software to devices to biotech - Our expectations as consumers are set by our online experience from services such as Facebook, Google or Amazon - Disruption pattern: startups put themselves in-between the customer and the company (i.e. check24) - Industry changes leading to further FinTech & InsureTech investments - Margin pressure: banks & insurrance by the lowest interest rates we have seen in 2.000 years - User Experience is driving value in a new way – and most startups understand customer-centricity - Banks & Insurance companies are under pressure because their offering is fundamentally undifferentiated - Regulators are opening up: i.e. PSD II forces the banks to open up their data; full disclosure of insurance commissions will arrive soon - Customers don’t want to be ‘told’ anymore: they don’t come to branches anymore - buy how can advice as the key point of sales be digitized? Banks need to build up digital capabilities based on 5 pillars plus 1 enabling capability: (1) DATA-DRIVEN DIGITAL INSIGHTS - Data-driven segmentation & Value Proposition Design - 360° single customer view - Customer Experience excellence - Comprehensive data ecosystem, including 3rd party APIs (2) CUSTOMER EXPERIENCE EXCELLENCE - Customer-centric experience design & processes - Omni-channel experience delivery - Journey consistent front-to-back, end2end - Clear brand positioning & brand amplified by a purpose (3) DIGITAL MARKETING - Data-driven, real-time segmentation & cohort analysis - Data-driven customer- life-cycle management - Targeted digital (performance) marketing (4) DIGITALLY ENABLED OPERATIONS - Operations are designed to support customer journeys - Streamlined and automated fulfillment processes - Digitized sales and service interactions (5) SMART TECHNOLOGY SETUP - Scalable application architecture - Flexible IT architecture (i.e. SOA) with clear messaging - Flexible IT infrastructure (6) DIGITAL ENABLERS - Digital Talent Management - Value-driven Organisation & governance - Test-and-learn culture We feel honoured McKinsey copied this model in the following article: Cutting through the noise around financial technology, Feb 2016: http://bit.ly/1Rtz0AF

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Frankfurt, 12th of October 2016
Presented by
Stefan F. Dieffenbacher
Keynote: why are Innovations critical for
Banks & Insurances?

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Company builder helping
corporates to build up
new digital business.
Focus: revolutionary, new offerings.
About me: Stefan Dieffenbacher
Currently running two companies:
Strategy / Exeuction Advisory
focused on digital helping
corporates to take their next
step with their existing digital
channels.
Focus: evolution of existing.
Active investor through THIS IS AWESOME / private –
currently active shareholder in four additional companies & startups.
Heavy background in FS:

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Why innovation is critical in
banking & insurance

4. Digital is both a major thread
as well as a *glorious opportunity*
for Financial Services

5. The thread

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The thread: stability of large organisations is decreasing
Source: Innosight / Richard N. Foster / Standard & Poor's
Average company lifespan on S&P 500 Index (in years)
(each data point represents a rolling 7-year average of the company lifespan)

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Do you remember the world’s
largest company in 2007?

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Nokia

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The new leader: Apple.
Funnily enough, Apple is deriving most value from it’s mobile phones –
an industry Nokia previously dominated.Picture: Future Apple headquarter

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Apple has 2x as much cash as
the US Government
Source: Forbes, 2015
The new leader: Apple.

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Similar to Apple changing mobile phones,
digital disruption has turned around many industries

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The *glorious opportunity*

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FinTechs have followed a very simple pattern thus far:
they go where the money are. Especially to payments…
Source: McKinsey 2016
Customer segments and product of leading financial technology companies
in 2015, % of total

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Venture-Capital Investments in FinTech have recently accelerated.
Globally, nearly $23 billion of venture capital and
growth equity has been deployed to fintechs over
the past five years, and this number is growing
quickly: $12.2 billion was deployed in 2014 alone.
Source: McKinsey 2016
Global investments in financial technology, $ billion

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The FinTech landscape by component
Result: component-based banking
Disintermediation?
Rather “component-based banking”.
§ Ever more complex business models.
§ New players will enhance banking.
§ Banks will open their ecosystems to
play in an ever increasing complex
landscape.
Latest version can be purchased here: https://www.venturescanner.com/financial-technology

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BlockTech in Financial Services
Result: component-based banking
Disintermediation?
Rather “component-based banking”.
§ Ever more complex business models.
§ New players will enhance banking.
§ Banks will open their ecosystems to
play in an ever increasing complex
landscape.

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FinTechs in Germany
Result: component-based banking
Disintermediation?
Rather “component-based banking”.
§ Ever more complex business models.
§ New players will enhance banking.
§ Banks will open their ecosystems to
play in an ever increasing complex
landscape.

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A view on the InsureTech Market
Result: component-based insurance
Disintermediation?
Rather “component-based insurance”.
§ Ever more complex business models.
§ New players will enhance banking.
§ Insurances will open their ecosystems
to play in an ever increasing complex
landscape.
Source: Swiss Finance + Technology Association, 2016

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FinTech is a *glorious opportunity*: massive creation of value for
customers & plenty of money to be made
Source: Let's Talk Payment, December 2015
Startups attacked large players and took
market-share of these.
But also (and probably mostly!), they have
created new markets!

