Review CHANNELS & CUSTOMERS CHANNELS & CUSTOMERS Revolutionizing the insurance industry Delivering service excellence in the digital age REVIEW HIGHLIGHTS Preparing for the future and embracing the next wave of technological advancements INNOVATION & FINTECH Transforming into the bank of the future INNOVATIVE PAYMENTS Rising to the challenge of bigtechs
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Review
CHANNELS & CUSTOMERS
CHANNELS & CUSTOMERS
Revolutionizing theinsurance industry
Delivering service excellencein the digital age
REVIEW HIGHLIGHTS
Preparing for the future and embracing the next wave of technological advancements
INNOVATION & FINTECH
Transforming into thebank of the future
INNOVATIVE PAYMENTS
Rising to the challengeof bigtechs
2 Efma review 2020
ADVISORYSERVICES
DRIVING CHANGE INFINANCIAL SERVICES
Private learning expedition
In-house conference
Executive briefing
Efma academy
EAS BENEFITS
1234
• Foster professional development withintrending topics that interest you
• Inspire your top leaders with insights fromEfma’s community and senior advisors
• Discover the most innovative�financialmarkets worldwide
EAS TOPICS
SME BANKING AI & BOTS CX IN A DIGITAL WORLD
COLLABORATION WITH FINTECHS
efma.com/easamong others...
INSURANCE OPEN BANKINGPSD2 & API
SME
CONTACTDorine Van Amerom
Head of advisory [email protected]
3
Editorial project leader: Anne-Laure Jozan Head of content [email protected]
Compiled by:Boris Plantier, Strategic content manager
Production team:Anne-Laure Jozan, Head of content management
Kevin Spangenberg, Copywriter
Chaneze Chaouche & Marion Menguy Graphic designers
Lorette Masson Graphic designer loeesong.com
Images fromwww.gettyimages.com
John Berry Efma CEO
Welcome to Efma review 2020.
While this review focuses on 2019 and highlights the innovations and successes the industry enjoyed the past year, 2020 is set to be defined by the Covid-19 outbreak and its ensuing impacts on the globe. The pandemic is touching every part of our lives – personal, professional, and everything in between. Businesses, banks, and insurers are adapting to a completely new reality as they work to maintain operations and serve their customers.
The challenges are enormous for the financial services sector and you can rest assured that Efma will be playing an extremely active role in supporting you, our members, through innovative solutions and the sharing of insights from our global membership, as well as developing a new strategy as a business to adapt to the ‘new norm’. Please enjoy looking back at a successful 2019 and be confident we will support the membership in the uncertain times ahead.
This past year, the financial services industry continued to undergo a major transformation driven by technological advances. With digital at the center of peoples’ lives, the world of finance has changed irreversibly. Many technologies, such as machine learning and cloud data storage, have now achieved widespread adoption, driving transformation in both front and back end banking operations.
The pace of change is only quickening. While barriers to transformation remain, such as legacy systems, integration, and culture, we are seeing an industry-wide understanding of the imperative to innovate in order to stay competitive. The need to evolve has led to an unprecedented number of bank and fintech partnerships. Fintechs are able to achieve scale much quicker through the infrastructure and network of an established institution, while banks can capitalize on the new technologies developed by fintechs to deliver more value for their customers.
We have seen the advent of new business models based around personalization. Utilizing new technology, banking service models are evolving from one-to-many to one-to-one personalized service that can meet the unique needs of all clients. Those firms that have embraced technological disruption, and made the necessary investments, have placed themselves in pole position to reap the benefits for many years to come. Efma members continue to demonstrate the very best in innovation. In this year’s review, you will learn about the latest offerings, technologies, and leading personalities in today’s hottest topics, including financial services of the future, fintech, channels and customer experiences, innovative payments, CSR, SME’s, affluent, and insurance and insurtechs.
At Efma, we firmly believe that collaboration is key to success. This is why we continue to focus our efforts on cultivating a network of top financial institutions and sharing their best practices to drive the industry forward as we enter the third decade of the 21st century. Leaders from banks throughout the world provide us with their unique insights and we profile the most exciting new developments that these institutions have brought to market so far.
We hope that you find this edition valuable and insightful.
ForewordADVISORYSERVICES
DRIVING CHANGE INFINANCIAL SERVICES
Private learning expedition
In-house conference
Executive briefing
Efma academy
EAS BENEFITS
1234
• Foster professional development withintrending topics that interest you
• Inspire your top leaders with insights fromEfma’s community and senior advisors
• Discover the most innovative�financialmarkets worldwide
EAS TOPICS
SME BANKING AI & BOTS CX IN A DIGITAL WORLD
COLLABORATION WITH FINTECHS
efma.com/easamong others...
INSURANCE OPEN BANKINGPSD2 & API
SME
CONTACTDorine Van Amerom
Head of advisory [email protected]
4 Efma review 2020
Contents
03 | Foreword
06 | A word from our CEO -- John Berry, Efma
08 | Meet the board
10 | Efma around the world 2020
12 | Efma membership
14 | Associate membership
15 | Studies and reports
16 | Advisory services
18 | What they're saying
34 | China: a leader with one eye on the future -- Richard Turrin
36 | Transitioning from open banking to "open X" -- Efma-Capgemini report
37 | What is the best way to measure the success of an innovation lab? -- Richard Turrin
38 | Efma and Accenture CIG banking innovation awards 2019
40 | How HSBC Bank USA embedded innovation in their DNA -- Jeremy Balkin, HSBC Bank USA
26 | Digital banking landscape: the future is now -- Lincoln Teo, Efma
28 | A people-driven digital strategy a key to success -- Paul Cobban, DBS
30 | Open banking is coming your way -- Matthias Kröner, Fidor Bank
32 | Banking as a living business -- George Beatty, Efma
ABOUT EFMA
INNOVATION AND FINTECH
PROSPECTIVE: FINANCIAL SERVICES OF THE FUTURE
CHANNELS AND CUSTOMER EXPERIENCE 42 | Delivering service excellence in a digital Africa -- John Berry, Efma
44 | Excellent customer experiences in the digital age -- Vikram Krishna, Emirates NBD 46 | Great customer service does not happen by chance -- Efma-Forrester report
COVID-19
20 | Supporting SME in a time of crisis -- Efma special edition
22 | Managing the Covid-19 crisis -- Dr. Dennis Tafoya, CompCite
23 | Why the economy should recover quickly -- Sandy Vaci, Efma
24 | After Covid-19 bank+fintech partnerships -- Gorkem Coktin, Efma
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60 | Versatility and innovation to produce strong results -- Joel Kornreich, Alliance Bank
62 | Cracking the small business ecosystem -- Efma SME banking digest
64 | Efma launches global executive SME banking program -- Lukáš Dzuroška, Efma
70 | The impact of changing customer behaviors for insurance -- Jean-Marc Pailhol, Allianz Group
71 | Insurance Connect 2020: All about ecosystems -- Rene van der Poel, Efma
72 | Challenges and opportunities for insurers -- Efma-Roland Berger report
73 | How health techs are revolutionizing the insurance industry -- Anne-Laure Jozan, Efma
74 | Efma and Accenture innovation in insurance awards 2019
75 | Lessons learned from Efma's insurance summit -- Yuri Stepanov, Mapfre
76 | Facebook takes first step into health services - Kevin Spangenberg, Efma
76 | Cultivating the solidarity economy in France -- Edouard Dumortier, AlloVoisins
66 | How to digitize the affluent customer relationship -- Silvia Cunill, Efma
67 | Adapting to a more diverse affluent customer base -- Lotte Månsson, Nykredit
68 | Openbank and its 100% digital wealth management proposition -- Openbank (Santander Group)
SME BANKING
INSURANCE AND INSURTECHS
AFFLUENT BANKING
48 | Facebook Libra: opportunities and challenges -- Efma-BCG report
49 | Delivering payments excellence for a streaming giant -- Kristen Morrow-Greven, Netfli
50 | Exploring the potential of blockchain -- Therese Torris, Efma
51 | P2P payments: the fintech and bigtech threat -- Anne-Laure Jozan, Efma
52 | How Payoneer is shaking up cross-border payments -- Eyal Moldovan, Payoneer
CORPORATE SUSTAINABLE RESPONSIBILITY54 | Why Efma members are adopting the Principles of responsible banking -- UNEP FI
55 | Desjardins: far-sighted finance -- Guy Cormier, Desjardins
56 | Corporate social responsibility in financial services: 2020 snapsho -- Efma, Ecole des Ponts
Business School, Wavestone report
58 | Making sure people find equality -- Marie Louise Sunde, Equality Check
INNOVATIVE PAYMENTS
ABOUT EFMA
A word from our CEO
The coronavirus has caused a major impact on all of our daily lives. It has far-reaching implications for the financial sector – for staff as well as customers, let alone the very structure of businesses. So many elements of day to day activities are having to be entirely re-thought as a matter of urgency. The role of Efma at this unprecedented time is to assist you through our extensive insights/ sharing and learning from other likeminded financial players facing almost identical challenges across the globe.
We are already actively supporting many members through engaging workshop eCouncils and focused webinars. We will continue to refine our strategy as we seek the best ways to connect, engage, and inform our members.
I’m delighted to be able to write to you as Efma’s new CEO. Efma has always taken care of its community, but now more than ever we want to be the support you need and in the most relevant way for you.
It’s time to take action and become stronger as a community
As the coronavirus continues to spread all around the world, our thoughts go out to all the professionals in our network and we hope that you and your loved ones are well and will stay that way. We are all highly engaged and we will stay close to the entire community during and after the crisis. Thanks to the expertise of our unrivalled community, senior advisors, and regional managers, we are speeding up the creation of these new services, some of which are already available on www.efma.com:
• New covid-19 forum to facilitate exchange and collaboration between institutions and gather your questions to be addressed by our senior advisors.
• New covid-19 hotline to get in touch and share your concerns, challenges and other feedback.
• eCouncils dealing with business continuity and contingency plans, specific problems in the current situation in each business department of your institution (8 groups for virtual discussion and workshops, exceptionally open to all your colleagues).
• eClubs looking at crisis responses for banks and crisis implications on a domestic level.
• Conference calls and podcasts with feedback from our teams monitoring the evolution of the crisis.
• Newsfeed and articles to keep you up-to-date on the covid-19 situation in financial services globally.
• Covid-19 papers that will be published soon and webinars to highlight the specific situation in certain sectors and including existing plans by some members, predictive scenarios, recommendations and frameworks.
Moreover, given the new context, some of our physical events scheduled for the first half of the year have been transformed to live or recorded virtual events and new resources for you to use: NewTech Challenge Ceremony, Innovation in Insurance Ceremony, as well as some report presentations. Our conferences have been postponed until October and November as you can see on the events’ calendar page: www.efma.com/events.
We can become stronger as a community by facing these serious issues and crisis together.
Crises have a way of ushering in a new reality. What may seem unusual today will be the norm of tomorrow. To that end, we believe there will be an acceleration of a number of trends that were already present in the industry. Here are some of the most important trends that will shape financial services in the coming year.
1. The future of work, nowThe future of work is a subject that has consumed businesses, organizations, and governments for many years. With the advent of disruptive technology making new working paradigms possible, people have wondered just what form work will take in the future. Now, a pandemic that is dramatically restricting human-to-human contact is likely to usher in the future of work much quicker than anyone anticipated. As people are forced to work from home and conduct their lives remotely, financial institutions have two concurrent challenges: maintain, motivate, and optimize their workforces while also continuing to innovate and deliver value, digitally, for their customers.
2. Future business models in financial services will be more digital-dependent.Open banking and open insurance were already creating new opportunities for institutions to rethink business models. This event will serve as a catalyst for further digital dependence. Open data gives customers more control over their financial data. Executed well, open banking and open insurance will deliver mobility, inclusion and new distribution channels. Several different approaches coexist in different geographies. For instance, in Asia the open platform strategy shows more industrialization and can quickly onboard partners thanks to API. In the USA, we observe a wide range of advanced collaboration tools like API store and development test platform in collaboration with big tech. In Europe, there is more in-depth collaboration with scale-up companies and the PSD2 regulatory framework.
3. Payments - contactless or bustCountries and citizens had already been adopting contactless payments to varying degrees. Now, people are increasingly wary of handling dirty bank notes and merchants are shifting rapidly to only accepting contactless payments. Most major banks and neobanks have already incorporated ApplePay and GooglePay functionality into their offerings, but the current situation will force laggards to speed up their adoption of this new trend. While some countries, notably in
Scandinavia, have widespread adoption of contactless payments, many others are still heavily reliant on cash. This virus, and the nature of its spread through droplets on surfaces, will force countries to reduce their reliance on cash. Financial institutions must follow suit with reliable payments services.
4. The future of digital banks and neobanks: a major opportunityNeobanks have long touted their ease of use and convenience as differentiating factors. These core features are the result of new business models and digital tools that aren’t beholden to legacy technologies. Now, with millions of new customers needing to manage their finances remotely, this presents an opportunity for neobanks to promote their core competencies. Pre-pandemic, 64% of customers stated they feel confident transacting with digital-only banks and want to become a member of a community. Digital banks, through elevated levels of customer experience and service, can create a stronger sense of community, loyalty, and convenience in our new reality.
5. The future of contact centers: customer engagement hubsBanks and insurance companies have shifted their customer services to contact centers where people can interact remotely by email, chat, or phone. These new customer engagement centers are based on knowledge management systems (KMS), webchat, tutorial video, built-in chat and mail apps on top of phone and interactive voice response (IVR). These new means of interacting with customers are only becoming more critical as banks will need to find alternative ways to serve and engage their customers.
6. The criticality of the financial services industryDue to their prevalence and role in society, financial institutions have a key part to play in addressing this pandemic. In recent years, we have seen social responsibility and sustainable business models become top priorities for many financial institutions. In light of this pandemic, it is time for banks to demonstrate clearly their commitment to their sustainable principles. They can do this by guiding, supporting, and leading their communities.
8 Efma review 2020
Yolande Piazza ChairwomanCEO at Citi FinTech, USA
Meet the board
Frédéric Chenot Vice President, BPCE Networks, France
Philippe WallezVice President Managing Director, Retail, and Private Banking, ING, Belgium
Séverine Clairet Senior Director of Integration and Marketing Deployment Desjardins Group, Canada
Paul Cobban Chief Data and Transformation Officer, DBS Bank, Singapore
Regine DebeuckelaereGeneral Manager Private Banking and Wealth, KBC Bank, Belgium
Sophie HellerChief Operating Officer Retail Banking and Services, BNP Paribas, France
Marianne Auvray-MagninHead of Retail Banking Public Affairs,Société Général, France
Paul BennettGlobal Brand Director, AXA, France
Stefano BisonGroup Head of Business Development & Partnerships, Generali, Italy
Omar BounjouGeneral Manager, Retail Banking, Attijariwafa Bank, Morocco
François BrierreHead of Strategic Marketing, Groupe Crédit Agricole S.A., France
John ChongGroup CEO, Community Financial Services, Maybank, Malaysia
ABOUT EFMA
9
Efma learning expeditions
Efma learning expeditions are premium, exclusive and hassle-free experiences for top-level executives. They offer an excellent opportunity to exchange ideas, insights and business cards, while getting hands-on experience during onsite visits at some of the most innovative global players.
