Technology, regulations and consumer expectations are disrupting the banking industry. "Banking will always be needed but banks as we know them may cease to exist: - Bill Gates

1. #DisruptingBanking
by Ziad Awad
HowTechnology, Regulation and Market Forces are Disrupting Banking
and creating new winners in Financial Services

2. About the speaker: Ziad Awad
 CEO of Awad Capital Ltd., a Dubai based, DFSA regulated
financial services firm specialising in M&A, Corporate Finance
and the Capital Markets. Founded in 2013.
 Previously worked with Goldman Sachs, Merrill Lynch and Bank
of America for 18 years in Paris, London and Dubai
 Started career in 1993 as a Fixed Income trader with Goldman
Sachs and participated in the Electronic Commerce revolution
that took place in Europe in the early 2000’s
 Was Board Member and Executive Director of MTS Associated
Markets, an ElectronicTrading platform, between 2004 and 2006

3. What is disrupting banking?
 Regulators
 Technology
 Market Forces
 Customers Expectations

4. What do customersWant ?
 “Good Service”
 Attentive
 Fast
 Understanding
 Cost efficient service
 Why pay a bank for a transfer if it can be done by email?
 Access to products and services
 Many potential customers are being excluded by the system

5. What is Banking ?
The Banking Pyramid
Advising
Investing
Trading
Advising
Proprietary
Investing in
companies
Trading financial
instruments
Underwriting Stock and Bonds
Issuance by corporates
Lending to riskier corporates including
SMEs
Lending to Prime Households,Governments
and Corporates
DepositTaking
Underwriting
HY Lending
HG Lending
Deposits

6. What is Banking ?
How it used to be done – One Stop Shop
Investment Banking
Division
Principal
Investments, Private
Equity , AM
Global Markets
Division
Capital Markets
Division
Commercial Banking
Division
Corporate Banking
Division
Retail Division
Advising
Proprietary
Investing in
companies
Trading financial
instruments
Underwriting Stock and Bonds
Issuance by corporates
Lending to riskier corporates including
SMEs
Lending to Prime Households,Governments
and Corporates
DepositTaking

7. What is Banking ?
The trouble with the One Stop Shop
IB
Division
Principal
Investments
Global Markets
Division
Capital Markets Division
Commercial Banking Division
Corporate Banking Division
Retail Division
Conflicts
Access to capital
Pricing
Pricing and Quality of
Service

8. What is Banking ?
The Alternatives to the One Stop Shop
Investment Banking Division
Principal Investments, Private
Equity and
Asset Management Divisions
Global Markets Division
Capital Markets Division
Corporate Banking Division
Corporate Banking Division
Retail Division
Boutique Investment Banks
Private Equity Funds, Independent
Asset
Managers, including Hedge Funds
Hedge Funds
IndependentAdvice + Direct
Placement
Non-Bank Lending – SMEs and High
Yield
Non-Bank Lending - High Grade
Online Deposit,Transfer and
Lending

9. Who will be the winners and losers?
The One Stop Shop model is the big loser
 Regulatory pressure to separate and spin-off non-banking
activities
 Governments do not want another bailout
 Cost of Capital makes lending and trading very expensive
 Significant reduction in risk appetite
 Political pressure on compensation structures accelerates
the brain drain

10. TheWinners are seeing rapid growth
Fintech is revolutionising retail banking
Picture credit: TransferWise Blog
 “Banking will always be needed
but banks as we know them could
easily disappear” – Bill Gates
 2,000 bank branches closed in the
UK over the last decade
 A multitude of digital money
transfer platforms are emerging,
effectively cutting the cost of
transfers close to zero
 Square Cash,Venmo, Paypal,
TransferWise …

11. TheWinners are seeing rapid growth
Non-Bank Lending is exploding
 Non-Bank lending in the US is just above 50% of total
lending
 In Europe the proportion is still closer to 25%
 Technology is a huge enabler of non-bank lending
 Allows lower cost and more efficient connection of lenders and
borrowers
 A variety of winners will emerge, including credit funds,
peer-to-peer lending, social lending etc.
Picture credit: Graham Rowan Blog
A variety of winners will emerge,
including credit funds, peer-to-peer
lending, social lending etc.

