Banking as a Service (download)

©Chris Skinner. All rights reserved. +44 790 586 2270 [email protected]

The Future of Banking Technology

Chris SkinnerChair, the Financial Services Club

CEO, Balatro

Co-Founder, Shaping Tomorrow


Banks have many components

Delivery Functions

Personal

Teller

Counselling

Agent/Broker

Dealing

Direct

Self Service

ATM/POS

Telephone/Voice

Home/Corp.

Delivery Functions

Document

Document Processing

Image Processing

Remittance Processing

Mailing

External Functions

Payment Networks

ATM Networks

Credit Authorisation

Settlement

Clearing

Info. Networks

Credit Bureau

Routers, Telerate, etc.

Securities Quotations

Other Data Services

Services

Card Protection

Check Printing

External Business

Relationships

Electronic Card

Interchange

Customer Information Functions

Personal Small Business Corporate

Private Commercial International

Re-insurance

Pensions

Investments

Claim Proc.

Underwrite

Service Functions

Insurance Retail Securities International

Non-life

Life Policy

Actuarial

Collections

Revolving CR

Mortgage

Savings

Chk. Accts

Term Loans Portfolio Mgr.

Personal Lns.

Factoring

Leasing

Trust

Securities

Commodities

Investmt Mgt.

Derivatives

Settlement

Foreign Ex.

Money Mkt.

Market Inst.

Commercial

Trade Finance

Cards



Business is a-changing

1999Mailing

10,000 people

Twice weekly

Brochures10,000+

Annual update

Meetings40 UK

8 Ireland

6 CEE

Newsletter1,000 people daily

Text only WebsiteNon-interactive

Custom-build

$150,000

$100,000

$100,000

$300,000

$150,000

$800,000


Business is a-changing

2009Mailing

10,000 people

Twice weekly

Brochures10,000+

Annual update

Meetings40 UK

8 Ireland

6 CEE

Newsletter1,000 people daily

Multimedia WebsiteNon-interactive

Custom-build

$150,000

$149

$10,000

Free

Gone

$160,000


“Information about money has become

almost as important as money itself .”

Walter Wriston, CEO/Chair, 1967-1984

“Banking is just bits and bytes.”

John Reed, CEO/Chair, 1984-1998

Banking is a-changing


There are no local data centres or servers, just

access to the HSBC network ... five years ago, we

ran 130 data centres because we had acquired 50

companies up to 2003. Today, we have 20 data

centres, and in two years we will have 6 worldwide.

Banking is a really changing

Case Study: http://thefinanser.co.uk/fsclub/2008/12/-hsbc-banking-on-the-network.html

©Chris Skinner. All rights reserved. +44 790 586 2270 [email protected] Study: http://thefinanser.co.uk/fsclub/2008/12/-hsbc-banking-on-the-network.html



1999

Payments

Insurance

Loans

Savings

Investments

Mortgages

>6%

<2%

3% commission

5% fee

>5%

3% margin

Base Rate 4%

3.5% per transaction



2009

Payments

Insurance

Loans

Savings

Investments

Mortgages

>4.2%

<3.8%

<0.5% commission

<1% fee

>5%

3% margin

Base Rate 4%

<0.5% per transaction


eBank Japan

Japan’s largest internet

bank with no branches,

three million customers

and less than 200

employees.

Case Study: http://thefinanser.co.uk/fsclub/2008/07/internet-bankin.html


8.7% for lowest risk borrowers

12.8% for highest risk lenders

11.9% for lowest risk borrowers

3.55% for highest risk lenders

APR£5,000

36 months

Base Rate 1%


• SmartyPig one of the

first real banking

applications that is truly

social.

• It is like an online piggy bank, where you save money for specific goals.

• First banking application that allows friends and family to contribute to interest bearing goals.

• Public goals allow friends and family to contribute, or keep your account private

SmartyPig


Where they are now

Launched in April of 2008

• Within 3 months, SmartyPig had customers in all 50 states

• Average goal amount: $8,900

• Average length of goal: 4+ years

• Top goal categories: Travel, Holiday Savings, Electronics, Home

Improvement, Weddings, Homes, Cars

• Two-thirds of all goals are public

• 25% of customers have more than one goal

• 67% of SmartyPig users are under the age of 35, 20% are

between 36- 45, and the remaining 13% are older.


Q3 2008:

• $14.81 billion worth of payments, 28% year-on-year growth;

• 65.3 million active users, up 19%;

• 214.5 million transactions, up 25%;

• Purchases made outside eBay are now greater than through eBay (71% of

PayPal payments were for eBay purchases at the end of 2004); and

• PayPal provides 28.2% of eBay revenue, up from 24.8% a year before.