Attendees can:• Get best practices from visits to major overseas
banks.• Discover cutting-edge technologies in the world’s
best-in-class labs.• Create long-lasting relationships with other banking
executives.• Learn how new markets are disrupting the industry.• Save time during a three-day trip with all the
inspiration you need.
efma.com/learningexpeditions
Andres Wolberg-StokHead of Strategy, Office of the CTCiti, USA
Daniela VitoloEconomics, Statistics and Research, ABI, Italy
Remo TaricaniCo-CEO Commercial Banking, UniCredit, Italy
Yuichiro KawasakiHead of Global Innovation Team, MUFG Bank EMEA, Japan
Manroop KhelaHead of Specialist Business Units, Santander, United Kingdom
Shekhar KrishnamurthySVP and Head of Strategy, Retail Banking & Wealth Management, Emirates NBD, UAE
Alexey KruglovManaging Director, Head of Digital Business Platform, Retail Business, Sberbank, Russia
Mauricio Machado de MirasMember of the Board and Executive Vice President, Banco Bradesco, Brazil
Burcu KüçükünalStrategy and Innovation Senior Vice President Akbank, Turkey
Andrea LecceExecutive Director Sales & Marketing Retail - Retail & SME Banking Division,Intesa Sanpaolo, Italy
Khomotso MolabeChief Information Officer, Personal andBusiness Banking, Standard Bank, South Africa
Fernando MorilloGlobal Head, Retail Products and Segments, Standard Chartered Bank, Singapore
Jean-Marc PailholAllianz Partners Board Member, Head of Allianz Group Global Strategic Partnerships, Allianz SE, Germany
Benjamí PuigdevallExecutive President Digital Business and Corporate Director, CaixaBank, Spain
Birte QuittHead of Group Retail Strategy, Erste Group Bank, Austria
2020Efma AROUND THE
WORLDAs an Efma member, you have a dedicated relationship manager, who will respond to your specific needs.
Percentage of members per
region out of the total number of
Efma members around the world:
America: 6%
MEA: 12%APAC: 15%Europe: 67%
BRUSSELS OFFICEBelgium, Luxembourg, NetherlandsPhilippe Van Fraechem [email protected]
LONDON OFFICEUK, IrelandJohn Berry [email protected]
MONTREAL OFFICENorth AmericaEric Morin [email protected]
ANDORRA OFFICEIberia, Africa & LatAmSilvia Cunill [email protected]
PARIS OFFICEFrancePatrick Desmarès [email protected]
MILAN OFFICEItaly, SwitzerlandCarlo Giugovaz [email protected]
WARSAW OFFICEPolandUrszula [email protected]
ISTANBUL OFFICETurkeyEylem Özen Bastü[email protected] SYDNEY OFFICE
Australia, New ZealandGeorge [email protected]
SINGAPORE OFFICEChina, Asia PacificLincoln [email protected]
TOKYO OFFICEJapan, South KeroaTsukasa [email protected]
DUBAI OFFICEMiddle EastFahim un [email protected]
BEIRUT OFFICELebanonRaheel [email protected]
STOCKHOLM OFFICEBaltics, Nordics,Lukáš Dzuroš[email protected]
MOSCOW OFFICERussia, Belarus, Kazakhstan, ArmeniaGeorge [email protected]
BRATISLAVA OFFICECEE, Russia, Germany, Israel, GeorgiaLubomir Olach [email protected]
To get in touch, contact [email protected] Efma review 2020
2020Efma AROUND THE
WORLDAs an Efma member, you have a dedicated relationship manager, who will respond to your specific needs.
Percentage of members per
region out of the total number of
Efma members around the world:
America: 6%MEA: 12%APAC: 15%Europe: 67%
BRUSSELS OFFICEBelgium, Luxembourg, NetherlandsPhilippe Van Fraechem [email protected]
LONDON OFFICEUK, IrelandJohn [email protected]
MONTREAL OFFICENorth AmericaEric [email protected]
ANDORRA OFFICEIberia, Africa & LatAmSilvia [email protected]
PARIS OFFICEFrancePatrick Desmarè[email protected]
MILAN OFFICEItaly, SwitzerlandCarlo [email protected]
WARSAW OFFICEPolandUrszula Wysocka [email protected]
ISTANBUL OFFICETurkeyEylem Özen Bastürk [email protected] SYDNEY OFFICE
Australia, New ZealandGeorge Beatty [email protected]
SINGAPORE OFFICEChina, Asia PacificLincoln Teo [email protected]
TOKYO OFFICEJapan, South KeroaTsukasa Makino [email protected]
DUBAI OFFICEMiddle EastFahim un Zaman [email protected]
BEIRUT OFFICELebanonRaheel Vakeel [email protected]
STOCKHOLM OFFICEBaltics, Nordics,Lukáš Dzuroška [email protected]
MOSCOW OFFICERussia, Belarus, Kazakhstan, ArmeniaGeorge Donchenko [email protected]
BRATISLAVA OFFICECEE, Russia, Germany, Israel, GeorgiaLubomir [email protected]
To get in touch, contact [email protected]
11
12 Efma review 2020
Efma membershipNon-profit organization governed by leading banksand insurance companies, Efma is YOUR key to connect with a global ecosystem, get inspired and be heard. Our purpose is to support our members and create a strong community based
Connect with a reliable network from all the continents, via international and local conferences, exclusive top level meetings & private introductions.
Learn the latest trends and use the exclusive resources to benchmark your institution & improve strategies. Unlimited use for all employees.
Engage your customers, prospects, partners, etc. by gaining visibility and credibility within the ecosystem.
Innovate and continually get inspired by thousands of innovative projects led by banks, insurance companies and fintechs on our portals
All Efma members around the world are leaders and innovators in financial services. Among them:
By becoming member of Efma, retail financial services organizations from across the world gain access to a number of exclusive benefits and networking opportunities:
on expertise and skills. Our mission is to provide community intelligence to optimize, innovate and transform by recognizing our members’ best practices and connecting them.
130countries
3,300 member brands
3,365 banking innovations
200experts presentations in 2019
100 insitutions highlighted in in-depth papers in 2019
1,195 insurance innovations
844 articles in 2019
29 in-depth reports in 2019
ABOUT EFMA
13
14 Efma review 2020
ASSOCIATE MEMBERSBecome an Efma associate member and network with some of the biggest names in the industry. As an associate member you can reach a captive audience of over 150,000 retail bankers and insurers from over 3,300 retail financial services organizations around the world.
Associate membership
Efma associate members are uniquely positioned to benefit from he exchange of ideas and experiences between different professions. Positioned as industry experts, associate members are the partner of choice for Efma members when it comes to producing studies or speaking at industry events. They also have the exclusive opportunity to co-author a study with us. Associate membership also provides access to exclusive and unlimited content such as reports, articles, news stories and presentations, as well as our three innovation portals. A spectrum of networking opportunities, spanning international conferences, learning expeditions and councils, enables associate members to create invaluable relationships across the retail financial services industry, boosting visibility and imp oving credibility. Every associate member has a dedicated corner on the Efma webpage where content will be hosted even if it is not Efma co-branded – empowering them to share information including company mission, key content, contact information, specialist expertise and available solutions with Efma members across the globe.
Efma eCouncilsIn this time of uncertainty, Efma has decided to transform its councils into eCouncils and extend them to the entire Efma community (members and non-members) with connection and sharing as two of our core values. As financial institutions worldwide are looking to adapt and manage current challenges, there is no better time to connect and seize the opportunities that these uncertain times offer.
The eCouncils will focus on how financial institutions will continue to operate, serve their customers, and contribute to slowing down the propagation of the virus, in the following taskforce groups:
• Collaborative sessions• Industry expert presentations• Workshops
• Out of the box session: fintechs,visits, etc.
• An informal gathering the eveningbefore the meeting
Find out more at www.efma.com/councils
• Affluent & private banking• Digital channels• Innovative payments• Insurance
• Operational excellence• Physical channels• Risk management• SME banking
The Efma eCouncils format is the result of members’ demands and feedback and it comprises:
ABOUT EFMA
15
Efma works with a wide range of partners to produce reports and studies addressing the latest major topics and trends affecting the retail financial services industry. Here are the key studies that were released in the past 12 months.
Studies and reports
P2P payments: the fintech and bigtech threatEfmaFebruary 2019
World Insurance Report 2019
Efma, CapgeminiMay 2019
Line: the would be FS leaderEfmaOctober 2019
Innovation in insurance trends 2019EfmaOctober 2019
World InsurTech Report 2019Efma, CapgeminiOctober 2019
The future branchEfmaOctober 2019
Innovation in retail banking 2019
Efma, Finacle InfosysOctober 2019
Cloud banking: innovation without limits?Efma, FinastraOctober 2019
Exploring the potential of blockchainEfmaOctober 2019
Artificial intelligence: challenges and opportunities for insurersEfma, Roland BergerOctober 2019
World Retail Banking Report 2019Efma, CapgeminiOctober 2019
APAC review 2019: banks of the futureEfmaNovember 2019
Engaging customers in digital channelsEfmaDecember 2019
How to digitize the affluent customer relationshipEfmaDecember 2019
Efma insurance review 2019
EfmaMay 2019
World Fintech Report 2019Efma, CapgeminiJune 2019
Innovative trends in retail banking 2019Efma, AccentureJune 2019
Insurtechs: how health techs are revolutionizing theinsurance industryEfmaJune 2019
How Alior Bank excels in product designEfmaJuly 2019
Africa: delivering service excellence in a digital worldEfmaAugust 2019
What if... we lived in a 5G worldEfmaSeptember 2019
Retail banking in the Middle EastEfmaFebruary 2019
Digital banking 2025
EfmaMarch 2019
Building the bank of the future (part.I): the first steps of open bankingEfma, WavestoneMarch 2019
Bank+fintech: the secret to a successful collaborationEfmaApril 2019
SME banking: cracking the small business economyEfmaApril 2019
Artificial intelligence: A key enabler for accelerating the digital transformationEfma, MicrosoftApril 2019
Use your contact center to deliver great banking customer experienceEfma, ForresterApril 2019
Learn more at efma.com/reports
16 Efma review 2020
In an evolving industry new challenges are always just around the corner, from the impact of new digital customer expectations to the implications of technological developments. Covering the spectrum of topics that are most important to banks today, Efma advisory services draw on a wide range of quality insights and market research as well as the expertise of Efma’s experts, each of whom has extensive knowledge of industry best practices and case studies in their chosen domain.Efma academy briefings can help you inspire yourteam and transfer knowledge through one- or two-day interactive training sessions at your premises. Each briefing can involve between 10 and 20 top andmiddle management participants. These tailor-made events include in-depth presentations on specific topicsby an expert Efma senior advisor as well as practical case studies.We also offer Efma executive briefings to inspireyour top leaders with insights from Efma’s community and senior advisors. Each session provides strategic insights, a chance to catch up with peers and key takeaways from Efma reports as well as an overview of recent trends in the financial services industry.Between one and three C-level executives can benefitfrom the sessions, where an Efma senior advisor will share in-depth expertise on a specific topic, includinganalysis of case studies. Efma’s private learning expeditions provide hands-on experience from a leading institution and an incentive for your most valuable employees. Up to 20 people from your institution can discover the most innovative local markets worldwide, visiting destinations and institutions of your choice. You can explore AI in Japan, fintechs in Israel or innovation in the UK. Participants can get immersed in the
local culture with tour guides, gastronomy and meetings, draw on the hosting institution’s resources and explore cutting-edge technology and the latest trends in the industry.This year, we have launched a new program, in-house conferences, arranging expert speakers for internal conferences at members companies.
Among our 2019 achievements:• Private learning expeditions:
Bank Leumi to Brussels and Warsaw, Crédit Agricoledu Maroc to Paris, and Stanbic Bank Kenyato Singapore.
• Tailor-made briefings:Crédit Agricole du Maroc, Stanbic Bank, AllianceBank, Krungsri Bank.
• First in-house conference at Credem's officein Italy.
Efma advisory services provide a range of highly-customized events, delivering the expertise and resources to help members meet challenges head-on and transform them into opportunities.
Advisory services
George Beatty Senior advisor, innovative payments, Australia
George is a retail banking, marketing and payments specialist across Asia and the Middle East. He consults with banks and retail on digital transformation and fintechs onproduct innovation and growth. He does board and advisory work for consumer facing businesses.
John Berry Senior advisor, customer experience, UK
John is internationally recognized for delivering cultural and customer-centric change in banks and helping to bring branch franchising to UK financial services. Since 2003 he has helped retail banks across the world improve their performance across all channels. John is now Efma CEO and as such is driving its transformation towards full digitalization.
More information on efma.com/eas
Lukáš Dzuroška Senior advisor, SME banking, Slovakia
Lukas is country manager at Efma in Poland, Turkey and the Nordic and Baltic regions. He also demonstrates a strong expertise on innovation and transformation in retail and SME banking, being the program director of the SME summit and SME banking council.
ABOUT EFMA
17
Datuk Michael Lor Chee Leng Senior advisor, business transformation, Malaysia
Michael Lor is a strategic business transformation leader with extensive focus in retail banking, business transformation, strategy formulation, risk management and corporate governance, and human capital development. He has led award-winning transformation at banks across SouthEast Asia.
Carlo Giugovaz Senior advisor, fintech collaboration & innovation, Ital
Carlo is a pioneer of digital banking who is recognized as one of Europe’s leading fintech thought leaders.After more than 30 years as a bank manager and management consultant, he founded Supernovae Labs, a business accelerator for fintechs and banks
Raphaël GouéSenior advisor, consumer finance, Franc
Raphaël is general manager for Euracific. While livingin China, he was national chairman of the consumer finan e & NBFI working group at the European chamber of commerce and an elected board member of the French chamber of commerce. He was also in charge of the Asian development of EuroPraxis.
Tsukasa Makino Senior advisor, AI & robotics, insurance, Japan
Tsukasa is senior research officer at The Tokio Marin Research Institute, and manager of IT planning and government and external relations at Tokio Marine and Nichido Fire Insurance. He conducts international research in advanced IT, cybersecurity and singularity.
Rene van der Poel Senior advisor, insurance, bancassurance, Austria
Rene is global bancassurance expert who provides consultancy and training services on bancassurance and insurance topics, in particular distribution, partnership development, digitization and innovation, regulations, strategy and operational execution.
