Copyright © Liam Ó Móráin 2014 Breaking Open the Bank Liam Ó Móráin
Aug 23, 2014
Copyright © Liam Ó Móráin 2014
Breaking Open the Bank
Liam Ó Móráin
Copyright © Liam Ó Móráin 2014
Top 50 Global BrandsSource & Copyright © Interbarnd 2014.
(23)
(32)
(33)
(44)
(48)
Copyright © Liam Ó Móráin 2014
Loyalty & Passion
Things that serve a purpose Things that people love
Emotional connections make great brands.
The relationship is often irrational!
Copyright © Liam Ó Móráin 2014
Loyalty & Passion
Emotional connections make great brands.
The relationship is often irrational!
Things that serve a purpose Things that people love
Copyright © Liam Ó Móráin 2014
Apple realized if it created everything itself it would greatly constrain the number and range of apps.
Apple has become a platform where 3rd parties can create products and services known as ‘apps’.
Apple maintains the standards for publishing the apps and pays the developers.
Apple is the distribution channel in this co-created ecosystem.
Downloads to date
$ paid to developers to date
$ app revenue in 2013
15,000,000,000
60,000,000,000
Loyalty & Passion
10,000,000,000
iTunes accounts and credit card numbers800,000,000
Copyright © Liam Ó Móráin 2014
mobile monthly active users
downloads to date 60,000,000,000
1,000,000,000
$ revenue/user/year in US & Canada5.18
Co-created Ecosystems
average number of apps installed each day20,000,000
mins average time spend on Facebook per visit 18
$ revenue in 20131,300,000,000
apps available1,200,000,000
Copyright © Liam Ó Móráin 2014
Co-created Ecosystems
Copyright © Liam Ó Móráin 2014
An APP
A piece of software performing a single task or small set of tasks which is very different from the more traditional big enterprise apps banks have built and deployed.
Co-created Ecosystems
The co-creators
The creations
Copyright © Liam Ó Móráin 2014
Source NUI Galway & Gigaom Research 2014.Co-created Ecosystems….
Copyright © Liam Ó Móráin 2014
Co-created Ecosystems….
What are the challenges facing banks today that suggest the current business model is under threat and that co-creation is a viable option?
How can banks draw inspiration from companies like Apple, Google, and Facebook and offer products and services created by others that customers want?
Should banks copy Apple, Google, and Facebook and develop their own co-created ecosystems?
Copyright © Liam Ó Móráin 2014
Challenges facing (retail) banks!
While numerous, focus today is on:
The distribution model i.e. branch networkPhysically constraint and very costly
Customers have an incredible digital retail experience in most places except in retail banking (think Apple!)
Competitors are eating away at the fringes:Wonga, Stripe, DWOLLA, Square, Ripple, Currency Fair, Tesco
Copyright © Liam Ó Móráin 2014
Challenges facing (retail) banks!
Branch network:Swallows nearly 50% of bank operational costsIs not open 24/7Legacy locations may not be fit-for-purpose
Product & Services: banks and in particular banking processes make it hard for customers to love them!
Technology & Operations: Held together with band aidsSmothered with compliance and fear of screwing up!Legacy systems may not be fit-for-purpose.
Copyright © Liam Ó Móráin 2014
Opportunity for (retail) banks!Branch network:
Varied layouts and types of branchesSome full service; some very basic; some in betweenDigital and Physical blend seamlessly Perception of scale and ability to meet customer
needs any where, any time
Product & Services designed to meet varied and tailored needs of customers often created by others.
Technology & Operations: Operational excellence e.g. STP Exceptions are rare!
FOCUS TODAY
Copyright © Liam Ó Móráin 2014
Co-created Ecosystems…
Offers huge customer base
Core business is a platform through which all activity flows
Powerful network effect
Manages revenue collection and distribution
Major data and customer analytics
Why 3rd Party Developers Love these ecosystems?
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Great customer base – low churn
Incredible depth of data on customers
Co-created Ecosystems…Why 3rd Party Developers would love to
work with banks?
What 3rd Party Developers need?
A Platform
Access to the bank’s DATA VAULT!
Combine with other data sources to create services of value.
Break Open The Bank!
Copyright © Liam Ó Móráin 2014
BROAD customer data
Bank Credit Card
16
Day in the life of a customer What a Bank sees …
Customer: Joe Bloggs • Withdrawal Grafton St. ATM• Transaction successful• Account: -€60
On the way to work, Joe calls his friend in Berlin.