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Top-level: what is happening?
Klaus Schwab has summarized it well…

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A perspective on the Financial Services industry:
the amount of changes will only accelerate.
Our expectations as consumers are
set by our online experience from
services such as Facebook, Google or
Amazon
Margin pressure: banks & insurrance
by the lowest interest rates we have
seen in 2.000 years
Banks & Insurance companies are
under pressure because their
offering is fundamentally
undifferentiated
Disruption pattern: startups put
themselves in-between the
customer and the company
(i.e. check24)
User Experience is driving value in a
new way – and most startups
understand customer-centricity
Regulators are opening up: i.e. PSD II
forces the banks to open up their
data; full disclosure of insurance
commissions will arrive soon
Industry changes
leading to further
FinTech & InsureTech
investments
Customers don’t want to be ‘told’ anymore:
they don’t come to branches anymore - buy
how can advice as the key point of sales be
digitized?
Exponential technologies are driving
change; convergence of several disciplines
from software to devices to biotech

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What to do?

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Mind the chasm

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Mind the chasm –
but avoiding the realities of the markets is not a solution!
Compared to
other branches,
banks are here
This is where banks should
be

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Mind the chasm –
but avoiding the realities of the markets is not a solution!
Here is where agile happens Compared to
other branches,
banks are here
This is where banks should
be

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Everything changes depending on
whether you are working on a castle or a
speedboat type of challenge, including:
§ Org structure
§ People & their capabilities
§ Approach
§ Technology setup
§ Customer approach
§ Etc.
The remainder of this presentation will
focus on castles.
Define your starting position: are you solving a
castle or a speedboat type of challenge?
Your existing digital channels / banking
platform / products / services.
Any future innovative or disruptive
products or services.
Most castle’s (aka. large organisations) are trying to solve speedboat issues with their
castle operating procedures. That is their prime point of failure.

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The critical business needs:
Banks need to build up digital capabilities based on 5 pillars
Data—driven digital
insights
Robust analytics & BI
based on centralised
data infrastructure
Data-driven
segmentation & Value
Proposition Design
360° single customer
view
Comprehensive data
ecosystem, including
3rd party APIs
Digital Marketing
Data-driven, real-time
segmentation &
cohort analysis
Data-driven customer-
life-cycle management
Targeted digital
(performance)
marketing
Digitally enabled
operations
Operational-
excellence enablers
Operations are
designed to support
customer journeys
Streamlined and
automated fulfillment
processes
Digitized sales and
service interactions
Customer Experience
excellence
Clear brand
positioning & brand
amplified by a purpose
Customer-centric
experience design &
processes
Omni-channel
experience delivery
Journey consistent
front-to-back,
end2end
Smart technology
setup
Digital enablers
Digital Talent
Management
Value-driven
Organisation &
governance
Test-and-learn culture
Flexible IT architecture
(i.e. SOA) with clear
messaging
Scalable application
architecture
Agile delivery to
market
Flexible IT
infrastructure
The basics: security &
privacy
We feel honoured McKinsey copied this model in the following article:
Cutting through the noise around financial technology, Feb 2016: http://bit.ly/1Rtz0AF

29. THIS IS AWESOME ©2016 29
The basics: security &
privacy
Flexible IT architecture
(i.e. SOA) with clear
messaging
Scalable application
architecture
Agile delivery to
market
Flexible IT
infrastructure
The critical business needs:
Banks need to build up digital capabilities based on 5 pillars
Data—driven digital
insights
Robust analytics & BI
based on centralised
data infrastructure
Data-driven
segmentation & Value
Proposition Design
360° single customer
view
Comprehensive data
ecosystem, including
3rd party APIs
Digital Marketing
Data-driven, real-time
segmentation &
cohort analysis
Data-driven customer-
life-cycle management
Targeted digital
(performance)
marketing
Digitally enabled
operations
Operational-
excellence enablers
Operations are
designed to support
customer journeys
Streamlined and
automated fulfillment
processes
Digitized sales and
service interactions
Customer Experience
excellence
Clear brand
positioning & brand
amplified by a purpose
Customer-centric
experience design &
processes
Omni-channel
experience delivery
Journey consistent
front-to-back,
end2end
Smart technology
setup
Digital enablers
Digital Talent
Management
Value-driven
Organisation &
governance
Test-and-learn culture
Since banks are increasingly becoming IT companies, it is no
wonder that the entire list of digital capabilities is ultimately IT
driven – and thus part of the IT function!
We feel honoured McKinsey copied this model in the following article:
Cutting through the noise around financial technology, Feb 2016: http://bit.ly/1Rtz0AF

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The opportunity landscape in InsureTech
Source: Guy Weismantel, http://bit.ly/2d9jSiW
Source: Startup Bootcamp Insurance London, 2016