Rudradeb Mitra Senior advisor, AI & machine learning, Poland
Rudradeb has more than 16 years’ experience in AI, including work with AI research groups, startups and helping to build an AI-driven insurance platform for Winterthur/AXA, Belgium. He is a well-known writer and speaker, and a product mentor for Google Launchpad and the Founder Institute. Institute.
Emel Temuçin Senior advisor, behaviorol & cognitive science, Turkey
Emel is an experience designer and digitalization consultant who works in the financial and technolog markets and customer behavioral sciences. She is an expert in digital channels, marketing management, business planning, analytical skills, coaching and customer relationship management.
Yvon Moysan Senior advisor, open banking, France
Yvon is an expert in digital marketing, digital banking and big data and the founder and CEO of Saint Germain Consulting, a digital marketing consultant with expertise in banking, insurance and retail. He writes and speaks on topics including big data, IoT and fintech for the financi and retail industries.
Meral Ahu Ozcan KarageyimSenior advisor, digital marketing & social media, France
Meral is a product development and customer journey expert with a communications focus. She is currently a professor of marketing at Bogazici University in Turkey and a researcher at Université Paris Sud. As a senior advisor she is working on growth mind set and digital transformations.
Mark Holtom Senior advisor, CRM & marketing, UK
Mark is an expert in event-driven marketing (EDM) with a focus on the banking industry. He has worked as an independent consultant for the banking sector across the world. Mark founded EDM consultancy eventricity, which developed an award-winning software solution for banks.
Sandy Váci Senior advisor, sales management, UK
Sandy is chairman of the Credit Bank of Moscow, leader of UK-based consultancy Bay Devonshire, and a lecturer at several MBA schools. He does board and advisory work in Europe and North America, and helps micro, small and medium enterprise banks in Africa and Asia to improve their business practices.
Meaghan Johnson Senior advisor, customer journey, UK
Meaghan is a customer journey, product and fintech exper with seven years’ experience working with digital teams at global banks, fintech startups and company builders. Sh increasingly consults banking executives on POC identificatioin the data commercialization, platform, marketplace and blockchain areas.
Lincoln Teo Senior advisor, risk, digital transformation, Singapore
Lincoln is CEO of Intel Wise Group which he founded in 2016. Prior to this, Lincoln was an advisor to Brunei's Central Bank Autoriti Monetari Brunei Darussalam since 2017, the chief operating officer of Experian Group i Singapore and the general manager of Experian Credit Bureau..
Therese Torris Senior advisor, blockchain, France
Consultant, entrepreneur and writer, Therese is an advisor on innovation, digital transformation, fintechand e-commerce. She previously, held executive positions in leading consultancy firms like Gartnerand Forrester Research.
Eric Morin Senior advisor, fintech & open banking, North Americ
Eric is senior advisor in innovation and startup in residence program lead and open banking expert at Desjardins. He is also vice-president and partner at Flinks, a data company that empowers businesses to provide better financial services to customers
Stephan YangSenior advisor, corporate & business banking, Singapore
Seasoned SME/bank lender, developer of supply chain structures/finance and fintech enabler. Stephan bringwith him close to 25 years of business and lending experience in the private and corporate field, and hasheld major roles in international banks including HSBC, Standard Chartered Bank and UBS.
18 Efma review 2020
Efma loyal members and ambassadors speak about their experience within the community and how being members has helped them and their institutions.
The power and benefit of working with Efma has been in the opportunitie to network with partners around the world that have been on similar journeys or are facing similar challenges and to learn from each other and share ideas. It has helped us confirm andchallenge the relevance of some of our thinking and assisted us in avoiding any potential stumbling blocks that others may have faced.
Tina Pieterse Executive, channel transformation Nedbank South Africa
Efma is a knowledge platform that allows us to access valuable insights, explore new trends and get inspired with new ideas. At Efma we have found very resourceful information to further nurture the discussions of our strategy and consider different perspectives when it comes to define and approach digital challenges in the financial secto
Elizabeth Ramirez Peña Digital strategy manager Bancolombia Colombia
Efma brings together collaborators around the globe who are sincere in building alliances to improve lives through the innovative delivery of financial services. The e change of insights be it via conferences, articles, topical portals, reports, etc., helps improve efficiency at the bank, and ensure a consistent and superior customer expe ience journey for our clients.
Joel Kornreich Group CEO at Alliance Bank Malaysia
Efma is one of my main source for following the latest news in banking and fintech ector and they have many researches, studies and whitepapers.
Gorkem CokcetinVP-fintech engagement, group digital offic Emirates NBD UAE
In a few words, for us, Efma is a think tank for banks and fintechs. The tru benefits of ourmembership with Efma are the experiences exchanged, the increase of knowledge and its refreshment, the networking, and the most interesting reports shared. Every time we attend an Efma conference we can find out what’s happening in the industry and earn a lot! Becoming a member is really worth it for the resources Efma has and the opportunities it presents.
José Gualberto de MatosCEO Empresa Interbancária de Serviços Angola
What they're saying
ABOUT EFMA
COVID - 19
2020 is now defined by the Covid-19 outbreak
and its ensuing impacts on the globe. Efma
recognizes the role it needs to play in connecting
and supporting its members, providing them with
appropriate content and events.
EVENTS
Business continuity planning for Covid-19 A webinar with Lincoln Teo, 31/03 & 01/04www.efma.com/webinar/overview/844
Covid-19 global pandemic 2020: possible scenarios and their impact on retail banks A webinar with Fahim Uz Zuman, 21/04 www.efma.com/webinar/overview/846
How AI can create new opportunities for banks during the crisisA webinar with Rudradeb Mitra, 16/04www.efma.com/webinar/overview/849
Affluent & private banking e-CouncilWednesday 20 May, 2.00 pm CETThursday 2 July, 2.00 pm CET
Digital channels e-CouncilThursday 14 May, 2.00 pm CETWednesday 24 June, 2.00 pm CET
Fintech & innovation e-CouncilWednesday 10 June, 2.30 pm CET
Innovative payments e-CouncilThursday 28 May, 2.30 pm CETThursday 25 June, 2.30 pm CET
Insurance e-CouncilWednesday 20 May, 9.30 am CETWednesday 17 June, 2.00 pm CET
Operational excellence e-CouncilWednesday 3 June, 2.00 pm CETTuesday 7 July, 2.00 pm CET
Physical channels e-CouncilWednesday 27 May, 2.00 pm CETWednesday 1 July, 2.00 pm CET
Risk management e-CouncilTuesday 12 May, 2.30 pm CETThursday 9 July, 2.30 pm CET
SME banking e-CouncilTuesday 16 June, 2.00 pm CET
REPORTS
Managing the Covid-19 crisisEfma special edition, March 2020
Supporting SMEs in a time of crisisEfma special edition, April 2020
Fintechs and bank+fintech partnerships after Covid-19Efma special edition, April 2020
19
COVID-19
Supporting SMEs in a time of crisis
The COVID-19 outbreak is wreaking economic havoc across the globe. What started in China has now spread to virtually every country on the planet. The virus spreads quite effectively from person to person in crowded areas. Armed with this knowledge, countries, to varying degrees, have essentially stopped people from gathering in large groups. Schools, restaurants, and bars have been shuttered. Conferences, festivals, and sporting events have been cancelled. The ensuing economic effects are immediate and severe. The world is facing an unprecedented demand shock.
People are not eating at local restaurants, visiting independent theatres, or even going to the gym. Due to the nature of this crisis, the impact is felt acutely by small and medium-sized businesses. This is your neighborhood café that employs ten people. The catering business that works local events. The boutique hotel on the corner with 25 rooms. These types of businesses cannot open their doors, causing incredible and immediate economic disruption.
There are many more examples of businesses under threat, not to mention all types of second and third-order effects of whole countries and cities being confined o their homes for the foreseeable future. The layoffs are already happening and this is only the beginning. A report by the Canadian Federation of Independent Business (CFIB) found that “a full quarter of small fi ms would not be able to survive for more than a month with a drop in business income of more than 50 per cent.” Another report published last week by the American Enterprise Institute estimated that in America “the cost of replacing 80 percent of the revenue for three months of private-sector fi ms with fewer than 500 employees, excluding the manufacturing, health, education, and financeindustries, to be $1.2 trillion.”
That is an incredibly high number that demonstrates the magnitude of the threat to SMEs posed by the coronavirus. Simply put, SMEs do not have the resources to survive a prolonged period of economic inactivity. SMEs rely on financing f om lenders for all manner of things: to expand their business, to pay their employees, or to purchase supplies. Their monthly cashfl w is very tight and margins are thin. They use their monthly revenues to cover all of their operating costs. Now, with that monthly revenue having dried up, SMEs are under incredible strain. Their revenues have plummeted. They can’t pay rent or their employees. They can no longer pay back their creditors. The impacts are felt by everyone connected to SMEs.
Banks across the world are implementing an array of measures to ease the burden on SMEs as they face a severe demand shortage as highlighted in this special edition by Efma.
Download a copy of the Efma’s special edition: Supporting SMEs in a time of crisis
20 Efma review 2020
STEP
05
STEP
04
STEP
03
STEP
02
STEP
01Deferring loan repayments
• 3-6 months• Property & goods purchases• Provide stopgap for immediate cashfl w needs
Waiving fees• Arrangement fees• Early redraw/overdraft fees• Merchant terminal fees• Establishment fees
Emergency loans and capital support• Immediate financial suppo t to help out in the short term
Accelerated loan response and approval time• Prioritize the most immediately impacted businesses
(i.e. Restaurants, hotels, service-suppliers)• Reduce burden on applicants with a streamlined process
Special support services for SMEs• Being proactive is key, anticipate needs of customers• Dedicated phone lines and advisors• Sector-specific adviso s• Go beyond financial suppo t with health, legal,
and HR advice
Example of a standard SME support package from banks
21
COVID-19
Managing the Covid-19 crisis
If WWII is understood as a crisis there are learning similarities. Treatments designed to address this virus-crisis result in loss of personal freedoms because of restrictions implemented by local, regional, and national governments. Access to certain venues are limited or denied. Implementation of national programs like a War Powers Act can require whole industries to shift their focus from producing products and services associated with their business mission or vision to produce goods and services needed ‘for the cause’. Core centres critical for a community’s or nation’s future can be affected as when schools or libraries are closed. And, of course, biases and prejudices associated with certain classes can be reinforced or promoted through this virus-crisis. Such as when information suggesting the rich or famous get preferential treatment or minorities or particular nations are associated with the cause of the virus.
Unfortunately, most people have never experienced a crisis of this sort so there are not a lot of past crises to use for direct comparisons. What prudent leaders can do is look for ways in which they have managed their own crises and then apply those key learnings to this phenomenon. However, this requires at least three conditions in order to happen. To do this depends, at a minimum, on the crisis, the organization’s management, and the organization’s culture. For example, this virus-crisis’ systemic nature is massive. This crisis affects organizations and the national, regional and local levels and, in turn, virtually all organizations and peoples within those political geographic regions. This makes it a rare crisis for many in today’s organizations to even conceptualize let alone begin to react to with programs and processes. State-level reactions to this virus-crisis has required organizations to send their workforces home and in some cases to completely alter or end for some time the way they operate. This can impact the organization’s economic and social dimensions as well as whole communities in which they operate and their social networks.
For example, if the organization’s current or past management treated previous crises with a ‘one and done’ mentality then any learnings from past crises may be lost or non-existent. I treat ‘knowledge management’ as one of seven core ‘practices and processes’ for effective organizations yet some fi ms have little or no knowledge management practices in place. Key learnings are inventoried because many approach a crisis as something that must be ended and then disregarded as we get on with the tasks set aside while the crisis existed. This problem is only exacerbated when those key learnings leave with the people who were involved and have since left the organization. There is an interactive nature among these conditions and it is best illustrated when one examines the organization’s culture. More specifical y, what and who are valued in the culture. If there are already existing divisions among people who work in the organization before a crisis, why should they come together and work when a crisis emerges? We/they mentalities that exist outside the organization can be carried into the organization as well. Some organizational cultures have drifted away from valuing accountabilities associated with work, performance, or behavior. This is proving to be totally unacceptable, as when charges of bias are revealed, but the problem may be broader than the highly visible cases or allegations. In the book the event-to-disaster stream is outlined for crises like the Wells Fargo Bank scandal, the BP Deepwater Horizon explosion, or the Boeing 737 Max crisis (each of which remains in the news) and in every case one question is examined: Why did this happen? What role did an organization’s culture play in these crises and, then, how did culture link with the nature of the crisis and management or organizational practices.
In this special edition by Efma, Dr. Dennis Tafoya, a crisis management expert and president of CompCite, explains how organizations can handle this crisis.
Download a copy of the Efma’s special edition: Managing the Covid-19 crisis
22 Efma review 2020
Why the economy should recover quickly Sandy Vaci, Efma’s senior advisor and Bay Devonshire’s managing director, explains why he is optimistic about the global recovery from Covid-19.
It’s hard to be an optimist these days. But I have four good reasons to believe the recession caused by Covid-19 will be rather short lived, compared to previous recessions.
1) There is a different cause for this recessionIn a ‘standard’ recession companies shut down becausethere is overproduction, market dislocation, a liquiditycrisis, unrealistic valuations, distorted value perceptions.These are multiple, internal causes. That is, we humanscause them all. And all these causes need to beaddressed before things return to normal. Factories willnot reopen until all the issues are dealt with.
This time it is a single, external cause: the coronavirus. Factories are not producing because workers are not allowed in. This is simply to prevent spreading the virus. Once the pandemic is constrained it is relatively easy to open the factories and start the machines again. All those complex issues inherent in a ‘standard recession’ do not need to be addressed this time. Or, at least, not to the same extent.
2) We are good at overcomingexternal threatsEarthquakes, tsunamis, forest fi es, diseases come andgo. We deal with every one of them. We developvaccines, early warning systems, we rebuild, we createnew technologies. We are much better at dealing withwell-defined xternal threats than learning from our ownmistakes. Humans are also supremely adaptable in theface of external threats. Take a colony of polar bearsand put them into the Sahara. Check back a year laterto see how many have survived. Yet humans populatedthe whole earth, survived ice ages, natural disasters.We are the only species capable of doing this. We aregood at dealing with the world beyond our control.
3) The hardest hit sectors are the most resilientSMEs are the hardest hit when things go south. Theydo not have the cash and capital cushion, the largecustomer base, the stable supplier chains to survive adownturn. But they are small and agile. They are alwaysthe fi st to take advantage of new opportunities at theend of the recession. And services are the most agile.This crisis is hitting services and SMEs very hard. Largecompanies get government attention and money. Theycan keep workers with state subsidies. Entrepreneursand your local barber shop do not have the samesupport. But it is exactly that part of the economy thatis the fastest to come back after any downturn. A lotof people will need their much-neglected haircut afterthe curfews are lifted. Your local barber will probablyexpand and hire extra help to cope with that – withindays.
