This document discusses the transformation of banking through technology. It notes that traditional banking systems are complex, inflexible and costly, while new digital entrants are providing a better customer experience. It argues that banks need to adopt new paradigms like standardized applications and APIs, flexible processes, and an industrialized infrastructure to better meet customer needs and compete in the digital age. The future of banking lies in becoming more customer-centric, digitally-enabled and adaptable to changing technologies and business models.

1. Banking Reloaded
http://www.FrankSchwab.de
by Frank Schwab

2. “A computer in every home.”
Bill Gates as a teenager

3. "There is no reason
anyone would want
a computer
in their home.“
Ken Olson,
president, chairman and founder of
Digital Equipment Corp., 1977

4. Sir Winston Leonard Spencer-Churchill
It is difficult to make
predictions,
especially about the
future

5. “We need banking,
no banks”
(1999)

6. Number of US Banks
Source: FDIC
1990 20112000
16,000
8;000

7. Number of German Banks
Source: Deutsche Bundesbank
1990 20112000
0
2,000
4,500

8. Why?

9. Regulation
SolvV
SOXAML
Basel II
Basel III
Basel I
MiFID II
Dodd Frank
FATCA
MiFID I
SEPA

10. Security
Product
Pricing
Decision
Contract
Account
Customer
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Retail Loan
Internet
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Customer
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Retail Loan
Branch
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Client
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Corporate
Loan Branch
CRM
Security
Product
Pricing
Decision
Contract
Account
Client
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Corporate
Loan Internet
CRM
Security
Product
Pricing
Decision
Contract
Account
Customer
Dealer
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Consumer
Loan Extranet
CRM
Product
Pricing
Decision
Contract
Collaterals
Account
Contact
Recovery
Transaction
Output
Archiving
Booking
Position
Identity
Customer
Retail Mortgage
Branch
Products are implemented
redundantly and
inconsistently across
product lines and channels
Example: Credit systems landscape

11. IBM Mainframe
Sun Server
Intel blade
Tandem
Thin clients
Fat clients
AIX Server Server FarmAny technology
of each and every decade

12. Complex

13. Complicated

14. Unproductive

15. Inflexible

16. Cost inefficient

17. Need to transform

18. (Q1/2013)
Some current
research on CORE

21. Current
CBS transformations
often introduce
old technology

22. Banks keep the
status quo

27. Traditional Banks

28. “The future is always
here
- it’s just not evenly
distributed yet.”
- William Gibson, Fiction Novelist

30. 17 Million Customers in Kenya
40,000 Safaricom Agents
New: Deposits and Loans

31. 2000 2003 2007

32. Design + Functionality + User centric = Life style

33. 2011 20162012 2013 2014 2015
662 Mn
> 4 Bn
Source: Cisco, 2012
Number of internet capable mobile devices

34. 72% Watching TV
Playing
Video Games
Listen to
music
Reading
newspapers
Reading
books
Internet
Smartphones are used always and everywhere
Source: Market Simplified

35. Digital Natives

38. Price
Coverage
Benefits
Bandwidth
Convenience

39. If I had asked people what they wanted,
they would have said faster horses.
Resistance To Change Falls For Benefits

40. Market share affluent bank customers
Branch
1990 2020
Mobile
?
2005
Internet

41. Attacker

42. Trust
Loans
Transformation
Investments
Payments
Customer

43. Trust
Loans
Transformation
Investments
Payments
Customer

47. Trust
Loans
Transformation
Investments
Payments
Customer

50. Trust
Loans
Transformation
Investments
Payments
Customer

53. Trust
Loans
Transformation
Investments
Payments
Customer

55. Trust
Loans
Transformation
Investments
Payments
Customer

56. Square
>2 Million User
>6 Bn USD

60. Wants to
co-create
products
Expects
better user
experience
Inform
themselves
online
Trusts in
advice of
peers in
online forums
Uses social
media to
communicate
Buys
online
The
New
Customer

61. Customer
experience

62. Where are
the banks?

63. Non-banks and
attackers make
the speed

64. Customer
Payments
Brokerage
Loans
Deposits

65. Banks need to
speed up

67. What can we
think of?

69. Car dealership
Location-based
services

70. Own home
Top Desire

73. R I P

74. Banks need to be close
to customer dreams

77. Context Banking
Next
You are looking for
your own home?
We can help to
make your dream
come true.

78. Scan

80. 18 €
53 €
5 €
12 €
17 €
23 €

82. New
Paradigms
Towards
Banking IT

83. IT Intensity

84. IT costs per user per year in USD
200
Tier 1/2 Bank Google
3.4
Facebook
3.8
eBay
7.4

85. Source: eBay, April 2013
1 GB Commodity RAM = 19 USD 128 MB Mainframe RAM = 249 USD
Factor 100

86. Cost comparison
- 75 % Cost reduction potential

87. Google

88. The OPEN Compute Project

89. Infrastructure High variety
Industrialized
& Low Cost
New Paradigms in Banking IT

90. Apple

91. BIAN service descriptions
Standardisation

92. Application
Applikation
centric
Infrastructure High variety
Industrialized
& Low Cost
New Paradigms in Banking IT
Apps & Standard

93. Relational
data bases
Horizontal
scalability
{ }
{ }
{ }
A new approach towards data
bases will make the difference

94. Processes Fix coded Flexible
New Paradigms in Banking IT
Infrastructure High variety
Industrialized
& Low Cost
Application
Applikation
centric
Apps & Standard

96. Elektronic fileBusiness
standardisation
Detailed key
performance
indicators
Fully automated
decision
Automated
assignment of
documents to
business processes
Industrialisation:
Think and work in
processes
Example: Loan factory

98. Processes Fix coded Flexible
Products Functional User
oriented
Infrastructure High variety
Industrialized
& Low Cost
New Paradigms in Banking IT
Application
Applikation
centric
Apps & Standard

100. Experience based front end development
http://www.moven.com

101. Products User
oriented
Processes Flexible
Infrastructure
Industrialised
& Low Cost
Applications
Apps &
Standards
New paradigms in Banking IT

102. Outlook

103. “The future is always
here
- it’s just not evenly
distributed yet.”
- William Gibson, Fiction Novelist

104. # Web APIs
2000 2005 2013
>10.000
0
programmable web

106. Bank API

108. Store
Platform
Open
SAP
Oracle
IBM
...
Modules/Apps

109. overrated
underestimated
Gartner Hype Cycle

110. Success = 1% inspiration + 99% perspiration

111. Do you want to learn more?
Frank@FrankSchwab.de
http://www.FrankSchwab.de