GUEST LECTURE AT NMIMS by NIRAJ VAIDYA : 1st part of the Fintech course. Topic name Context of Technology landscape

2. Acknowledgement
and Disclaimer
All the material in this deck is been prepared using resources published on public
domain by various subject matter experts, Technical and domain experts and visual
presentation experts. The deck is a collection of information published on
web/internet sites, blogs and informative portals and it is prepared purely for
educational awareness perspective with not for profit motive. I do not claim any copy
right or ownerships IP whatsoever for any of the slides.

3. Impact of Fintech
on Incumbents
Player 1 : Banks and established Financial Services Companies(Incumbents)
Player 2 : Fintech companies
The game is set…
Wildcard Entry: ‘TechFin’ or ‘Big tech’ in our lives
(Big daddy’s – Google, Facebook, Apple, Amazon)

4. https://www.visualcapitalist.com/a-visual-history-of-the-largest-companies-by-market-cap-1999-today/
By Market Capitalization…

5. By Overall Forbes Ratings…
https://www.forbes.com/global2000/list/#tab:overall

6. And Largest Fintech in the world ?

8. Evidence : Technology is Changing Business Faster than ever
89%
Of S&P 500 companies of 1955
Is GONE in 20141955 2014

9. Evidence : Technology is Changing Business Faster than ever
52%
Of S&P 500 companies of 2000
Is GONE in 20142001 2014

10. Evidence : Technology is Changing Business Faster than ever
2001 2014
52%
Of S&P 500 companies of 2001
Is GONE in 2014

11. Financial Services
17% of Global GDP

12. <1%
Loans Originated
Online(US loans data)

13. 30% Of Bank’s workforce is
Operations and Compliance Staff

14. 3 Billion
NEW Smartphone users by 2020

15. 702 Million
Smartphone Users In India Will
Account For 85% Of Mobile Data
Traffic By 2020
Source: news headline

16. That’s 54% demographic of India turning
Digital Natives

17. Transforming Culture
Transforming Legacy Systems

18. By the way 71% of American millennials say they would rather go to the
dentist than listen to what banks are saying
How do I attract talent among millennials and tech
wizards to work for my bank
- A bank CEO’s challenge

20. "Silicon Valley is coming"
JPMorganCEO Jamie Dimon warned in his annual letter to the shareholders.
"There are hundreds of startups with a lot of brains and money with a lot of brains and
money working on various alternatives to traditional banking," Dimon wrote. "They are
very good at reducing the 'pain points’”.

21. Imagine the difference here.
Is it the People, Backend Systems and Technology platforms,
Age, Market Segment or the DNA ?

22. Understanding
Disruption
(From a typically disrupted industry)

23. Born : 1997
Business : Entertainment (Internet Streaming)
Claim to fame : 100 Million Subscribers
in 50 countries, two billion hours of
TV shows/movies per month.
Personality : Customer Obsessed
Superpower : Data Analytics and AI

24. Netflix was at a crucial juncture after launching
online streaming services in 2013.
They desperately wanted a smash hit

25. Netflix spent $100 million based on a
prediction based on data analytics.
(& it was a Smash hit exactly as predicted !)
• Data generated from over 40 million “plays” a day.
• Record of every time subscriber’s pause the action, rewind, or fast-
forward.
• They track how many subscribers abandon a show entirely after
watching for a few minutes.
• In addition they track the time of day when shows are watched, and on
what devices they are watched on.
• Co-relation of this data with account data
• Verified personal information (sex, age, location)
• Preferences (viewing history, bookmarks, Facebook likes)
• Recommendation and repeat viewing habits
• Content creation using data analytics and AI – and more

26. The result
House of Cards is the most streamed piece of
content in the United States and 40 other
countries, according to Netflix.
It is rated 9.1/10 from 180,816 users at IMDB.

29. Becoming big data company first
(& happens to use this to entertain us)

34. Imagine the difference here.
Is it the People, Backend Systems and Technology platforms,
Age, Market Segment or the DNA ?

35. Globally Banks Spend so much on IT
https://www.celent.com/insights/964486482

37. $ 76 Trillion
$ 4 Trillion
$ 13 Trillion
$ 0.3Trillion
17%
7.5%
Worldwide GDP v/s Banking Revenue
Worldwide IT Spending v/s Bank’s IT Spending

38. Spent on innovation
38
25%
75%
Spent on maintenance,
integration, and routine tasks
Unfortunately…
Source: “Debunking Two Myths About Tech Budgets,” Forrester Research.

39. Banking has a legacy
Many Banks have more than 25
years old technology infrastructure.
Technology Debt continues to pile up
• Average age of IT Equipment in banking industry
is up to 15% to 25% - especially the backend
systems.
• Average of 75% of the budget is spent on
maintaining status quo.
• Security and Compliance adding costs and stress
• Cyber vulnerability is increasing many fold.