4) Politicians want to get votesIt is a sad fact that a booming economy is rewardedby voters much more than an excellent universal healthcare system. The blame is also attributed differently. Ifmy loved one dies of Covid-19, the virus has causedit. If I lose my job, it’s because the government did notprotect me. On top of that, there are different multipliersat play. A personal tragedy stays with close family andfriends. A business failure has repercussions for manymore people. This, plus the above ‘attribution bias’, addup to more votes for getting the economy going andless for fighting he health care battle. Politicians wantvotes. They will do what they have to, to get them. A fasteconomic rebound is what they need. This is what theywill focus on.
Of course, I could be wrong. But I wanted to show the logic for believing in a fast recovery. Everyone should decide for themselves what they believe in. I, for one, am betting on the scenario I outlined. I hope I’m right!
23
COVID-19
After Covid-19 bank+fintech partnerships
We are living through an exceptional moment which many people define as ‘ he largest black swan event of our lifetimes.’ There is no question that 2020 will be challenging for fin echs to navigate. However, given the nature of this crisis, which is causing people all over the globe to reconsider their daily routines and movements, prosperous times remain ahead post crisis as financial in titutions are pressured to evolve to meet new customer demands and behaviors.
In recent years, banks have been turning to fin echs to introduce new digital and data-driven tools that have transformed how they do business. From RPA in the back office o automated recruiting to customer-facing technology, fin echs have pushed innovation upon banks. Now, these new tools will not merely be nice-to-have add-ons, but integral to any bank’s strategy in the post-Covid-19 world. Banks that do not radically restructure the way they work and deliver their products to customers risk being obsolete in a future where people are not moving as freely as before.
As far as this crisis is concerned, the light at the end of tunnel has not yet appeared. These predictions were made based on a positive, best-case scenario where things get back to some type of ‘normal’ in 2-3 months’ time. Governments are declaring stimulus packages one after another and pouring almost unlimited liquidity with very low interest rates to reduce the effects. Fintechs and their banking partners can use this event to create new business and foster existing lines of business.
Efma’s senior advisor Görkem Cokcetin, ex-head of fin ech engagement and partnerships at ENBD has divided the fin ech fields in o three dimensions: businesses (primarily SMEs), households, and operations and has taken a closer look at some of the coming developments in each area.
Businesses-SMEs: Small businesses have been serious victims of the Covid19. Many of them depend heavily on daily customer activities and operate with scarce working capital and cash fl w. The hospitality sector has taken the biggest hit as most countries have implemented some form of lockdown, preventing citizens from leaving their homes to do anything other than shop for groceries and medicine. The damage has not been confined o the hospitality sector, with almost every sector experiencing damage from global limits on movements and gatherings.
Households: Some governments will support their citizens by providing certain amounts for each family or higher unemployment support. Two months ago, it would have been difficult o envision the United States increasing their unemployment insurance to $600 a week, but that is exactly what has been implemented as a result of this crisis. Unfortunately, many countries still lack clarity when it comes to delivery mechanisms.
Operations:With interest rates close to zero, banking margins will be razor-thin. Governments will force banks to lend and essentially become a utility provider of loans with high risk and low revenue. Banks will also need to reduce their operating costs due to reduced revenues. Going digital, creating new digital products, and transforming internal processes to digital will be the key to survival.
In this special edition, Efma’s senior advisor Görkem Cokcetin explains.
Download a copy of this special edition by Efma: Fintechs and bank+fintech partnerships after Covid-19
24 Efma review 2020
PROSPECTIVE: FINANCIAL SERVICES OF THE FUTURE
EVENTS
World retail banking summit10-11 February 2020, Dubaiwww.efma.com/wrbs20
Retail banking summit in Lebanon1 July 2020, Beirutwww.efma.com/lebanon20
Innovation & transformation congress21-23 October 2020, Madridwww.efma.com/congress20
Retail banking Asia summit5-6 November 2020, Singaporewww.efma.com/asia20
REPORTS
Retail banking in the Middle EastEfma regional review, winter 2020
APAC review 2020
Efma regional review, spring 2020
25
All banking is digital. Going forward, there is now significant opportunity for banks to differentiate themselves by embracing the next wave of technological advancements. But the future of banking doesn’t only promise elevated levels of functionality and personalization. It will introduce optimization in every aspect of a bank’s operations.
Michael [email protected]
Lincoln [email protected]
Stephan [email protected]
EFMA EXPERTS
26 Efma review 2020
Digital banking landscape: the future is nowLincoln Teo, Efma’s senior advisor and head of Asia Pacific, writes about the technologies and trends shaping the future of finance.
PROSPECTIVE: FINANCIAL SERVICES OF THE FUTURE
Google’s CEO Larry Page said in his 2014 TED talk: “The main thing that has caused companies to fail, in my view, is that they missed the future.”
The future is taking shape!Traditional banks and financial institutions are underincreasing pressure to change technologically and embrace the promise of a new era of banking. Customer experience is turning on its head with a myriad of interventions that are not only interconnected, but communicate, analyze, and use information to drive further intelligent action back in the physical world.
The digital transformation that is driving changes within the banking industry culminates in two things; choices and ease of use. Both are inseparably intertwined. A low-priced loan or a high-yield investment product is just a ‘click’ away — not only to access passively, but to actively engage with, in many cases, from their digital devices.The digital banking trend is underway all over the world. With the explosion of challenger banks in the UK and Europe to recent developments in Asia. In early 2019, Hong Kong handed out eight virtual banking licences allowing financial institutions tooperate branchless savings and loans businesses earlier this year, as the city catches up with other Asian jurisdictions in disrupting traditional banking.
Singapore followed up when the Monetary Authority of Singapore (MAS) announced in June 2019 that it will issue up to five new digital bank licences andsubsequent to that, MAS said it received “strong interest” in its move to open up the banking industry to new competition with 21 applications, many from non-banks, for up to five digital bank licences. Singapore’sneighbour Malaysia has also given indication that it will go down the same path in 2020.
Today, if we look at the changes that financial servicesare facing, there has never been a more exciting time in the banking industry. As technology’s onward rush continues nonstop it provides institutions with opportunities that expand well beyond traditional financial services. Are we going to see branchesand operation centers staffed by sophisticated robots instead of human tellers? Or does it mean a democratization of knowledge where everyone from high net worth investors to mass market savers have access to financial advice from artificially intelligenapps? More than expanding the services offered, financial institutions will be able to process data andengage with consumers faster than ever.
The meaning of technology in this equationLet us step back from these cutting-edge technologies and take a look at what is happening around the world. Something is changing. The world is ‘digitizing’ by taking analogue information and encoding it into zeroes and ones so that computers can store, process, and transmit. It then moves on to ‘digitalization’ which sees the use of digital technologies to change the business of banking and providing new revenue and
27
value-producing opportunities in the process. All these points to the socialization where customers expect frictionless and immediate delivery of services.
It is not surprising that it brings a ‘digital transformation’ which requires the bank or financialinstitution to deal better with change overall, essentially making change a core competency as the organization becomes customer-driven end-to-end. Such agility will facilitate ongoing digitalization initiatives within broader transformation projects.
For centuries, the imposing architecture of banks was meant to signify that customers’ life savings and assets were secure within the vaults of the institution. Today, with the emergence of fintechs and banksgoing digital, the trust remains but it has also shifted. Whether your money is safe with a bank is heavily dependent on the state of technology in use. As these systems start to change globally, it is not surprising to find that the foundations of traditional financiaservices to be shaking because it cannot remain the same as it has been.
The new players As we are seeing the shift of technological innovations, the traditional banking system is now challenged by fintechs and tech giants. These firms are acting like bibanks and disrupting legacy banking systems.
The new challengers looking to upend the financial services industry are not offering anythingrevolutionary just yet. Their offerings are primarily current accounts and credit cards, basics that banks have always offered. But outdated business models and bloated operating costs are hindering banks’ ability to respond to these new threats.
However, new entrants face increased pressure to demonstrate the safety of their businesses in light of recent questions surrounding challenger banks’ risk modelling and sustainability of their business models. According to the Financial Times, in 2000 the top six UK banks accounted for 80 per cent of personal current accounts, according to the Financial Conduct Authority (FCA). By 2017, the figure had risen to 87per cent. Challenger banks clearly still have some way to go before truly disrupting the industry.
To ensure that they fend off newcomers and remain viable, banks must capitalize on their inherent advantages, recognize the expectations of newer generations, and adapt their services accordingly. If they do this, fewer customers are likely to be lured away to the shiny new players, instead opting for institutions they trust to continue meeting their banking needs.
Challenger banks struggleNet interest margin (%)
Metro Bank CYBG Santander UK
2015 16 17 18 19
*CYBG’s 2019 figures include takeover of Virgin Money 2019 figures for H1Source: companies © FT
2.5
2.0
1.5
1.0
0.5
0
28 Efma review 2020
DBS is a people-driven company on an upward trajectory. In a fitting accolade following the bank’sdigital transformation, DBS was named ‘World’s best bank’ by Euromoney in 2019. The bank’s digital successes come from placing people at the heart of the its transformation story, says Paul Cobban, chief data and transformation Officer for DBS. “At the very inception of our journey a decade ago, we made a deliberate, strategic decisionto involve the entire organization in our vision to re-imagine banking and we built it by driving a start-up culture. Contrary to the prevailing wisdom of the time, we made a choice to bring everyone along instead of driving change through a small innovation unit. We chose to keep, nurture and involve our people through all the waves of changes that ensued.”
In a fast-paced digital world, the quality of learning is a key competitive differentiator, says Cobban. “We are passionate about being a learning organization and have created a culture that allows our people a myriad of opportunities to learn and upskill. We unlock the curiosity of our people by empowering and encouraging them to experiment,to celebrate failures and to become teachers. “We developed DigiFY, a curated curriculum on seven digital skills – journey thinking, agile, data driven, digital business, digital technologies, digital communication, and risk and controls, which is offered to our employees through our virtual university, DBS learning hub. More than 80% of our employees have been through the curriculum.“We launched the Data Heroes program to build our data analytics capabilities. This is a first-of-its-kind,six-month program with an intensive and hands-on curriculum designed to equip employees with the skills
While digital developments are crucial to banks seeking to grow their market share, DBS has placed people at the core of its digital strategy, as Paul Cobban, chief data and transformation officer for DBS explains.
A people-driven digital strategy, a key to success
and mindset of a data translator. We have trained over 1,000 employees in Singapore.” Other notable innovations are the bank’s Hack2Hire program, which leverages cloud technologies, machine learning, artificial intelligence, big data and analytics;and its GANDALF scholarship, which promotes a culture of peer-to-peer learning. Employees can apply for a S$1,000 grant to learn a skill of their choice. In return, they have to pay it forward and teach it to at least 10 people. “We facilitate learning by doing through immersive innovation programs such as hackathons, partnering schools and start-ups,” explains Cobban. “More than 5,000 of our employees have benefitted fromthis. We harness our social learning to rapidly spread knowledge across the bank, and we are proud of the more than 30 physical and virtual communities on DBS’s social platforms, that foster collaboration and sharing.The bank’s decision to anchor its digital transformation on its people strategy is the key to its success, remarks Cobban. “The culture of continuous learning that
Paul Cobban Chief data and transformation officer fo DBS
PROSPECTIVE: FINANCIAL SERVICES OF THE FUTURE
29
we espouse embraces both the hardware and the ‘heartware’– the technology and the people who run it.“We have redesigned our DBS customer centre to be much more than just a phone answering service. In addition, we have empowered our Customer Service Officers (CSOs) to learn the skills necessary to createtheir own apps, such as the Alive Super App. These employee-created apps help to improve key aspects of their roles including engagement, performance management, and even online shift bidding. ”We also offer our CSOs career growth, through internal mobility and digital training. Using DBS Skills Optimiser, they can select jobs and conduct a self-assessment to gauge their qualificationand aptitude against those positions. They are then redirected to an e-learning portal, which recommends online courses that can help them skill up for the jobs of their choice."
The proliferation of technology has deeply impacted the behaviors and choices of customers, driving demand for different skills at work and the redefinitionof many jobs. “Through our digital transformation, we have been rigorously instrumenting our systems and customer journeys at a very granular level. We see the future roles in customer servicing and operations as monitoring and managing customer journeys in real-time – something we call ‘customer science’. Using advanced data analytics, we are able to anticipate and predict what customers will do next in their journeys and hence what challenges they may face. This allows us to make timely interventions to resolve issues, sometimes even before they occur.”The bank has restructured the way its employees work to allow for iteration and speed to market. “Two years ago, we adopted a platform operating model to enable us to align with the rapidly advancing digital landscape and increasingly digital-savvy customers. We created a two-in-a-box structure – business and technology leads with joint KPIs and a common, holistic vision to deliver a differentiated customer experience. ”Employees receive training in data analytics journey management, human-centered design and agile development, enabling them to create
seamless journeys that deliver excellence in customer experience. “We realize that there is still a lot of work to do to ensure that our people are ready and protected for whatever workplace changes may unfold in the future.”Cobban says this approach has allowed individuals to transform themselves and their roles – for example, a customer service officer reskilled into a NaturalLanguage Processing engineer and went on to teach our digibank chatbot to respond to customer queries before transitioning into a ‘knowledge specialist’ role. The bank has developed an innovative virtual bank recruiter called JIM, in partnership with Singapore start-up impress.ai. “We want to streamline our hiring process in order to give our applicants an enhanced experience with us. Currently, we are using JIM to hire wealth planning managers. JIM shortlists potential hires by automating the first stage of the hiring process.“JIM reviews resumes, collects applicants’ responses for pre-screening questions, conducts psychometric profiling assessments, and answers questions. It offersapplicants a faster, more streamlined process, with real-time interaction available 24/7, while saving recruiters some 40 man-hour a month.”Partnerships with fintechs are another area in whichDBS is active. The bank’s business-matching program, startup Xchange, matches fintech start-ups with variousDBS Bank units and SME clients to co-create solutions and address business problems in real time.
DBS was awarded the gold innovator of the year at the Efma-Accenture Banking Innovation Awards 2019
DBS Jobs Intelligence Maestro (JIM) was awarded BEST in APAC workforce experience innovation 2019 by Efma and Accenture
We inspire [our people] to become lifelong learners so they can reimagine their roles and the value they can continue to add.
30 Efma review 2020
Open banking is coming your wayEfma’s senior advisor, George Beatty, interviewed Matthias Kröner, fintech entrepreneur and founder of Fidor Bank on the future of open banking. Matthias is a speaker at Efma’s Bank+Fintech conference on 21-23 October in Madrid.
What has been the real response to PSD2 in Europe, compared to what established universal banks had anticipated?PSD2 is considered to be an open door for new competition, a level of competition that previously was not possible. That was the intention of the lawmakers. Clearly, everybody was extremely excited, in particular in the fintech environment. That excitement obviouslytranslates into real numbers. Felix Hufeld, chairman of German BaFin, recently stated that there is a three-digit number of applications – obviously way more than expected. Sadly, but understandably, he did not share what companies have already applied. Maybe even more important: Felix Hufeld calls PSD2 a true game-changer and currently the most exciting development within financial services. So, there is a truly positivesentiment on the regulator’s side which I regard to be most important.
