Retail Banking Trends 2018
Capgemini, November 2017

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 2
10
1 73
2 6
5
8
9
4
Banks Make
Significant
Investments in
Digital
Transformation
More and More,
Banks Collaborating
With FinTechs
Through Different
Models
Banks Look To
Leverage Digital IDs
Beyond
Authentication
Banks Strive to
Bring Distributed
Ledger Technology
Out of Labs, Into
the Real World
Banks Deploy AI
and RPA to Increase
Productivity and
Efficiency
Banks Leverage
Analytics to
Transform End-To-
End Customer
Journeys
As Security Threats
Recede, Banks
Leverage the Cloud
to Cost-effectively
Streamline
Processes
Digital-Only
Challenger Banks
Threaten to Beat
Retail Banks at
Their Own Game
Alternate Lenders
Leverage Alternative
Data for Providing
Credit Facilities to a
Wide Range of
Customers
Banks Connect With
Third-Party
Providers to Drive
Customer-Centricity
and Implement New
Models
Retail banking trends 2018

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 3
As competitive pressures rise, banks are investing
aggressively in digital transformation
71%
Redesign / enhance
digital experience for
consumer
41%
Digital enhancements
for improving
customer experience
30%
Migrating customers
from physical to
digital channels
35%
Digital laggards in FS
industry could lose up
to 35% of the total
market share to
digital pure-plays
Note a: The survey for top strategic priorities for banking was conducted in 2016
Source: Capgemini Financial Services Analysis, 2017; "The Digital Banking Revolution: Who Will Survive?”, Jeffrey Pilcher, The Financial Brand, Jan 31, 2017; "How a bank bet on fintech for its digital reboot”, Bryan
Yurcan, American Banker, Aug 30, 2017; "Top 10 Strategic Priorities for Banking in 2017", Jim Marous, The Financial Brand, Dec 7, 2016
BankingExecutivesTop
StrategicPrioritiesa
#1
Digital business /
digitalization was the
#1 strategic business
priority for industry
CIOs in 2016-2017

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 4
FinTechs have accelerated the digital disruption and
banks are now increasingly collaborating with them
Source: Capgemini Financial Services Analysis, 2017; Capgemini World Retail Banking Report, 2017; https://www.finextra.com/newsarticle/30605/bankfintech-collaboration-can-take-transaction-banking-to-new-
heights; https://thefinancialbrand.com/61980/banks-partner-fintech-strategy/
91%
Banks want to
collaborate with
FinTechs
75%
FinTechs want to
collaborate with
Banks
86%
Banks feel they
will suffer if they
don’t embrace
FinTechs
42%
Banks feel
collaboration will
reduce their costs
Capital Innovation
Economies of Scale Agility
Customer Data
Better Customer
Experience
Regulatory
Know-How
Technological
Know-How
Banks’ Strengths FinTechs’ Strengths

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 5
Banks look to leverage digital IDs beyond
authentication
Source: Capgemini Financial Services Analysis, 2017; WEF: “A Blueprint for Digital Identity,” August 2016, accessed October 2017 at http://www3.weforum.org/docs/WEF_A_Blueprint_for_Digital_Identity.pdf
Benefits for Users
Enhanced Security
New Revenue
Streams
Access to Other
Services
Enabler of Open
Banking
Personalized
Offerings
Enhanced Products
Convenience with
Control
Operational
Efficiency
Benefits for Banks
Biometrics
Customer Experience
Key Drivers
Cost Savings
Transparency

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 6
Banks strive to bring Distributed Ledger Technology
(DLT) out of labs, into the real world
No Intermediaries, Minimal
Supervision
Better Compliance (no need of
separate ledgers)
Instant Payments Transfers
(Domestic and Cross-Border)
More Secured with Network
supervision
Instant Verification and KYC
Key Areas of Benefits
Source: Capgemini Financial Services Analysis, 2017

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 7
Banks deploy AI and RPA to increase
productivity and efficiency
80%
Of back office
workers’ time is
spent on repetitive
and manual tasks
35-
50%
Of banks productivity
gains can be enabled
by Robotic Process
Automation
50-
90%
Savings on cost, with
the help of robots
when compared to
off-shore / on-shore
employees
Enhanced Customer Experience
Increased Efficiency and Scalability
Improved Quality of Output
Optimized Operations and Delivery
Cost Reduction and Regulatory
Compliance
Source: Capgemini Financial Services Analysis, 2017; “Robotic Process Automation,” Capgemini Consulting, 2016
Benefits

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 8
Banks leverage analytics to transform
end-to-end customer journeys
Source: Capgemini Financial Services Analysis, 2017
Benefits
Personalized OfferingsSuperior Customer Journeys
Rewarding Loyalty
Programs
Efficient Decision Making
BanksMakeUseofStructured
andUnstructuredData

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 9
Banks leverage the cloud to cost-effectively
streamline processes
58%
Executives believe Cloud will
help to lower overall IT costs
while delivering banking
solutions
50%
Executives believe cloud will
help to support new
technology while delivering
banking solutions
Source: Capgemini Financial Services Analysis, 2016; “Cloud Banking: A Question of Collaboration", Temenos, 2016
Reduced Overhead Costs
Increase in Agility and Flexibility
Easier Integration with Emerging Technologies
Provides the Ability to Scale
Benefits

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 10
Digital-only challenger banks threaten to beat retail
banks at their own game
Cost Advantage
Superior Customer Experience
Targeting Niche Segments
Flexible and Agile Decision Making
Simplified Technology
Distribution Digital Channels
Lack Of Physical Infrastructure
54%
Challenger banks are
offering lending
related banking
services
Source: Capgemini Financial Services Analysis, 2016; “Burnmark Research: Challenger Banking,” October 2016
Competitive Advantages Over Traditional Banks

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 11
Alternative lenders are using digital platforms and
tools to provide credit to a wide range of consumers
46.2%
Growth of P2P
Lending industry in
2016
Faster Credit
Source: Capgemini Financial Services Analysis, 2017; Capgemini World Retail Banking Report, 2017; https://www.finextra.com/newsarticle/30605/bankfintech-collaboration-can-take-transaction-banking-to-new-
heights; https://thefinancialbrand.com/61980/banks-partner-fintech-strategy/
51.5%
Expected CAGR of
P2P Lending industry
from 2016 to 2022
Lower Interest Rates
Higher Transparency
Better Customer Engagement
Lower Operating Costs
AdvantagesofAlternate
Lenders

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved. 12
Banks connect with third-party providers to drive
customer-centricity and implement new models
Source: Capgemini Financial Services Analysis, 2017; World Retail Banking Report, Capgemini, 2017
Benefits
New Revenue Streams
Collaborative Ecosystem
Enhanced Offerings
Challenges
Cyber Vulnerabilities
Disintermediation
Loss of Relationship/Revenue

Retail Banking Trends 2018 | November 2017 © 2017 Capgemini. All rights reserved.
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