Lessons from FinTech: Innovators & Disruptors

VIEWS FROM BANKERS,
DISRUPTORS & INNOVATORS
Mike Horrocks – Baker Hill
Elizabeth Crawford – Emprise Bank

Confidential & Privileged DocumentConfidential & Privileged Document
New competitors and the raid on clients
Percent of market share that full-service banks in North America
could lose to new digital competitors by 2020
35%
Source: Accenture, 2016 – Includes consumer, small business and commercial accounts

What are your top strategic priorities?
71%
50%
41%
26%
22%
22%
20%
18%
14%
10%
Redesign/enhance the digital experience
Enhance analytics capabilities to identify…
Find ways to reduce operating costs
Increase investments in innovation
Meet regulatory and compliance…
Update/replace components of a legacy…
Recruit/retrain talent to meet changing…
Changing core business processes
Improve components of security and…
Invest in and/or partner with alternative…
Source: Financial Brands, 2017

Top challenges in commercial banking
1. Escaping the commodity sale
2. Operational excellence in the digital age
3. Disrupting within the bank
4. Business growth through actionable insights
5. Changes in customer expectations

1. Escaping the commodity sale
Features
Local Expertise Years of
Experience
“The right financing
tools can streamline
your cash flow.”
“Our decisions are
made locally and are
tailored to the needs of
your business.”
“[Our bank] offers local
expertise in all aspects
of…solutions…”
“[Our bank] is a
community-focused
regional bank.”
“A small business checking
account that offers more
control and access.”
“…in addition to
traditional credit and
financing solutions.”
“For the last 165 years,
our customers come
first.”
“First more than 100
years…”
“Why bank with us? We
have over 135 years of
experience.”
“Why [our bank]? Our
Experience, Strength
and Stability.”
“Substantial experience,
with many team members
averaging 15 to 20 years.”

Avoid being a commodity
93 YEARS TO BUILD
610,000 ROOMS, 88 COUNTRIES
4 YEARS TO AMASS
650,000 ROOMS, 192 COUNTRIES

Replaced value: tech & convenience
$20
Billion Market
Capitalization
$31
Billion Venture
Capital Funding

Outlook on FinTech
39%
31%
30%
Yes
No
Not Sure
Q. Do you and your bank
colleagues consider FinTechs a
significant threat to your
industry in the next few years?
Source: KPMG, 2016

FinTech disruptors

In the news…

Chase removes the friction in SMB loans
“Remember, there
is nothing online
lenders can do that
we can’t,”
Jamie Dimon
CEO, JPMorgan Chase

How is Emprise breaking out?
• We believe we need to evolve to
meet changing customer expectations
• New leadership with new direction in
enhancing the digital footprint
• We are looking for ways to add value
to our existing brand that meets
changing customer needs digitally

2. Digital operational excellence
• Customer experience
• Technology push
• Economic benefits

Achieving operational excellence
Digitize end-to-end
the customer
experience
Digitize products and
services as part of the
value ecosystem
Create trusted
analytics
Source enhanced
operational
capabilities in the
dynamic ecosystem
Drive rapid customer
centric innovation
Digitize for agility
over efficiency
Commercial &
Private Banking
Customers
Financial
Institution

Operating excellence at Emprise
• Historically we built processes that
were centered around bank efficiency
instead of the customer experience
• We learned that sometimes you have
to sacrifice operational efficiencies
for the customer experience
• Make sure you can hold the entire
company accountable for the digital
experience
• Balance that with your culture and
what is important

3. Disrupting within the bank

Acceptance of innovation
32%
44%
20%
4%
Always embraced
Often embraced
Sometimes
embraced
Q. Acceptance of innovation
and change in my institution is:
Source: KPMG, 2016

More with less in commercial banking
0
400
800
1,200
1,600
2,000
2,400
0
3,000
6,000
9,000
12,000
15,000
18,000
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Commercial Banking Assets & FTE
Assets FTESource: FDIC, 2016
$(Billions)
#(Thousands)

Outlook on FinTech
51%
33%
16%
Yes
No
Not Sure
Q. Has your bank already
created a strategic alignment or
joint venture with a peer-to-
peer lender or marketplace
lender for the purpose of
creating consumer or business
loans?
Source: KPMG, 2016

Confidential & Privileged Document
Collaborating with FinTech
59.3% Banking executives agree that FinTechs are setting the bar higher
Approaches to build FinTech Capabilities and Drive Innovation
Partnership / Collaboration
Setting up Accelerators
Acquire Non-traditional/
FinTech Firms
Develop In-house Capabilities
Funding /
Investment in FinTechs
Source: Cap Gemini, 2017

Confidential & Privileged Document
Collaborating with FinTech
Increased customer experience
Environment for innovation
Reduced cost of operations
Deriving better insights from data
Delivering personalized services
Benefits from collaboration with FinTechs
77.8% Banking executives say that FinTechs provide opportunity for partnerships
Source: Cap Gemini, 2017

Emprise’s FinTech Strategy
• Look to digital tools and
partnerships that can help
comply with ever-increasing
regulatory burden
• Pay attention to customer
behavior – Stop thinking like a
bank and start thinking about
how customers adapt technology
in their everyday lives
• Stay true to our core values

4. Growth through actionable insights
Trusted advice from the bank
Holistic Relevant Insightful Actionable

What is a cognitive bank?
Cognitive systems are helping banks
become more agile so they can manage
the ever-growing demands of customers,
compliance and the competition.
What is a cognitive bank?

Cognitive banking
Front Office (Branches and
call centers)
Customer-Facing AI – Chatbots,
Cognitive Agents
Support
AI and Cognitive
Enabled Analytics
Back Office (Data
Entry, Processing)
Cognitive Advisors, Robotic
Process Automation
Compliance, Policies
and Regulations
AI-Enabled Expert
Systems

Learning to use data at Emprise
• Letting go and automating
decisions – trusting the systems
• Empowering the customer to
accept and move loans along
• Supporting loan growth with
digital marketing campaigns with
analytics

5. Changes in customer expectations
• End-to-end solutions
• Industry specific solutions
• Faster and simpler solutions
Source: American Banker, 2015

Enabling anytime access to client information
Cloud Storage
MobileServers
Desktop
iPad
Banker / Advisor Client
Achieve by integrating
information systems
across lines of business
and multiple channels
• Commercial
• Private banking
• Trust
Integration of
Firm-Wide
Information
Systems and
Tablet
Applications into
Client Interactions Bank
Client





Emprise is changing with our clients
• Observe what your
customers are doing
• Stop thinking, speaking, and
acting like a bank; meet
customer needs in a way that
makes sense to them
• Leverage your strengths and
history to evolve and remain
relevant in the community
bank space

Call to actions
Always have the customer in mind and what is
the most important value for them
Challenge and change the culture of your FI with
new thoughts and new talent if needed
Be willing to learn and discover throughout the
FinTech strategy process

For more information
contact Mike Horrocks
Mike.Horrocks@bakerhill.com
@mikehorrocks

Lessons from FinTech: Innovators & Disruptors

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Lessons from FinTech: Innovators & Disruptors