However, the objective was to create a single industry standard. I am not sure whether we have achieved that. Lobbies have created more hurdles than simplicity. One example: instead of a standardized European approach, we have national dialects. The whole thing is definitely more complex and took longer thanneeded. I think it was a great intention, a good start – conceptually it was perfect. However, the executionleaves room for improvement.
On the other hand, PSD2 acts as great inspiration for others. I can report positive feedback from outside Europe. Whenever I am travelling, I am extremely proud to see that other regions are taking PSD2 as a role model for their own local initiatives. Looking at the Australian approach, it’s the perfect example to see how a basic initiative happened in Europe, and how the Australian regulators are taking it one step ahead and integrating other industries, which is not the case with PSD2. It’s a good start for international development and everybody is invited to do it better than on the European continent.
Since the intent of PSD2 was established, how has customer behavior towards privacy and data sharing evolved?The whole data protection and internet trust issue seems to be reaching new peaks, becoming a ‘hot topic’ in society. This discussion is fueled by, for example, many attacks that are actually happening on a daily basis and the way data is being misused by all kinds of players, resulting in discussion regarding data protection and usage. The internet itself definitely hasthis potentially fatal problem overall and needs to gain back trust.
Data, and the trust challenge and responsibility that comes with it, have to be solved within the framework of an overall social effort. I know a lot of initiatives, for instance, emerging from Singapore’s Monetary Authority regulator that take care of the consent, opt-in and opt-out topic, including thoughts regarding bilateral corridors crossing national borders for data exchange. Cloud banking is also related, for example, where is the cloud located – does the cloud store my data nationally on the ground or internationally? All in all, I think we are only beginning to get our hands around the whole topic and its dimension.
What are the implications for markets where open banking has not (yet?) been regulated or supported? What are some lessons learned so far from this?Today, we don’t even see the outcomes of open banking when it is regulated, so I wouldn’t say that we in Europe are in a position to judge its development. I see no disruption as of today, as there is no mass acceptance by consumers. It is therefore way too early to pass judgment. That might change once all the applicants have received their license.
However, talking about open banking, I am extremely convinced that it will be the superior solution. Why? Because we are confronted with changing customer
PROSPECTIVE: FINANCIAL SERVICES OF THE FUTURE
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behavior that is creating new customer-centric problem statements. That will affect banks! At the same time, the technological environment can help us solve these challenges. The banking world has changed from “CRM” (Customer Relationship Management) to “CMR” – Customer Managed Relationship. You cannot respond to this change with traditional recipes.
In a not too distant future world of increasing mobility, IoT, blockchain, AI, etc., banks cannot simply stop servicing their customers just because of their IT-architectural restrictions. If there is a market-sector that is not ready for that overall technological development and the behavioral change coming with it, that market-sector cuts itself out of future development entirely. That means: it is the banks’ obligation to get their heads around that challenge and cope with the future, which is unavoidably, like it or not, coming.
What is a likely successful business model in 10 years’ time for mainstream, retail banking at scale?As I mentioned, we will see a strong change in retail and consumer behavior simply because of technological developments. Retailers have a closer relationship with customers than banks ever had and will have. Given the technological interoperability of various industries, I predict that banks will increasingly disappear. Why? Because banks are definitely not thenumber one place that customers go when they face a life challenge. It is the service or product partner on the retail side that comes first, and then the payment orvalue transaction. Those brand owners and customer owners will drive the future of retail banking, also because open banking allows those players to reach out into areas they have never been before.
This means that banks need to reconsider their positioning. Even if ATMs disappear, banks definitelyhave one remaining advantage – ALM and regulation require banks to know their customers and prove their identity. Today seen as a threat, this obligation might be a USP in the future.
Banks in the open banking future may not be only a storage for value as we know it with money, but could become a storage for digital assets and identity, and this will become an absolutely central point compared to today. However, states like Singapore are already discussing initiatives for creating national/digital ID-agencies, so institutions had better hurry up!
Observing the relevant stakeholders today, it is easy to predict that most banks will further lose their primary relationship with retail consumers, unwillingly handing it over to digital retailers and big brands. The only way to survive, for some banks in that segment, will be by entering into new areas, for example via open banking.
Banks in the open banking future may not be only a storage for value as we know it with money, but could become a storage for digital assets and identity, and this will become an absolutely central point compared to today.
Matthias KrönerFintech entrepreneur and founder of Fidor Bank
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Banking as a living businessGeorge Beatty, Efma’s senior advisor, explains how to evolve banking in its report Digital banking 2025.
How to transform a universal bank to bring it into the digital world and simultaneously keep all the lights on?
The answer is to evolve banking into a living business. One that is capable of growing and changing without the structural rigidities of technical debt.
Three key enablers form the foundation:• Data-driven decisions using internal and externaldata and analytics to derive actionable customer insightand decision support• Lightweight, nimble architecture through cloud-based, enterprise-integrated platforms to fuel omni-channel capabilities and the next generationof innovation• Intelligent, robo-enabled banking at the frontend. Powered by a chatbot interface to initiate queries,customer service actions, or product onboard requests.Plus, analytics and machine learning to fight fraud andmoney laundering in the middle.
Accenture uses the term digital decoupling as a transformation approach which applies new technologies, development methodologies, and migration methods to build systems that execute strategy on top of legacy systems. Organizations can then decouple the rapid execution of their business strategy from the more lengthy and gradual transformation of the enterprise. In simple terms it can also be called two-speed IT, or modular design.Efma held a series of banking forums with senior bankers in Singapore to examine these issues. The output from the forums contributed to this white paper on Digital banking 2025.
PROSPECTIVE: FINANCIAL SERVICES OF THE FUTURE
Download a copy of the Digital banking 2025
INNOVATION AND FINTECHFintechs continue to push traditional players to innovate or risk becoming obsolete. Banks are responding by fostering innovative cultures to adaptto the changing times and deliver customer-focused solutions.
EVENTS
Operational excellence council3 meetings a year (physical & online)www.efma.com/operationalexcellencecouncil
Financial NewTech Challenge Ceremony 28 May 2020, online meeting fintechvisor.com
Bank+Fintech
21-23 October 2020, Madridwww.efma.com/bankfintech2
Innovation & transformation congress21-23 October 2020, Madridwww.efma.com/congress20
Customer insight & growth banking awards Fall 2020 Madrid - By invitation only innovationinbanking.efma.com
REPORTS
Converting credit leads to customers: How machine learning can unlock lending potentialEfma-Edgeverve Systems, February 2020
How AI can make banks relevant in 2020Efma-NG DATA, February 2020
Machine learning in financial institutionsEfma-Google, June 2020Carlo Giugovaz
Meaghan [email protected]
Tsukasa [email protected]
Rudradeb [email protected]
Yvon [email protected]
EFMA EXPERTS
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34 Efma review 2020
We hear a lot about the success of big tech companies in terms of innovation. What is their secret sauce? Do they innovate differently than the rest of the world? Yes, they do innovate differently. I wouldn't call it a ‘secret sauce’ but would say they are ‘cut from a different cloth.’ Big tech companies have innovation built into their DNA. They are continuously innovating because that is what they've done from the moment they launched. They have their entire culture and management structure built around innovation, so it comes naturally to them. Compare that to a bank, where innovation was never part of the culture. What bank manager ever had innovation built into their KPIs until very recently? This is why you see so many in the financial services space looking to big tech tocopy their approach to innovation. They are belatedly trying to integrate innovation into their institutions and find it very challenging. As I say, “innovation can’tbe bolted on to an existing non-digital company like training wheels on a child’s bicycle.” Instead, it needs to be instilled in the culture or DNA of the institution. It is a considerable transformation and one that is tremendously difficult because it is so expansive.
Ant Financial is often cited as a model in terms of innovation in financial services, but what about Chinese incumbent banks? Are they innovative?Yes, the incumbents are quite innovative; they were forced to be. WeChat and Alipay disrupted China's banks in both payments and deposits, which forced incumbents to spring into action. According to the “2018 China Direct Banking White Paper”, 135 online direct digital-only banks, what we would call neobanks, were opened by commercial banks in about three years. They learned the hard way that their role in retail banking is not a sure thing and that
they had to meet customers' digital expectations and fight back against digital competitors.Besides setting up new digital banks, they’ve also been trying to build out internet platforms that allow their clients to do more than just bank on their websites. ICBC Bank, for example, now operates an e-commerce site called ‘Rong E Gou’ that sells consumer items throughout China. It is a massive effort with some 10,000 merchants and reported sales of RMB 1.27 trillion ($US184 billion) in 2016. Buyers can get loans to help them purchase online and can improve their credit rating with repayment. A bank running an e-commerce operation may sound odd to Western bankers, but by building a platform of their own, ICBC is fighting back against tech giantslike Alibaba.Chinese executives made digital innovation a top priority because of the existential threat that big tech presented to their business. I would contrast this to many Western banking C-level executives who seem to live in a state of denial, even though GAFA companies are already entering into retail financialservices. Not all Chinese banks are super innovative; some of the state-owned banks are playing catch-up as are some of the regional commercial banks.
Award-winning executive and fintech expert Richard Turrin spoke with Efma about the state of innovation in China and how the government has been forward-looking in its technology promotion.
China: a leader with one eye on the future
INNOVATION AND FINTECH
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Are Chinese incumbent banks threatened by new players? Absolutely and this threat is very much at the heart of their desire to innovate. In the payment space, Accenture predicts ongoing cumulative losses of $US 61 billion to China’s incumbent banks between 2019 and 2025 due to digital payment platforms. Currently, Alipay and WeChat Pay represent about 90% of the payment market. Meanwhile, the loan books of the neobanks have grown with incredible speed. The total credit on the books of the biggest neobanks owned by WeChat and Alipay at the end of 2017, was RMB 1.3 trillion, or 22% of all of China’s consumer credit. An impressive figure considering they did this withinthree years of launch. So yes, being threatened is undoubtedly an excellent motivator for innovation. But there is an even more significant threat. Bankingis becoming an afterthought. With the ease of digital payment provided by WeChat Pay and Alipay, most users don’t care much about the bank’s app or services, they are irrelevant, and banks are used only for storing money. Relegated to the role that some refer to as “dumb pipes.” Banking being considered an afterthought by clients is, in my view, what makes bankers in China cringe more than anything else. The thought that their bank is not “in mind” and not considered “at the heart” of their client’s financialworld is a profound change for retail bankers.
What about the Chinese fintech ecosystem? Is it really promising and impressive?Yes, I would agree that the ecosystem is both. Impressive because of the scale of fintech use in China. While fintech has undoubtedly gone mainstream inthe west, it is better integrated into the life of ordinary people here. If you had asked me in 2016 when WeChat and AliPay use was taking off: "How likely is it that Shanghai, a city of almost 30 million, would go cashless?" I'd have said you were crazy. Cash was still used everywhere; the thought that it would be nearly eliminated in about two years is still mind-boggling to me. Now, according to Business Insider Intelligence "Global Fintech Landscape," China has the highest number of "digitally active consumers who use fintech"in the world at 69%. For comparison, the global average is only 33%, with India in second place at 52% and the UK in third place at 42%. So yes, the ecosystem is impressive because fintech is completelymainstream here and developers simply build it into digital products everywhere. You don’t have to be a “fintech developer” to see an opportunity to buildsome new fintech function into your code.It's also promising, and I'll give you the best example of how fintech has benefited China. China has thworld’s largest unbanked population at around 225 million adults. The World Bank's Universal Financial Access 2020 program shows China's impressive efforts in bringing financial inclusion to its people.In the six years between 2011 and 2017, China increased the number of adults with basic banking services by an impressive 16% due to the use of mobile digital banking platforms. So that’s the promise of fintech, financial services for everyone
36 Efma review 2020
Transitioning from open banking to “open X”The World FinTech Report 2019 from Capgemini and Efma explores how the future is moving to a shared marketplace where banks must think beyond open banking and transition to an impending phase we call open X.
The World FinTech Report (WFTR) 2019 indicates that even though open banking has yet to reach maturity, the financial services industry is entering a new phaseof innovation – referred to as “open X” – that will require deeper collaboration and specialization. The report advocates that banks and other financialservices ecosystem players must begin to plan accordingly and evolve their business models.The WFTR 2019 identifies a dual challenge: fintechare struggling to scale their operations and banks are stalling on fintech collaboration. As a result, industryplayers are looking to leapfrog beyond open banking towards open X, which is a more effective, structured form of collaboration, facilitated by Application Program Interface (API) standardization and shared insights from customer data. The era of open X will create an integrated marketplace, with specialized roles for each player that will enable a seamless exchange of data and services, improving customer experience, and expedite product innovation.
Key findings of the report include:
Open X will transform industry norms and assumptions Open X will lead the financial services industry toa shared ecosystem or marketplace, in which the industry reintroduces the re-bundling of products and services, and both banks and fintechs must re-evaluatetheir strategy for innovation and serving customers.
APIs will be critical open X enablersThe WFTR 2019 also finds that industry players arelooking at two potential monetization models for APIs – revenue-sharing (which 60% of banks and 70% of fintechs think is feasible) and API access fees(supported by 46% of banks and 55% of fintechs).However, only about a third of banking executives said they are currently well equipped to monetize APIs.
Privacy, security and collaboration concerns may slow progress While banks and fintechs said they understand theimportance of collaboration, apprehension over privacy and security remain top of mind. The WFTR 2019 responses suggest that many banks and fintechsremain unprepared for open banking, let alone for the increased demands of data sharing and integration that open X will bring.
Open X participants must choose strategic,specialty-based rolesWithin the open X marketplace, banks will need to enhance their integrated (traditional) model first andthen focus on areas of specialized strength. The WFTR 2019 identifies three strategic roles expected to evolve as a part of open X (see open banking business roles graphic).
In the era of open X, ecosystem players will have to work together more effectively than they have previously.
Vincent Bastid,Former CEO of Efma
Download a copy of the World FinTech Report 2019
INNOVATION AND FINTECH
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What is the best way to measure the success of an innovation lab?
There is no clear answer to this. No two companies will have the same measurement system, which means a prescriptive solution isn’t useful. Measuring a lab’s contributions largely depends on the aims of the management. These are expressed broadly in the mission statement of the lab, and ideally, more specifically at thestart of every new project. Meeting these goals should be the primary metric of success, and its measurement will be an iterative process that is adjusted and improved over the course of the lab operations. Not all traditional innovation metrics will map with your lab’s remit, for example the number of patents gained, the budget of the lab relative to sales, and percentage of sales attributableto a new product.