Q4 2008:

• $15.99 billion worth of payments, 14% year-on-year growth;

• $623 million in revenue, up 11% year over year; and

• 70 million active users, an increase of 23% year-over-year .

Case Study: http://thefinanser.co.uk/fsclub/2009/01/paypals-tenth-birthday-party.html


Who needs a bank?


Who needs a bank?

Case Study: http://thefinanser.co.uk/fsclub/2008/08/do-recessions-m.html


Who needs a bank?

A Red Herring Top 100 European

technology company and Top 200

worldwide.

Completely automated with no

humans involved and only 37 staff

in London, with the rest of the

development team in the Ukraine.

Case Study: http://thefinanser.co.uk/fsclub/2009/02/wonga-another-web-financial-disruption.html


Banking as a Service (BaaS)

Explanation: http://thefinanser.co.uk/fsclub/2009/02/baas-banking-as-a-service.html


• Widget:

– A portable chunk of code that can be installed and executed within any

web page by an end user without requiring additional compilation.

• SaaS:

– an application is licensed for use as a service provided to customers on

demand. On demand licensing and use alleviates the customer's

burden of equipping a device with every application.

Widgets and SaaS


BBVA has 4.1 million online

customers performing over 1.3

billion annual online

transactions

They launched Tú cuentas in

Summer 2008 with a totally

customizable interface for the

iPhone, Blackberry and Nokia

phones

BBVA Tú cuentas (You count)

http://thefinanser.co.uk/fsclub/2008/07/bbva-the-first.html

Case Study: http://thefinanser.co.uk/fsclub/2008/07/bbva-the-first.html



2009

Payments

Insurance

Loans

Savings

Investments

Mortgages

>4.2%

<3.8%

<0.5% commission

<1% fee

>5%

3% margin

Base Rate 4%

<0.5% per transaction


These are trading venues


These are new trading venues

Explanation: http://thefinanser.co.uk/fsclub/2008/11/one-year-after.html


These are new, low cost trading venues

The firm is currently building its

own trading engine - which will be

based in London to reduce latency -

and has engaged a central

counterparty, believed to be EMCF,

for clearing ... believe they will be

able to win market share by

undercutting rivals and keeping

costs to a minimum by operating

out of Budapest.


Big difference


eXay


Lower Latency

“It takes a 240 millisecond link to go from

London to Tokyo via the US. If you go via

Russia it’s 60 milliseconds faster.”


We can move into a new country with credit cards

with an investment of $1-$2 million, mainly on

marketing, because we don’t have to build all that

infrastructure. We can move into a country with

full service banking for under $10 million, which is a

fraction of our competitors. We just open a

building and sell, because everything is delivered

through the network.

Banking is a

really changing


Personalised search

Personalised NewsLive TVPersonalised Weather

My social networkMy outlook calendar

(including transactions) My finances

My real-time life

My outlook inbox

My Semantic HomePage


Personalised search

Personalised NewsLive TVPersonalised Weather

My social networkMy outlook calendar

(including transactions) My finances

My real-time life

My outlook inbox

My Semantic HomePage

My Personalised Advertising(not your adverts to me)


Banking on the Network

BaaS Widgets


Further Reading

• Banks ignore social media at their

peril

– http://thefinanser.co.uk/fsclub/2008/12/ba

nks-ignore-so.html

• Social networks don't need banks,

they need friends

– http://thefinanser.co.uk/fsclub/2008/12/so

cial-networks.html

• Social finance is right here, right now


cial-finance.html

• Social money – what’s all that about?


cial-money-wh.html

• Mobile social money, the final

frontier?

– http://thefinanser.co.uk/fsclub/2008/12/m

obile-social-m.html

• Internet Banking 2010 and Beyond

– http://thefinanser.co.uk/fsclub/2008/04/inte

rnet-bankin.html

• Technology is key for banking in 2009

– http://thefinanser.co.uk/fsclub/2009/01/tec

hnology-predictions-hold-the-solution-to-

the-banking-crisis.html

• The next boom starts in 2014

– http://thefinanser.co.uk/fsclub/2009/01/the-

next-boom-starts-in-2014.html

• The Future of Investing in Europe's

Markets after MiFID ;

• The Future of Finance after SEPA ; and

• The Future of Banking In a Globalised

World

– http://eu.wiley.com/WileyCDA/Section/id-

WILEYEUROPE2_SEARCH_RESULT.html?quer

y=chris%20skinner


The Future of

Banking Technology

Chris Skinner

Read my daily blog at

www.thefinanser.com

Banking as a Service (download)

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