At work, he Googles to research impact of the Ukrainian crisis on the stock market.
Joe wakes up in the morning. He checks the news on his iPad.
At lunch, Joe goes to the ATM to withdraw money.
He pays for a wedding anniversary gift for his wife with his credit card.
Joe calls his Bank’s Relationship Manager, Shirley, to confirm the position of his stocks given situation in Ukraine. However Shirley was not available so he left her a voice mail.
Going home, Joe uses Twitter, Facebook and LinkedIn account, and watches YouTube.
1
2
3 4
5
6
7
8Joe gets home and he goes online on his iPad to
read books and surf the net.
Customer: Joe Bloggs • Credit card transaction
successful• Merchant: Cartier• Credit account: -€2,500
• Bank’s RM Shirley receives phone message to call Joe Bloggs.
Customers experience BANKS as a set of interactions through various mediums throughout their busy lives, not as a number of “channels”.
On the other hand, a BANK sees the customer as a series of discrete transactions with little context.
BANKS sees these as siloed transactions within different areas of the bank…
How well do BANKS know their customers and understand their world?
DEEP customer data
Transactional Data
Connecting the dots...crossing the data & digital divide…
Back end systems
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ARMY OF 3rd PARTY DEVELOPERS will marry the two data sets and discover
things of interest
Source: Career Rocketeer
DIGITAL FOOTPRINTAv Joe Footprint
DEEP DATA
BROAD DATA
SMART DATA &
SERVIC
ES
Connecting the dots...crossing the data & digital divide…reaching customers
BROAD customer data Google etc. great at mining!This is BIG DATA. Offers clues and insights
DEEP customer data
Transactional Data Business IntelligenceAnswers to known questions
Copyright © Liam Ó Móráin 2014
Connecting the dots...crossing the data & digital divide…reaching customers
Customers post ideas on CA Store
‘Les Digiculteurs’ encouraged to contact customer
Most apps have narrow but important function
Process to manage apps and seepage of malicious code
Breaking the Bank Open
Copyright © Liam Ó Móráin 2014
Connecting the dots...crossing the data & digital divide…reaching customers
Open source API and APP store for banks
Kinder Bank
A PFM for children. Providing kids with
categorised money trail of transaction history.
Breaking the Bank Open
Copyright © Liam Ó Móráin 2014
Connecting the dots...crossing the data & digital divide…reaching customers
Breaking the Bank Open
Copyright © Liam Ó Móráin 2014
Connecting the dots...crossing the data & digital divide…reaching customers
Breaking the Bank Open
Copyright © Liam Ó Móráin 2014
Connecting the dots...crossing the data & digital divide…reaching customers
Copyright © Liam Ó Móráin 2014
Connecting the dots...crossing the data & digital divide…reaching customers
Copyright © Liam Ó Móráin 2014
Q1 Y1 Q2 Y1 Q3 Y1 Q4 Y1 Q1 Y2 Q2 Y2
Hackathon Dublin
Open/Linked DataCensus Data, Revenue Data
Hackathon Stockholm
Bank APP Store 1.0
Hackathon London
Hackathon Berlin
Hackathon San Francisco
SDK & API
Transactional Data
Account Activity Bank APP Store 2.0
Customer Data
Global App Developer Base
Global Reach
Global Customer Base
Group-wide capability
Bank APP Store 5.0
Economically Viable Ecosystem
Breaking The Bank Open
Copyright © Liam Ó Móráin 2014
Business Rationale
• A place to innovate and try new things• Free Apps (targeted advertising)• Paid Apps • Revenue to Bank & Developers• Positive reaction amongst key
influencers in digital community• Target squarely at Digital natives and
device savvy customers• Attracts non-customers• Garner digital insights• Understand better the digital footprint
and digital life of customers
Technology
• Identify and make available customer data (anonymized)
• Build SDK and development infrastructure
• Expose relevant APIs: a/c balance, ID&V, SSO, a/c transfer
• Protect customer and data privacy
• Build securely • Build transparency, audit
capability
Breaking The Bank Open
Copyright © Liam Ó Móráin 2014
Legal
• Legal entity 1˚ removed from parent bank!
• Toe-in-the-water approach. Easy to pull and distance Parent Bank and brand
• FSA/Central Bank and what is permissible.
• Regulated entity?
Operational Structure
• Provide infrastructure to test, validate, and approve Apps
• Management payment to developers
• Manage advertisement network
Breaking The Bank Open