Of course, these are solid metrics, but traditional financial metrics only reveal part of the picture of thestate of innovation in a company. A lab’s enterprise goes above and beyond these baseline measures and those achievements which are less tangible achievements should be acknowledged. This may be at odds with how you evaluate the rest of your business, but it is important to remember that the lab is in a unique position to impact the company’s future. Much of its work won’t fit neatly withinstandard measures.
By award-winning executive and fintech expert Richard Turrin.
SUPPLIER ROLEThe entity provides and services to third
parties for distributionThe entity acts as trusted third party
to connect producers and distributords
The entity sources products and services fromthird parties to distribute via its channels
(Traditional role)
ORCHESTRATOR ROLE
AGGREGATOR ROLE
INTEGRATED
Inte
rnal
Exte
rnal
InternalProduction
Dis
trib
utio
n
Source: Capgemini Financial Services Analysis, 2019
External
Efma-Capgemini Financial NewTech Challenge 2020
The Financial NewTech Challenge 2020 rewards the most innovative financial newtechs in banking, payments, wealthmanagement alongside the most inspiring bank + financialNewTech collaborative projects at scale. The winners and the Financial NewTech Watchlist 2020, which will include the top shortlisted financial newtechs from the challenge, willbe unveiled online on May 28, 2020. This challenge is powered by FinTechVisor, a global platform that enables
fintechs, insurtechs, regtechs and financial n techs* to showcase their solutions as well as empowering an interactive matchmaking tool to foster new partnerships for them with financial institutions
* Financial newtechs are all start-up and scale-up firms which provideB2B solutions for financial institutions
More info: fintechvisor.com
Open banking business roles graphic
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Efma and Accenture CIG banking innovation awards 2019 Eight banks from Asia, Europe and South America are winners of the seventh annual Efma and Accenture customer insight and growth banking innovation awards.
Back for its 7th edition, the Efma-Accenture Customer Insight & Growth (CIG) banking innovation awards has once brought together a record number of 605 innovations from 235 institutions in 70 countries to celebrate and reward the most innovative projects and initiatives in the retail banking arena. Winners of the eight categories were selected through a combination of votes by a panel of judges comprising senior retail bankers from around the world and by Efma members and non-members from retail institutions who voted online.“The 3,369 innovations now in our library are proof of banking leaders transforming the retail financialservices landscape and reshaping the future of the industry,” said Vincent Bastid, former CEO of Efma. Piercarlo Gera, who leads Accenture's CIG for financial services globally at the time, said, “The futureof banking is in the platform economy and these awards showcase banks and their journey to transforming their business models, with retail banks rising to the challenge of competition from non-traditional providers. The geographic range of this year’s winners indicates that innovation knows no boundaries, as competition intensifies across all markets.”
ANALYTICS AND AI AWARD
CaixaBank (Spain) for Chatbot “Neo”
DIGITAL MARKETING AWARD
Banco Bradesco (Brazil) for End-of-Year Firefly Campaign
Developed using artificial intelligence, the personalcustomer service assistant is available 24/7 to provide support across business processes in three different languages.
The campaign produced a video promoting diversity and inclusion and is the most viewed commercial in YouTube Brazil history.
View the full repository of innovations at
efma.com/innovations
INNOVATION AND FINTECH
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OFFERING INNOVATION AWARD
KEB Hana Bank (South Korea) for GLN, Global Loyalty Network
PHYGITAL DISTRIBUTION AWARD
Krungsri Bank (Thailand) for Krungsri Digital Homeloan
RESPONSIBLE BANKING AWARD
BNP Paribas Corporate & Institutional Banking (UK) for ClimateSeed
WORKFORCE EXPERIENCE AWARD
Alior Bank (Poland) for Smartphonization – a mobile way of working
NEOBANKS AND SPECIALIZED
PLAYERS AWARD
illimity bank (Italy) for illimity The New Paradigm Bank
GLOBAL INNOVATOR AWARD
DBS Bank (Singapore) for its 2019 innovations
GLN is a payment hub that links major financialinstitutions, retailers and loyalty point operators to a unique global network that enables users to freely pay and transfer digital assets to one another.
This product provides a better customer experience during the mortgage journey using "Di-Sales" and connecting it with the home buying journey using "Krungsri Homeloan Connect".
It is a digital voluntary carbon-offsetting platform that helps connect organizations with tangible sustainable projects to cut carbon emissions and support the achievement of the U.N. Sustainable Development Goals.
Alior Bank has given its employees safe smartphones with a preinstalled set of applications to move them to the digital world and enable the bank’s digital transformation.
Relying on the best information technology, the bank provides new levels of quality, service and efficiency for three underserved markets in Italy:small and medium-sized enterprises, corporate non-performing loans, and direct banking.
DBS Bank was named global innovator for innovative products it brought to market in 2019, including a data heroes’ program to equip employees with big data and data analytics skills; an end-to-end cross-border blockchain trading platform; and POSB Smart Buddy, the world’s first in-schoolwearable tech savings and payments program.
Submit your innovation for the 2020 CGI banking
awards: Entries are now open for the 2020 banking
innovation awards. The best innovation in each category
will be announced at a dedicated awards ceremony
in fall 2020. Submit your innovation at efma.com/innovations
40 Efma review 2020
HSBC was founded in 1865 by two fellows in the UK based in Hong Kong who had this audacious desire to finance trade with the US. In 1865 that’s essentiallya fintech company doing logistics! In a way, it wasthe Amazon of financial services at the time. 154years later, think how many companies don’t exist anymore – yet look at the bank today! It’s very easy to talk about innovation, but at the end of the day it’s about execution. The regulatory constraints we have as an industry to keep our customers’ information safe limit the possibilities for a bank compared to a tech company. But that doesn’t give the banking industry an excuse to be mediocre. Instead, it means we have to be even more progressive, because customers have more choice today than they’ve ever had. The advent of fintech competition that deliver one product orservice exceptionally well – faster, smarter, cheaper and when, where and how the customer chooses – is a big threat to banks. Having said that, the role of the bank in society is very important – for economic development, security, community. I welcome competition and believe in collaboration, especially regarding fintechs, which is why here at HSBC wepartner with fintech companies to deliver betterexperiences.
At HSBC, we don’t simply define value in justeconomic or customer value terms. Creating value could mean value to employees. Arguably, it’s the people working in financial services that have beenthe most impacted over the last 10 years – if you look at morale, employee engagement scores, and attractiveness of financial services. One of the thingswe’ve done with the employee in mind is partner
How HSBC Bank USA embedded innovation in their DNAJeremy Balkin, Head of innovation at HSBC Bank USA, shared how the bank has made innovation a key component of its culture.
with Samsung Smart Watch to trial the world’s firstdeployment of wearable technology. We optimized our frontline staff communication and the results were staggering – not only in the efficiency gains in terms ofcustomer waiting times and happiness, but also how our employees feel.
A year ago, through a partnership with SoftBank Robotics in Japan, we launched the first consumerfacing robot called ‘Pepper’, to gamify the banking experience and excite the customer in a branch in New York. Now we’re in four US markets including Miami with a 60% increase in new business at the branches where Pepper has been deployed. Often when banks get press attention, it’s negative. So, I found it most heartening, not only because our story has put a smile on our customers’ and employees’ faces, but also because it has delivered tangible business results. There’s a myth that robots are going to replace people. Technology and people need to work together.
It’s very easy to talk about innovation, but at the end of the day it’s about execution.
Jeremy BalkinHead of innovation at HSBC Bank USA
INNOVATION AND FINTECH
CHANNELS ANDCUSTOMER EXPERIENCE
With increased competition from tech-focused neobanks and big tech companies, customer engagement is crucial for financial institutions. Consistent, frictionless, and delightful experiences across all channels is now mandatory for a superior customer experience.
EVENTS
Digital channels council3 meetings a year (physical & online)www.efma.com/digitalchannelscouncil
Physical channels council3 meetings a year (physical & online)www.efma.com/physicalchannelscouncil
Customer insight & growth banking awardsFall 2020 MadridBy invitation only innovationinbanking.efma.com
REPORTS
Improving origination in the branchEfma-VeriPark, June 2020
How CaixaBank created a bank for millennialsEfma-CaixaBank, May 2020
George [email protected]
John [email protected]
Mark [email protected]
Datuk Michael [email protected]
Emel Temuç[email protected]
Sandy [email protected]
EFMA EXPERTS
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42 Efma review 2020
In Africa, the Bank of Africa Group, Crédit Agricole du Maroc, Standard Bank, Standard Chartered Bank, and Wema Bank are embracing the latest technology to offer exciting new customer experiences and product offerings in a more cost-effective manner and tackle financial inclusion head on.
According to John Berry, CEO of Efma, the digital evolution occurring in Africa means more than updating branches and converting customers to digital channels, instead involving a broader challenge of cultural change and workforce transformation.
"Africa has huge opportunities for successful growth for retail banks that have the desire to adapt, learn, and change to deliver excellence in customer experience. Technology is the enabler. While it is management’s willingness to embrace change that starts the journey, the way transformation is executed itself will be the difference between success and failure,” says Berry.
For example, Amine Bouabid, CEO of Bank of Africa group, speaks about the different stages of the digital journey in Western and Eastern Africa; Jaydeep Gupta, regional head of retail banking at Standard Chartered Bank for Africa and the Middle East, talks about the core workforce transformation that is required to balance digital channels with a human touch.
Download a copy of the report: Africa: delivering service excellence in a digital world
CHANNELS AND CUSTOMER EXPERIENCE
Delivering service excellence in a digital AfricaJohn Berry, CEO of Efma, provides an insightful introduction in the 'Africa: delivering service excellence in a digital world’ report.
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Africa has huge opportunities for successful growth for retail banks that have the desire to adapt, learn and change to deliver excellence in customer experience. Technology is the enabler. While it is the management’s willingness to embrace change that starts the journey, the way transformation is executed itself will be the difference between success and failure.
John BerryCEO of Efma
The cultural change of going digital has required a lot of training[...]. We are catching up very quickly and the number of customers going digital is exponential. Every month we have huge growth.
Amine BouabidCEO of Bank of Africa Group
Our main concern is developing the ability to leverage digital technologies that deliver the best customer and employee experience.
Abdelmounaim Dinia Deputy general manager at Crédit Agricole du Maroc
At Standard Bank in South Africa, less than 1% of transactions are done in a physical branch. Our digital transactions are growing at a huge rate, over 30% in the last three years.
Khomotso MolabeCIO of personal and business banking at Standard Bank of South Africa
Our vision is ‘digital with a human touch’. As such, it is important that we provide a digital experience that still feels personal.
Jaydeep GuptaHead of retail banking at Standard Chartered Bank for Africa and the Middle East
Managing change in any organization begins with awareness, usually employing a top-down approach. Wema Bank has adequately sensitized its staff to the need for innovation and digitization in its services delivery system.
Dotun IfebogunHead of retail at Wema Bank
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Excellent customer experiences in the digital ageVikram Krishna, executive VP and head of group marketing & customer experience at Emirates NBD explained at Efma’s first ‘Customer experience’ webinar.
How does Emirates NBD manage customer journeys?Emirates NBD is a leading bank based in the Middle East, founded in 1963. We have USD 146 BN of assets and close to 25% of banking customers in the UAE. We have a growing presence in Saudi Arabia and Egypt, and are in the advanced stages of acquiring DenizBank in Turkey. We are currently in the process of a large digital transformation of our technology stack that will significantly enhance ourability to meet the needs of the customer. The UAE is quite a unique market because our customers belong to close to 190 countries. To put this into context, 90% of UAE residents are actually expatriates. Our biggest challenge as an organization, therefore, is meeting diverse needs across different ethnic groups who usually list English as a second language.
When you’re dealing with so many cultures, how does Emirates NBD strive to engender a cultural change across the business that puts customers first?There are a few things that we do consistently that help us. First of all, customers are at the heart of any new product or service that we introduce. We go through a whole range of testing, research, and trialing to make sure that we’re actually meeting customers’ needs.Secondly, we focus on understanding the product structures that this diverse customer profile requires.An example is remittance payments, which are a big business here because of the large expatriate population. Through our online banking app and platform, you can send a remittance to certain countries across the world within 60 seconds. Another notable example is Liv., our digital bank for millennials and Gen Z customers. Liv. is a mobile-only proposition
that caters to the unique needs of the connected generation. It’s the fastest-growing bank in the country, with over 200,000 customers.We also have a comprehensive measurement system based on surveys and face-to-face interaction, ensuring that we are constantly listening and reacting to what’s important to customers. An initiative we recently rolled out to enhance the customer journey is ‘Better Together,’ a beta community of almost 500 customers that provides us with valuable and honest feedback when piloting new services. We can then use that understanding to improve our services before going to market.
I think as bankers we need to look outside our industry, because what’s happening there is far more interesting.
Vikram KrishnaExecutive VP and head of group marketing & customer experience at Emirates NBD
CHANNELS AND CUSTOMER EXPERIENCE
In terms of ROI, how do you convince some of the finance guys that investing in customer experience, for example through training, goes to the bottom line?Emirates NBD operates in a highly competitive market with 46 banks serving a relatively small population of about 3.5 million banking customers. Accordingly, the customer experience has to be at the heart of what we do for us to ensure we remain ahead of the curve – and our board supports this. In fact, at least one board or executive committee meeting every year includes a comprehensive discussion on how we can improve the customer experience. This helps a lot – if we trace our Net Promoter Score (NPS) back, it has progressed from the low 20’s to 46, which puts us among the leading customer experience companies in the country. KPMG recently conducted a review, and we ranked seventh across a very diverse set of organizations, including hospitality. We are quite proud of that.
How does Emirates NBD use performance metrics?When it comes to measurement, we have a done a few things differently. One is that we’ve created a clear correlation across our product segments between customer service and revenue – and we’ve seen a direct improvement in NPS through revenue. This has really helped because the skeptics are more easily convinced when the numbers in front of them point to the fact that customer experience leads to really good sales. Secondly, we’ve linked our incentive payments to service, rather than just net present value or revenue. This has also helped significantly enhance the levelof service delivery. Thirdly, the “customer” KPI and its related attributes are weighted anywhere between 15 to 25% on our organization-wide scorecard system.
Where has Emirates NBD’s focus been in using technologies like AI bots and machine learning to improve customer experience?We are continuing to explore each of these technologies in depth. For example, we have introduced a direct application of big data, where all the interactions in real time across the bank are aggregated into a platform which is available to relationship managers. As a result, we’ve had strong feedback that our customers are pleased with the knowledge that our relationship managers demonstrate. We’re also in the advanced stages of deploying an enterprise data platform across the group to make data available to our customers when it matters most. Equally, when it comes to AI, we are
exploring different applications, from chat bots to voice-assisted protocols and augmented technologies at the call center. In fact, we are in the advanced stages with Amazon of looking at how AI and voice-assisted services can facilitate interaction with banks. We are also investing in and looking at scaling up blockchain capabilities.
