Today’s banking industry has moved beyond a ‘digital technology on the side’ way of thinking. The world’s leading financial service providers are mobilizing their entire organizations on a journey to become digital to the core: truly digital-first.
8. Digital Disruption - Serious Impact
Market share
Time
Incumbent
business models
New Digital
Business models
Incumbent
business
models are
threatened
9. Digital Transformation - Where are we with Banking?
Market share
Time
Incumbent
business models
New Digital
Business models
Incumbent
business models
are threatened
Banking
Today?
27. Scaling: Value Aggregation at Speed
Feb 2016
International
transfers
Transferwise
Feb 2016
Investment funds
Dimensional Fund
Advisors
May 2017
Term deposits
WeltSparen
Jun
2017
Insurance
Clark
Dec
2017
Consumer credits
Younited Credit
Savings
accounts
Raisin
Personal loans
Lending Works
Mar 2017 Pensions
Pension Bee
May 2017
Travel
Insurance
Thomas Cook
Jan 2018
Mobile
Insurance
Alianz
Oct 2017
30. Scaling: Goldman Sachs Marcus
986528148
Number of months to $1B in total personal loans issued
Marcus by Goldman Sachs vs. select lending platforms
31. Scaling: Goldman Sachs Marcus
Progress since launch (2016)
~2mm
Customers
$4bn +
Loans Originated
$29bn +
Deposits
40. Game Plan 1
Digital Front-End
Digital Banking InterfaceCore Systems
Game Plan 2
Greenfield BankNew Digital BankLean Core
Game Plan 3
Value AggregatorLean Value Aggregator
FinTech Providers
FinTech Providers
Other Industries
Customer Digital FirstFinTech Providers
Other Industries
Game Plan 4
Digital Transformation
Reduce Core
Backbase: Business Model Agility
45. DBS: Superior Returns from Digital
2017 Profit and Loss (S$bn)
Customers (m)
Income
Costs
Profit before allowances
Key Indicators
Income per Customer (s$’000)
Cost-income Ratio (%)
Return on Equity (%)
T
3.6
2.0
1.1
0.9
T
0.6
55
19
D
2.3
3.1
1.1
2.0
D
1.3
34
27
Total
5.9
5.1
2.2
2.9
T
0.9
43
24
Digital is material
39% of customers contribute
60% of income and 68% of
profit before allowances
Digital is more valuable
2X income per customer
20pp lower CIR
8pp higher ROE
47. DBS: Digital Customers - Lower Acquisition Costs
DBS Investor Report November 2017
-43%
Traditional Digital
Consumer Banking
-54%
Traditional Digital
SME Banking
48. DBS: Digital Customers - Higher Engagement
Online
Offline
Traditional Digital
16X
DBS Investor Report November 2017
Consumer Banking
Traditional Digital
6X
SME Banking
49. DBS: Digital Customers - Higher Income
Income per Customer Consumer Banking
(2017)
1.6x
2.6x
3.4x
2.2x
1.5x
Other lending
Credit Cards
Mortgages
Wealth
Deposits
2x
DBS Investor Report November 2017
Traditional Digital
50. DBS: Digital Customers - Higher Income
Income per Customer SME / Corporate Banking (2017)
DBS Investor Report November 2017
3.6x
2.3x
3.2x
1.4x
Treasury
Trade Finance
Cash Management
Loans
Traditional Digital
2x
51. Traditional Digital
Higher Income / Customer
Higher Profit / Customer
Higher Cost-to-serve (absolute)
Profit
Costs
Revenue
DBS: Digital Customers - Higher Income & Lower Cost
52. DBS: Low Cost/Income Ratio
45%
2015
43%
2017
<40 %
Aspiration
Singapore / Hong Kong
India, Indonesia, …
30%
DBS Investor Report November 2017
55. Game Plan 1
Digital Front-End
Digital Banking InterfaceCore Systems
Game Plan 2
Greenfield BankNew Digital BankLean Core
Game Plan 3
Value AggregatorLean Value Aggregator
FinTech Providers
FinTech Providers
Other Industries
Customer Digital FirstFinTech Providers
Other Industries
Game Plan 4
Digital Transformation
Reduce Core
Backbase: Business Model Agility
65. Design Sprint
PROTOTYPING
Building Minimal
Viable Product
Running the
Pilot
EXPERIMENTS
Pivot/Persevere?
DEFINE
EMPATHIZE
LAUNCH
Roll-out and
Scale Up
BUILD
LEARN MEASURE
Product
Market Fit
Business
Model Fit
LEARN
MEASURE
BUILD