31. We understand the points of focus as banks &
insurance companies.
But how do we execute?

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1. IT needs a fitness program
Data—driven digital
insights
Robust analytics & BI
based on centralised
data infrastructure
Data-driven
segmentation & Value
Proposition Design
360° single customer
view
Comprehensive data
ecosystem, including
3rd party APIs
Digital Marketing
Data-driven, real-time
segmentation &
cohort
Data-driven customer-
life-cycle management
Targeted digital
(performance)
marketing
Digitally enabled
operations
Operational-
excellence enablers
Operations are
designed to support
customer journeys
Streamlined and
automated fulfillment
processes
Digitized sales and
service interactions
Customer Experience
excellence
Clear brand
positioning & brand
amplified by a purpose
Customer-centric
experience design &
processes
Omni-channel
experience delivery
Journey consistent
front-to-back,
end2end
Smart technology
setup
Flexible IT architecture
(i.e. SOA) with clear
messaging
Scalable application
architecture
Agile delivery to
market
Flexible IT
infrastructure
Digital enablers
Digital Talent
Management
Value-driven
Organisation &
governance
Test-and-learn culture
We feel honoured McKinsey copied this model in the following article:
Cutting through the noise around financial technology, Feb 2016: http://bit.ly/1Rtz0AF
IT needs a “fitness
program” to enable banks
to support future
strategies.
Any strategy is useless
without the fundamental
ability to execute.
Banks typically have two
major concerns:
§ Speed of IT (due to the
weaknesses in their IT
setup – see left)
§ Weaknesses in
developing value-driven
roadmaps

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2. Existing tools are not ideal to prepare for value-driven
prioritization and execution
Startups: the Business Model Canvas nor related models do not
explain how to translate to execution.
Corporates: Difficult to orchestrate and integrate corporate & IT-
Strategy.
1. Introduction
2. Basic Challenges
a. Growing customer needs
b. Regulatory requirements
c. Competitive & cost pressure
d. Digitizing of the environment
e. IT risks and IT security
3. Effects of the challenges on the IT strategy
a. Standardization, sourcing, scalability
b. Integration architecture and innovation
c. Complexity reduction (IT has grown historically)
d. Information security & privacy
e. Handling it innovations
4. Dealing with the challenges
a. Objective dimensions of it
b. Portfolio training in it and orientation of portfolio
5. IT norming strategies
a. Standard
b. Non-Standard
6. Division specific areas of action and transformation
a. Transformation of the bank
b. Private customers
c. Corporate customers
d. Financial markets
e. Comprehensive bank controlling
f. Credit processes
7. IT specific fields of action
a. IT governance
b. Changes in sourcing model & reducing the vertical integration
c. Continuous development of IT functions
i. Increasing the maturity of requirements management
ii. Increasing the maturity of Project Management
iii. Increasing the maturity of Architecture Management
iv. Increasing the maturity of control functions
v. Increasing the maturity of provider control
vi. Increasing the maturity of Innovation Management
vii. Increasing the maturity of Application Development & integration
viii. Increasing the maturity of Information Security Management &
Data Protection
d. Establishment on an IT group
e. Integration of business critical event-management
f. Authorization management
g. Talent Management
h. Processes and method
i. IT risk management
8. Measurability of the IT-strategy
a. IT costs
b. IT architecture management
c. Human resource development
d. IT operations
e. IT projects

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2. Value-focused conversations
Data—driven digital
insights
Robust analytics & BI
based on centralised
data infrastructure
Data-driven
segmentation & Value
Proposition Design
360° single customer
view
Comprehensive data
ecosystem, including
3rd party APIs
Digital Marketing
Data-driven, real-time
segmentation &
cohort
Data-driven customer-
life-cycle management
Targeted digital
(performance)
marketing
Digitally enabled
operations
Operational-
excellence enablers
Operations are
designed to support
customer journeys
Streamlined and
automated fulfillment
processes
Digitized sales and
service interactions
Customer Experience
excellence
Clear brand
positioning & brand
amplified by a purpose
Customer-centric
experience design &
processes
Omni-channel
experience delivery
Journey consistent
front-to-back,
end2end
We feel honoured McKinsey copied this model in the following article:
Cutting through the noise around financial technology, Feb 2016: http://bit.ly/1Rtz0AF
We need a smart dialogue
across business, IT and
Marketing how these fields
integrate and how these need
to be managed.

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2. We need one common & simple language between IT & business:
Customer Journeys enhanced with their implications are an ideal means to this end
Customer Action
Front-end
Backend
Support processes
Interaction with
Bank personnel
1 2 3 4 5
We need a simple and value
focused tool both IT and
business understand
The customer journey is ideal:
§ Almost all bank processes are
driven by customers
§ With very few customer
journeys, 90% of the value-
functions of the bank can be
mapped
The customer journey needs to
be enriched with system and
staff interactions

36. Thank you.

37. THIS IS AWESOME ©2016 37
Let’s create winning digital businesses –
together
Achieve digital transformation. Develop independence.
Create profit. And design the future.