40. Kodak’s
downfall
wasn’t about
Technology
Remember Kodak Moment ?

41. May be, its not just that…

42. Rapid Rise of new Business Models

43. Typical Disruption Cycle across other industry
Source: McKinsey

44. 12,000 companies
$ 50 billion in value
10x over 5 year time

45. HALF OF BANKING
CUSTOMERS
GLOBALLY ARE NOW
USING FINTECH
FIRMS
(Capgemini Report)
Research also found that 46% of customers are
using services from more than three fintech
providers.

46. Understanding the
Eco system in INDIA
Government and voluntary organizations
Regulators
Banks and Financial services providers
Fintechs
How they Impact each other..
How they encash each other..

47. 1 Billion in 5 ½ Years

48. Evolution of the India Stack built on JAM

49. The INDIA Stack
Owner: Reserve Bank of India
Owner: National Payment
Corporation of India (NPCI)
Owner: Department of
Electronics and IT
Owner: Unique Identification
Authority of India

50. Why is the India Stack disruptive

51. Innovation driven and progressive Regulation

52. Fintechs in India across Segments

53. Some are at early stages of adoption,
some have wide acceptance

54. https://www.cbinsights.com/research-unicorn-companies
• Snapdeal
• OYO Rooms
• OLA Cabs
• ReNew Power Ventures
• Hike messenger app
• Swiggy
• Shopclues
• Zomato
• InMobi
• Quikr
• BYJU’s
• UDAAN
Our Unicorns and Soonicorns!

57. Payments in India
Deserves a very special mention
Everybody is a winner…
(Customers, Regulators, Incumbents and FinTech)

60. Devices based, Paperless, Instant Payments

61. Merchant Enablement

62. Segment Attributes Services Required Approach
Rural
• Migrant Labor
• Farmers
• Small Shops
Urban
•Unbanked
• Not Smart-phone savvy
• Transact in small amounts
• Need assurance of a physical
outlet/agent
• Financial education required
• Cash-in and Cash-out
• Funds Transfer
• Small Savings
• Utility Payments
• DBT (Aadhaar based subsidies)
• Take the bank to customers
• Invest in development of a
geography/community
Urban
• Housewives
• Students
• Low-income
Households
• Smart phone savvy
• Cash averse
• Convenience and frictionless
banking
• One-stop payment solution for all
recurring and ad-hoc payments
• Savings Inducing and Financial
education for children
• Nuclear families (DISKs)
• Payments (NEFT, IMPS)
• Wallet
• Utility Payments
• DBT (Aadhaar based subsidies)
• Spend Analysis and Budgeting (PFM)
• Rewards (Cashback, etc.)
• Goals
• Insurance, MF (SIP)
• Digital acquisition – self service
• Focus on building the ecosystem
Payments for everyone : Rural/Urban diversity

63. Transactions
are already
moving away
from banks

65. Online Financial services* to be 4x the
size of the market existed in 2014

69. Unique Vectors at play

70. Confidential – Oracle Internal/Restricted/Highly Restricted 70
Pressure points on the Incumbents
Margin erosion
Fintech / Non-bank
competition driving down RoE
Geo-Political Uncertainty
Brexit / Trade war / Russia
requiring tight/integrated risk
mgmt.
Cost Efficiency
Cost of running legacy bank, rising
CER, -ve JAWs
Crisis 2.0 Threat
Consumer credit bubble /
corporate debt / Interest Rates,
China slowdown
AI / Machine Learning
Data driven decisioning and
automating people from
repeatable tasks
Distributed Ledgers
Shared systems of record and
smart contracts
User Experience
Omni/Cross Channel, VR/AR,
Robo Assisted channels, Bots,
Wearables
Immediacy
Real Time, Straight Through
Processing, Intra day
processing
Market
Pressures
Technology
Getting ahead
Of
Business
Increasing Regulation
Further reaching / cross
function regulation e.g. Basel 3
Business
Survival
Digital Depth
Front to back digitization
beyond a channel veneer
Customer at Centre
Journey designed around the
customer
Business Model
Externalization
Novel sourcing / as a service
models / JV models
Open Banking
Coopetition with peer banks,
Startups and Fintech
Next gen workforce
Creating a liquid workforces
Agile structures, turning HR
into banking business partner
Cloud
Secure, elastic and automated
compute democratizing
banking

71. • Digital Depth
• Customer Centricity
• Platform / Open Banking
• Ecosystems (Fintechs and Techfins)
• Beyond Banking
• Distributed Ledgers & The
Blockchain
• Robotics & AI
• Revised Financial Services
Workforce
• Service Externalization & Utility
Models
• Banking Regulation
Financial Services Megatrends

72. The Potential