12.  Beyond their success at managing money and generating
returns, Hedge Funds are also increasingly taking the role of
liquidity providers as Banks’ risk appetite reduces
TheWinners are seeing rapid growth
Hedge Funds are becoming mainstream
-0.25
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
'90 '95 '00 '05 '10 '14
Estimated assets
Net asset flow
Hedge-fund assets have grown sharply since the early 1990s
Values in $ trillion
Source: Hedge Fund Research

13. TheWinners are seeing rapid growth
Private Equity AUMs at a record highs
418 374 360
465 554
675
898
1,265 1,204
1,413
1,783
2,029
2,332
2,546
2,644
0
500
1,000
1,500
2,000
2,500
3,000
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Jun-14
All Private Equity: UnrealizedValue, 2000 - 2014
Source: Preqin Performance Analyst
UnrealizedValue($bn)

14.  9 out of the top 20 advisers on M&A in the US in 2014 were
independents, versus 5 in Europe
TheWinners are seeing rapid growth
The big come-back of the M&A boutiques
United States Announced Deals
(Any Involvement)
2014
(1/1/14 - 12/31/14 )
Firm Rank
MKT
Share
Volume
USD (bn)
Goldman Sachs & Co 1 33.8% 655.0
Bank of America Merrill Lynch 2 25.7% 496.8
JP Morgan Chase & Co 3 25.1% 486.2
Citigroup Inc 4 22.9% 444.8
Barclays PLC 5 22.2% 429.2
Morgan Stanley 6 22.1% 427.9
Lazard Ltd. 7 15.8% 305.1
Deutsche Bank AG 8 11.6% 224.6
Centerview Partners LLC 9 11.5% 222.2
Credit Suisse Group AG 10 11.3% 218.6
Evercore Partners Inc 11 5.5% 106.5
UBS AG 12 5.1% 99.6
Jefferies LLC 13 5.1% 99.5
Allen & Co Inc 14 4.6% 89.0
RBC Capital Markets 15 4.1% 79.7
Wells Fargo & Co 16 4.0% 77.5
Perella Weinberg Partners LP 17 4.0% 76.9
PJT Capital LP 18 3.9% 75.7
Rothschild Ltd 19 2.8% 54.1
Greenhill & Co Inc 20 2.3% 43.6
Total $1,937.0
Europe Announced Deals
(Target or Seller)
2014
(1/1/14 - 12/31/14 )
Firm Rank
MKT
Share
Volume
USD (bn)
Morgan Stanley 1 29.7% 268.4
Goldman Sachs & Co 2 29.3% 265.2
Lazard Ltd. 3 23.9% 216.3
Deutsche Bank AG 4 23.2% 210.4
Bank of America Merrill Lynch 5 19.1% 172.6
JP Morgan Chase & Co 6 18.4% 166.9
Rothschild Ltd 7 16.6% 150.3
Credit Suisse Group AG 8 15.8% 143.1
Citigroup Inc 9 15.6% 141.5
Barclays PLC 10 15.3% 138.3
BNP Paribas SA 11 13.1% 118.6
UBS AG 12 9.0% 81.2
Societe Generale SA 13 8.5% 76.7
HSBC Bank PLC 14 7.6% 68.7
Credit Agricole Corporate & IB SA 15 6.3% 56.6
Centerview Partners LLC 16 5.6% 50.9
Perella Weinberg Partners LP 17 4.3% 39.1
Zaoui & Co LLP 18 4.1% 37.5
Ernst & Young 19 3.2% 29.0
Banco Santander SA 20 2.3% 20.3
Total $905.3
Includes Mergers, Acquisitions, Divestitures, Self-tenders and spinoffs. Excludes Open Market Transactions;
Total Volume represents all announced transactions in US$ billions
%