Which industries have provided the biggest learnings in terms of customer experience?We are always taking inspiration from industries across the world that are raising the bar when it comes to customer experience. In the airline industry, Emirates Airline has raised the bar with its service delivery and how they consistently scale that up. We’re also looking very actively at the hospitality sector. Given that Dubai is a world-class tourism hub, standards are high for hotels operating here, specifically from a trainingperspective. In our organization, we have built our customer service academy on some of the principles that we’ve learnt from this sector, for example making the training process experiential. Across our two-day training programs, our staff become customers and experience retail, hospitality and other sectors, and then use that learning to reflect upon and improve theirquality of service. We also look at top-tier multinational companies worldwide that are redefining the digitalcustomer experience. We have partnerships with several top tech brands including Amazon, Apple, Google, and Facebook to elevate our customer value proposition, and we’re trying to see what we can do across different verticals to bring more value to our customers.
I think as bankers we need to look outside our industry, because what’s happening there is far more interesting. I love the way Uber has redefined the experience forcustomers. I love the way Booking.com and TripAdvisor have completely transformed the travel industry. I’m also very interested in how the healthcare industry is moving on – how they’re moving from ‘sick care’ to ‘health care’ and how they’re providing proactive and comprehensive solutions.
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Great customer service does not happen by chanceRetail banks are lagging behind customers’ expectations, according to a new report from Forrester and Efma entitled ‘Use your contact center to deliver great banking customer experiences.’
56% of the executives surveyed from 61 retail banks worldwide confirmed they considered deliveringconsistent customer service across all channels to be among their organization’s top three priorities in the coming year.
Customers seek convenient and effective customer serviceThe digitization of retail banking has evidently transformed and heightened customers’ expectations from customer service. Key findings from the reportemphasize numerous customer expectations in retail banking, including the need for convenience, efficiency, speed and consistency across differenttouchpoints and channels. However, the state of play demonstrates that most banks are not meeting these standards.
Great customer service requires disciplineIn order to meet these demands, banks’ customer service strategy must be redesigned. While this requires discipline, the report reveals, Forrester has proven it is a source of competitive advantage. The report highlights where some banks’ strategy is missing the mark, for instance, by failing to gather customer feedback, or to integrate their strategy across multiple channels. Crucially this report shows what leading banks in the industry are doing to improve the quality of customer service. Examples include surveying customers to understand their communication preferences, reviewing customer and agent feedback, and leveraging data.
Retail banks need to excel in four main areas — strategy, people, processes, and technology — in order to provide easier, more effective, and more emotionally rewarding customer experiences.Efma and Forrester recommend four main actions: aligning the customer service strategy across the organization; developing a customer-centric culture; redesigning processes to support customers across channels; and leveraging technology to deliver speed.
Which of the following initiatives are likely to be your organization’s top three priorities over the next 12 months ?
Delivering a consistent customer service experience across all channels, including the contact center
Leveraging technologyto improve efficiencies andcut costs in the customer service department
Helping customers complete more high-value bankingactivities through digital touchpoints by investing in liveinteraction solutions
Leveraging technology to support customerservice agents more effectively
Offering more personalized customer service in the contact center
Changing performance metrics to make our contact center culture more customer-centric
Investing in customer service agent training or retraining, management and career pathing
56%
41%
39%
28%
26%
13%
8%
Download a copy of the report: Use yourcontact center to deliver great banking customer experiences
CHANNELS AND CUSTOMER EXPERIENCE
INNOVATIVE PAYMENTS
EVENTS
Innovative payments council3 meetings a year (physical & online)efma.com/innovativepaymentscouncil
Bank+Fintech21-23 October 2020, Madrid삙
With more competition than ever in the payments space, notably from big tech’s, providers across the world are under pressure to deliver more optimal, convenient experiences throughout the payments value chain.
EFMA EXPERTS
George [email protected]
Meghan [email protected]
Datuk Michael [email protected]
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Facebook Libra: opportunities and challengesThe latest Efma and BCG point of view studied Facebook’s Libra initiative: its design and differentiating factors and the implications for banks.
On 18 June 2019, Facebook announced project Libra, a cryptocurrency intended to enable consumers and merchants to transact through both Facebook’s ecosystem and potentially other channels. Having a digital means of exchange is the missing piece of the puzzle that Facebook needs to offer an e-commerce platform in geographies where mobile penetration is high but banking penetration is low—and where other global e-commerce players might struggle to turn a profit — and Facebook has long-lasting ambitions to bethe entry point to the web.Facebook’s plans for Libra are ambitious. Its avowed goal is to empower the estimated 1.7 billion unbanked population worldwide through a “simple global currency and financial infrastructure”. Libra proposesa ‘low volatility’ cryptocurrency (or ‘stablecoin’) intended to support C2B and P2P transactions, and
is complemented with a ‘smart contract’ overlay platform to facilitate “responsible financial servicesinnovation” by third parties. A global network of authorized resellers could enable retail end-users to purchase Libra coins in exchange for fiat currency,minting or retiring Libra coins according to local demand to match the value held in Libra’s Reserve. Facebook’s newly-formed Calibra subsidiary will develop consumer-facing financial products builton Libra, starting with the Calibra digital wallet. Exhibit 2 presents an illustrative view of Libra based on the information available in the white papers published upon its announcement. From the outset, although Libra’s design appears to adequately address some of the key design criteria for a low-volatility cryptocurrency (or ‘stablecoin’), it also raises many potential challenges, particularly around monetary stability, regulation, and privacy.
How does Libra work ?
The user has to regsiter and provide a valid photo ID
The Libra Blockchain is pseudonymous and allows users to hold one or more adressesthat are not linked to ther real-world identity
Traditional Crypto’s volatility? Basket of currencies
Libra will be paired up tostable fiats to anchor its priceand prevent volatility
Basket of low-volatility Assets
• Banking deposit• Government securitiesin currencies fromstable Central Banks
In case of large currencyfluctuations these assetssecure Libra’s price stability
Libra Association maintainsthe basket of assets
Authorized Resellers
Libra Reserve
• Wallets• Third party resellers
Minted new Libras
The user can use its existing Libra balanceto purchase, pay bills or make tranfers(local/international)
• Merchants• eCommerce (e.g. Ebay)• Ecosystem of apps (e.g. Uber)• Billing (e.g. Vodafone)• P2P transfer services
- Calibra wallets will allow p2ptranfers through Facebook appecosystem (Whatsapp, Messenger, Instagram)
What is Calibra?
What is the Libra reserve?
Facebook has founded a regulated subsidiary called «Calibra» toensure separation between social and financial data and to buildand operate services on its behalf on top of the Libra network
Source: Facebook/Calibra, press research, BCG analysis Cop
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The Association’s purpose is to coordinate and provide a framework for governance forthe network and reserve
• The Association is governed by the LibraAssociation Council, which is comprised ofone representative pervalidator node
All transactions will be recordedon Libra’s Blockchain withanonymized data from theparties involved
Fiat Currency Fiat Currency
INNOVATIVE PAYMENTS
Download a copy of the report:Facebook Libra: what are the opportunities and challenges for banks?
Delivering payments excellence for a streaming giantKristen Morrow-Greven, director of payments/partner ecosystem for EMEA at Netflix, is a speaker at Efma’s Bank+Fintech conference in Madrid on 21-23 October 2020.
Could you tell us about your work at Netflix?My team has two primary goals -- we ensure that payments do not prevent a customer from signing up for Netflix, and we ensure that payments are nota reason why a customer leaves Netflix. We bringlocal payment methods to customers across the EMEA region and optimize performance for our subscription payment model.
What is the main challenge in terms of payments for an online firm like Netflix?The biggest challenge for our payments team is adapting our subscription model in markets where credit cards or other real-time payment methods are not commonly used.
What will you be speaking about at the Bank+Fintech conference?I will discuss how Netflix engages with banks todayand explain how our approach differs from most merchants. I will look at some of the different bank partnerships we have had in the EMEA region to show how collaboration can be beneficial to banks, theircustomers, and Netflix. I will also address some ofthe biggest challenges I see for the future of recurring payments to help initiate a conversation where banks can innovate or where fintechs might step in
What are some payment innovations that really wowed you in recent years?Mobile payment innovation has really taken off, and it has delivered a new meaning to frictionless payments. Card on file tokenization is anotherdevelopment which I will be watching closely. It can improve the payment experience for customers, create efficiencies for merchants, and enhance securityacross the entire ecosystem.
In your opinion, what will payments look like in 2030?Technology will continue to be the enabler and driver of change for payments. Consumers will be much more aware of the value of their personal data, and they will be focused on keeping it secure, but also leveraging it to create more personalized experiences when paying. Plastic cards will be a thing of the past, and open banking, a term we are just starting to use, will become the norm.
The biggest challenge for our payments team is adapting our subscription model in markets where credit cards or other real-time payment methods are not commonly used.
Kristen Morrow-GrevenDirector of payments/partner ecosystem for EMEA at Netflix
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Exploring the potential of blockchainTherese Torris, Efma senior advisor, consultant, entrepreneur, writer and senior contributor for Crowdfund Insider, explains in a recent report.
An overwhelming majority of corporate decisionmakers believe in the business case for blockchain. Executives from Efma members including ING, Alior Bank, and KBC expect that blockchain will transform many current poorly integrated patchworks of centralized financial networks into more efficientdecentralized, and collaborative transaction networks. They view areas such as global payments, supply chain management, or the management of any asset whose ownership can be digitized and encrypted into a token, as likely targets for blockchain disruption.This is the long-term vision.
Currently, however, a blockchain project requires a sizable investment into an immature and fast-moving technology. What does it take to launch such a project and, most importantly, rally a meaningful group of partners to support the blockchain transformation of an ecosystem?We can look at Facebook’s recent announcement of the blockchain-based cryptocurrency Libra as a major case study in answering these questions. Libra demonstrates the hopes, challenges and risks associated with a large corporate blockchain project.
To conclude, it is hard to predict the future of Libra. When it comes to innovation, fear is often a stronger argument than greed. However there seems to be much to gain from closely watching how the blockchain project unfolds.
The development of new technology requirestrailblazers who will lead others.
Tomasz Sienicki,Blockchain Strategy lead at alior bank
We distinguish three main growing pains with this emerging technology: technological, regulatory, and organizational challenges.
Mariana Gomez de la Villa, Program director, distributed ledger technology at ING
We are working on a blockchain-based solution that reuses corporate customer data to onboard the customer faster at other banks and remove project duplication.
Dirk Hermans, Blockchain solution owner at KBC Bank & Verzekering
I see blockchain as a way to establish trust and advocate transparency, not to be feared, but openly embraced for the change that it could bring to both corporations and humankind.
Naomi Snyman, Innovation ecosystem lead at Standard Bank
Executives from Efma members expect blockchain to transform many current ill-integrated patchworks of centralized financial networks into more efficientdecentralized and collaborative transaction networks.
Therese TorrisSeniot advisor at Efma
Download a copy of the Exploring the potential of blockchain
INNOVATIVE PAYMENTS
P2P payments: the fintech and bigtech threatIn a recent report, Efma’s Anne-Laure Jozan examined the current state of the P2P arena considering the threat posed by GAFAM-BAT and fintech players across the world.
Peer-to-peer payments solutions have emerged as a key battleground in the financial services. With thepotential to put the customer at the center of a fast, convenient, and personalized experience, P2P is attracting a growing number of new market entrants from fintechs to GAFAM-BAT (Google, Amazon,Facebook, Apple, Microsoft – Baidu, Alibaba, Tencent) players who have the strategy, infrastructure and budget to engage consumers through multiple channels and services. But banks are rising to the challenge and they hold a key advantage: consumers want a streamlined, integrated P2P experience that is tied to their bank accounts.
The current P2P landscape is filled with bothopportunities and challenges for banks. With the continued growth, it is certainly not an area that can be ignored by any bank. But with GAFAM-BAT players making continued advances and many built-in advantages when it comes to user base and experience, it will require innovation and hard work to win in the payments space. Asia’s BAT companies are leading the way with integrated and complete P2P+ services. It is incumbent on traditional playersto update their payments offerings for customers that have placed digital at the center of their lives.
Efma P2P payments digest: the fintech andbigtech threat from 29 pieces of research
In 2020
Current state of the P2P arena
The global market for P2P transfers and remittances stands at more than $1 trillion (Digital Banking Report)
$1
47% 45%
consumers prefer to use digital payments app
consumers prefer to use cash(Digital Banking Report)
Trillion
From 2015 to 2020
$316.6BILLIONvalue of payments transacted (Aite and Early Warning)
P2P Payments will triple by 2020(Aite and Early Warning)
In the US alone
$100.3BILLION
X3
Download a copy of the Efma P2P payments digest
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INNOVATIVE PAYMENTS
How Payoneer is shaking up cross-border paymentsPayoneer enables millions of businesses and professionals from more than 200 countries to connect with each other explains Eyal Moldovan, Payoneer’s general manager.
With over four million customers, Payoneer has witnessed a remarkable rise to fame since its inception in 2005. Eyal Moldovan, the firm’s general manager,attributes this success to a variety of factors. “At Payoneer, we aim to empower businesses to grow globally by providing them with a wide range of payment solutions,” he says. “These solutions rely on us having strong relationships with banks, not only to deliver payments in a secure, local and regulated way, but also to fuel innovation and bring more value to customers. When banks and fintechs shift theirapproach from competition to cooperation, there’s a massive opportunity to modernize legacy financialsystems. We’re proud to be partnering with banks all around the world to help drive global commerce and improve services for today’s businesses.”
“China has long been a leader in eCcommerce, but now countries like Vietnam, Korea, Japan, and India are following in their path,” says Moldovan. “Our business is built to fuel global growth, and to make it easier for digital entrepreneurs to succeed in the modern economy.” Markets which have traditionally focused more on their strong domestic economy or on imports, like the UK and US, are also beginning to see the benefits of taking part in the global exporteconomy, as consumers all over the world are getting more comfortable with buying across borders. As more online business models arise, there are new,
complex payment needs that must be addressed – and this is where Payoneer is keen to shake up the status quo. “We want to be a one-stop shop, a partner that provides everything that a modern business needs to pay and get paid internationally,” Moldovan explains. “As a company, we were both very lucky and very smart to have identified these needs earlyon, forming the banking partnerships and building the infrastructure necessary to support this type of global economy. “Today, we are linked with over 100 local clearing systems, and integrated with marketplaces and digital platforms throughout the world. These relationships are time and resource intensive. Being able to form them early on has allowed us to grow globally at an unmatched scale.”
Moldovan is keen to note that the trend of globalization is not a matter of ‘if’ or ‘when’ – it’s already happening. “We’ve been seeing it increase every year for the last several decades,” he says. “While some voices around the world are looking to make it harder to connect across borders and do business together, the world economy is not moving in that direction – it’s only becoming more global and more diverse. Every day, we see it at Payoneer, and we see the powerful impact that these trends have. We will continue to empower our customers and give them all the tools they need to succeed in this global world.”
