This is the presentation for a talk I gave recently to a group of managers from the Nordic-Baltic bank SEB, seeking to highlight some of the threats from FinTech startups, but also some of the assets that banks have to fight the new challengers. I argue that the new competition is different and dangerous, but that banks that leverage their strengths will be able to compete and even build new revenues and business models to be highly successful.
Q2 2024 APCO Geopolitical Radar - The Global Operating Environment for Business
Banks under attack: Presentation to SEB Bank Baltics management about the #FinTech revolution
1. Banking Under Attack
Startups that want to eat your business ….
and what you might do to avoid it.
1
Andris K. Berzins
April 2015
Image copyright of Home Box Office Inc.
2. Who is Andris K. Berzins?
• MBA
• Consultant
• Entrepreneur
• Investor
• Advisor
• Volunteer
• NOT a banker
6. Personal identity device
• The smartphone will
become THE identity
device
• Viability driven by security
improvements
• Improved authentication
• Device locking on theft
• NFC and Bluetooth for
micro-location
7. Low trust in banks
“to do what is
right” dropping
even further…
… while technology
companies enjoy
very high trust.
0%
20%
40%
60%
80%
2009 2014
71%71%
29%
34%
Banks
Technologycompanies
Source: Edelman Trustbarometer 2014 survey (EU)
Less trusted
%ofEUconsumerstrustindustryto“dowhatisright”
8. Share of consumers
using mobile apps
rose 19% globally
2013-14
Making every
interaction ever
more important
Less face time
Source: Bain report on banking customer loyalty (2014)
9. Expectations of
speed of service
and delivery are
different
Especially among
younger
consumers
Consumers want it now
10. The competition
is different this
time round
Includes large
technology
companies and
hungry startups
Fresh competition
11. Person-person
micropayments are
evolving rapidly
Using smartphone and
phone number as identity
device is critical for this
application
Venmo & Monea
Often deployed as a layer
over traditional banking
system - innovation is in
user experience
12. Technology and big data
has pulled an industry out
of the shadows and into
the light
Even with heavier regulation
and censure, Wonga profit
in 2013-4 was 12.4%
Payday & consumer
micro-loans
These services often target
the “under-banked”, a
separate customer segment
13. Rethinking the banking interface for small
businesses & collaborative organizations
Holvi
14. Person-business loans enabled by big data
Bondora & Mintos
Offers retail investors diversified loan portfolio
with attractive rates
15. More mature US market shows where part of
competitive advantage lies - in lower costs
Bondora & Mintos
These new players
are able to “outsource
compliance” and take
advantage of “start
from scratch” cost
base
But primary customer
benefit is SPEED OF
DECISION
Source: Goldman Sachs Future of Finance report, March 2015
Cost advantage merely
allows profitability at
much lower volume
16. Social network-enabled, pre-production,
viral, pre-paid product funding
Combines market
testing of innovations
with financing of
production
Crowdfunding
For vendor this is
unsecured financing for
first run manufacturing
Inherent network effects
drive success of funding
campaigns
19. Traditional banks have
some distinct
competitive advantages:
• Big data
• Customer service
organization
• Branch networks
• Low funding costs
Play to your strengths
20. • Fraud prevention
• Account relationship management and awareness
• Spot issues related to corporate changes, market
conditions
• Enhance customer relationships through positive
interactions
• Proactive churn prevention
• Analysis of historical pre-churn behavior can enable
warning and prevention service to be deployed
• New income streams
• Advisory services for retailers using consumer
spend data to improve retail locations and
advertising targeting
Big Data Opportunity
21. Use your well-trained customer
service staff but make sure they
are empowered to make
decisions to help clients
Branch visits are opportunities
to WOW the customer and
sell new products
Customer Service & Branches
Look for opportunities to make
the service more convenient by
allowing clients to avoid branch
visits if they wish
Even simple stand-alone
technologies like Qminder can
change the customer experience
22. The adoption of Bluetooth low
energy beacons by the Apple
and Android ecosystem brings
huge opportunities
The mobile and physical
experiences can now be brought
together at a micro-location level
The iBeacon Opportunity
Think automated VIP priority
queues, reinvention of the ATM
experience, instant electronic
document delivery…
23. Risk-taking is generally
not rewarded in banking
careers, to say the least
But taking risks is essential
to tackle the new
competitive reality
Take more risks
Need to fund small risks,
expand what succeeds
Need to change reward
mechanisms and culture to
encourage risk-taking and
tolerate failure
24. Many new financial products may do better launched
under a distinct brand
Think multiple brands &
geographies
Banks may need to cannibalize their own products
before competitors do, and better to do that under a
separate brand
Smaller country banks need to take advantage of
licenses that allow them to sell financial products all
over the EU, this is a great opportunity
25. Andris K. Berzins
+371 29568157
www.akberzins.com
akberzins@gmail.com
Questions & Discussion