We want to be a one-stop shop, a partner that provides everything that a modern business needs to pay and get paid internationally.
Eyal MoldovanPayoneer’s general manager
CORPORATE SUSTAINABLERESPONSIBILITY
Leading financial services providers understand the importance of adapting their business practices to meet the most pressing needs of our time. This includes promoting energy efficiency, making societies more inclusive, and tackling global inequality.
John [email protected]
EFMA EXPERT
REPORTS
Financial inclusion: new ambitions for 2020Efma-Ecole des Ponts Business School-Wavestone, February 2020
Bank of tomorrow (sustainable business)Efma-Wavestone, May 2020
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Why Efma members are adopting the Principles of responsible bankingThe UNEP Finance Initiative’s ‘Principles of responsible banking’ are soon set to become the industry standard with over 55 leading banks worldwide already confirming their support. Efma members are among the founding banks and early endorsers of the principles.
Launched on 26 November 2018 by the United Nations Environment Programme Finance Initiative (UNEP FI) together with 28 leading banks from fivecontinents, the ‘Principles of responsible banking’ offer banks the opportunity to play a leading role in achieving society’s goals for a sustainable and equitable future. Namely, by endorsing the principles, banks commit to align their strategy, portfolio, and business practices with the Paris Climate Agreement and to explicitly integrate the Sustainable Development Goals into their business strategy.
Efma members BNP Paribas, Bradesco Group, CIMB, Garanti Group, ING, Piraeus Bank, Santander, Standard Bank and Société Générale are among the banks that developed the principles alongside the UNEP FI. Other Efma members including Caixabank, Danske Bank, KBC Group, La Banque Postale, Sparebank, and Standard Chartered have since officially endorsed the principles
Jean-Laurent Bonnafé, CEO of BNP Paribas, one of the pioneering banks, said “Finance in its very nature is forward looking, and we must make sure that it works not only for profit but also for the future of thepeople and the planet. The framework set out by UNEP FI in its Principles for responsible banking will enable us to move collectively in that direction.”
“The role of banking is about building the future. We are committed to the positive transformations of our economies and societies. We welcome collective approaches and best practice frameworks such as the Principles for responsible banking to pave
1. Alignment with the Paris Climate Agreement andthe Sustainable Development Goals
2. Increase positive impact while reducing negativeimpact on people and the environment
3. Work with clients & customers to encourage sustainable practices4. Consult, engage and partner with relevant stakeholders5. Governance & target-setting in areas of most significant impac6. Transparency & accountability through public reporting
and review.
What are the Principles for responsiblebanking about:
the way for a positive impact together with our stakeholders,” reported Frédéric Oudéa, CEO of Société Générale, another founding bank which is also part of the global Efma member community.
As pressure mounts on the financial sector to assumea role in shaping a sustainable future and fightingclimate change, more Efma members are likely to join the initiative. “It is fantastic to see this coalition growing so quickly. The Principles for responsible banking are rapidly setting the global standard for what it means to be a responsible bank. We invite banks that haven’t endorsed them yet to join and show their commitment to the sustainable banking system of the future,” said Simone Dettling, head of the banking team at UNEP FI.
“The global banking industry is stepping up to the sustainability challenge. I’m optimistic we’ll see a realignment of business practice – one that embraces the fact that green and socially responsible business is the best business,” asserted Satya Tripathi, UN assistant secretary-general, UN environment.
CORPORATE SUSTAINABLE RESPONSIBILITY
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Desjardins: farsighted financGuy Cormier, president and CEO of Desjardins Group, has his eyes on the bigger picture when it comes to building a constructive relationship between business and society.
Many corporations are taking positive steps by pledging to invest in employees, deal fairly with suppliers, and support their communities. But for Guy Cormier, president and CEO of Canada’s largest financial cooperative Desjardins Group, it’s the actionsthey take to achieve those goals in the long term that really count towards strengthening the relationship between business and society.
As 181 US chief executives came together in August to back a new mission statement reflecting thosegoals, proposed by the major lobby group business roundtable, Cormier sounded a warning against short-term thinking. Intense focus on short-term gains, he said, is contributing to issues like trade tension, climate change, and income inequality. It’s a view he underlined recently at the Toronto Global Forum and in an interview with the Financial Post. Echoing the Business Roundtable’s call for a pivot away from “shareholder primacy”, he identified an excessivefocus on short-term gains as “one of the real problems with our system.”
Desjardins’ actions back up Cormier’s message. Since the cooperative implemented its environmental, social, and governance investment criteria in 2018, he said it has declined to finance a quarter of the projectsoffered because they didn’t meet their standards. In an interview with the Financial Post, he said, “Even if their results were good and they were making money, if we felt that the impact on the environment, social and governance weren’t okay, we said no.”
Cormier credited Desjardin’s cooperative business model with helping in the aftermath of its recent and well-publicized data breach, because members trusted the company and it had no shareholders to placate. “My main focus was my members,” he said. “How do I reassure them? How do I protect them? And I think who we are as a co-op was really helpful to manage the situation.” In fact, he said, Desjardins has gained 15,000 new members since the breach.
Ultimately, Desjardins is turning a healthy profit ona cooperative business model, making decisions that are not based on profit alone. For example,bearing the cost of decentralizing some operations and putting call centers in smaller communities has enabled the organization to support regional development – an option that Cormier thinks many of the company’s competitors would be reluctant to take.
I feel that when you’re really serious about the long-term perspective, sometimes it means that you’ll take real decisions that will affect your bottom-line.
Guy CormierPresident and CEO of Desjardins Group
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Corporate social responsibility in financial services:2020 snapshotThis first study by Efma, Ecole des Ponts Business School and Wavestone aims to establish an overview of the financial sector’s considerable scope for action on the corporate social responsibility front.
The major financial players play a key role ineconomic, societal and environmental terms. Taking the initial examples of this, we can observe: an increase in the number of initiatives from major players, each having a positive impact on available support for entrepreneurs and SMEs; increasing access to financial services underpinned by assistance andfinancial-education tools; the financing of infrastructurin emerging countries; and financial initiatives thathelp protect the environment (green funds, etc.). While it might not yet be enough, we are seeing a shift in the sector’s activity that goes beyond awareness and communication. Some players have put social and environmental responsibility at the heart of their strategies, giving it similar priority to international growth and digital. Today, the majority recognize the virtue and long-term potential of such a strategy. CSR-related activities and "green finance" now formpart of these companies’ strategic plans and models. Their impact will grow, and, in the future, we will endeavor to chart the changes and regularly update this overview by highlighting initiatives by financialplayers that significantly and positively impact society,the economy, and the environment.
The nature of CSR initiatives is in transformation: banks are progressively moving from charitable donations and pure and simple philanthropy to the creation of specific offerings and services to handlethese concerns. Sustainable development is no longer
seen as an obligation imposed by public opinion or regulators, but as an opportunity for growth and to win new customers. In light of this transformation, banks and insurance companies are becoming reacquainted with their traditional role by accentuating their position with regard to general interest. This is confirmed byMr. Andrea Lecce, executive director of the retail and small business sales and marketing department at Intesa Sanpaolo: “There is a push on the one hand for the definition of models for measuring environmentalrisk in portfolios, and on the other hand towards the search for business opportunities in green sectors and counterparts.”
The report tends to draw the outlines of what a more sustainable and more inclusive bank or insurance company could look like in the 21st century. Society has expectations of financial players on these issues,and they must consider them if they are to survive. While we’re seeing an early set of initiatives, which are both strategic and growing in number, they are far from having a sufficient impact. The wholesaleredesign of business models, guided by serious consideration of current societal trends, and a projection of the future role of financial players,is more important than ever.
CORPORATE SUSTAINABLE RESPONSIBILITY
Download a copy of the report:Financial inclusion: New ambitions for 2020
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The evolution of uses and the definition of value
Mankind in its biotope
SYMBIOSIS
SUSTAINABILITY
SOCIABILITY
"All included"economy
Promote soberness, circular economy, sharing economy
Understand & value the biotope
Live and consume in a decarbonizedand sustainable economy
Develop local autonomy and promote reasonable distances for exchanges
Offer multiple opportunities for social interactions
Develop intercultural talk and collective intelligence
Connection with time
Sens of existence
EQUILIBRIUM
Anticipate the effects of global warming
Re-integrate natural cycles
Mitigate causes of global warming
Develop life areas propitious to socialinteractions and inclusion
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Making sure people find equalitEquality Check’s co-founder Marie Louise Sunde speaks about her company’s mission to create healthier and more diverse workplaces.
What led to the creation of Equality Check?An increasing amount of studies show a strong correlation between diversity and profit, innovationand creativity. We know that employees today say that opportunity, autonomy, flexibility, and work/lifebalance are important to them when they apply for a job. We also know that today’s employees engage in due diligence before applying for a job; nearly 80% actively seek reviews before taking a job, 70% would not take a job in a company with a bad reputation, and 90% trust online reviews as much as they trust friends.Today’s employees are also less hesitant to leave their job if they are unhappy. Last year, the number one reason people quit their job was lack of opportunity. Most employers today understand that lacking diversity will result in a competitive disadvantage and that it is crucial to retain and attract the best talent. Despite all this, progress is still slow. And there is not a whole lot of transparency regarding level of opportunity and diversity in the workplace. This is why we founded Equality Check.
Could you describe Equality Check's offer?EqualityCheck.it is a platform for anonymous reviews about perceived equality and opportunity in the workplace. Anyone can leave a review about their current or former employer - and let other people know how they feel about their employer’s level of opportunity, inclusivity, work/life-balance, management and more. When more than five peoplehave reviewed a company, it goes live for everyone to see. We cover a large spectrum of diversity; age, gender, ethnic minority background, disability, sexual orientation, etc. Equalitycheck.it introduces complete transparency about equal opportunity regardless of your background. This is a great way for employees to see where they will be given the best opportunities. For companies this is a great opportunity for employer
branding, to attract and retain talents, and to improve their diversity. When your company is live, you can “claim” the company profile. You can also subscribeto Equality Check for business to get more granular information about what employees are saying about you, in addition to more powerful tools for employer branding. Premium clients will also get access to our solutions-tool, which helps companies identify their problem areas, and suggests evidence-based solutions for how they can improve their diversity.
What have you achieved so far?Equalitycheck.it is live, and we have more than 2,500 reviews about 500+ companies. The next few months we will continuously update features. Our solutions-tool is ready built and we have 12 leading Norwegian companies as beta clients. Our company has grown over the past few months, and we currently have five employees
What's coming next for Equality Check?The next year we will focus on the product-market fit and building the brand in relevantmarkets. Equality Check is global from day one, but we will focus the marketing and scaling in Scandinavia for the first 12 months. Our goal isto go live in the UK and the US by 2021.
CORPORATE SUSTAINABLE RESPONSIBILITY
Marie Louise SundeEquality Check’s co-founder
SME BANKINGIn a global environment, SME’s continue to have complex financial needs. What remains constant is their need for trusted partner who can provide seamless access to all the services and partners they need to be successful.
EVENTS
SME banking council3 meetings a year (physical & online)www.efma.com/smebankingcouncil
World SME banking summit& Global SME banking awardsNovember 2020www.efma.com/sme20
Stephan [email protected]
EFMA EXPERTS
Lukáš Dzuroš[email protected]
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Alliance Bank posted its highest earnings in five years.“This strong financial performance is due to our clearstrategy for the future,” said Joel Kornreich, Group CEO. The bank’s mission is to build alliances to improve lives, and its vision is to be the preferred bank of business owners. “Everything that we do, from building or innovating a product, to rolling out a solution, begins with being empathetic to our customers’ needs, and having the innate desire to act on it. We call this the Alliance Way,” Kornreich highlighted. “We leverage on digitization to bring about improved customer experience, one that is faster and more responsive. For example, we launched the Alliance Origination
System last year, an automated loan origination system that simplifies the loan disbursement processto enable faster turnaround time. This helps businesses to get the funding they require as soon as possible,” said Kornreich. This year, the bank has introduced digital on-boarding for individual and business account opening. Using a tablet, individuals can now open a savings account and activate their debit card, Internet and mobile banking in as little as 15 minutes. “For enterprises,” said Kornreich, “we have improved business account opening from two weeks to within one day. We are also streamlining and modernizing the bank for greater efficiency within theorganization.”
One reason for Alliance Bank’s continued success is its focus on being a core player in the SME segment. “We do this by offering end-to-end products and solutions that are innovative, fast, simple, responsive and aligned with the needs of the SME community, and their stakeholders of family, employees, and clients,” according to Kornreich. This year, Alliance Bank will be introducing several new diagnostic tools such as the financial health calculator and sectoralbenchmarking analysis to support SMEs. “We will soon be introducing another new program to help businesses grow. Our Islamic Bank, Alliance Islamic Bank (AIS), will launch their Halal-in-One Business Solutions,” explained Kornreich. The proposition will help SMEs grow their business in the Halal segment by providing them with the right knowledge and help them establish relationships with key Halal agencies.
Joel Kornreich, Group CEO of Alliance Bank, explained to Efma how the bank is building alliances with business owners to improve their lives, and the lives of their stakeholders.
SME BANKING
Versatility and innovation to produce strong results
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The bank has launched a series of innovations for their SME customers:
The Alliance Origination System (AOS) is a credit workflow process that reduces theturnaround time for SME loan approvals to within nine days, from 20 days previously. This process significantly reduces paperwork, freeingup their relationship managers’ time to focus on servicing their customers better. The automated system also enables faster turnaround time on loan disbursements.
The multiple award-winning BizSmart Online Banking offers advanced cash management tools and self-configurable transactions limitsto sole proprietors and businesses. Mobile BizSmart app is scheduled to launch in FY2020
to enable SMEs to make faster decisions on time sensitive payments. One of the bank’s key transformation initiatives is the Alliance@Work solution, which offers banking products and services to the business owner, its employees, and clients. This integrated financial services solution offersservices such as the BizSmart Online Banking, cash management system, business solutions for business owners as well as on-site account opening for their employees.
The bank uses digital tools such as biometric facial recognition and optical character recognition to facilitate paperless on-site account opening, and debit card activation for foreign and local workers.The Cash2Home app also functions as a mobile foreign remittance app for foreign workers, extending competitive remittance rates and prepaid reload services.
“When it comes to CSR initiatives,” explained Kornreich, “our flagship programs such as theBizSmart Challenge, Eco-Biz Dream Project, and SocioBiz reflect the sustainability we haveembedded into our business strategies. We frequently collaborate with civil and non-profit organizations,non-governmental agencies, and private enterprises to bring about change in the communities we engage with.”We are most well-known for our BizSmart Challenge, which helps young businesses of less than five yearsto take their business further with business training, coaching, mentoring, networking, and funding,” said Kornreich. The bank awards RM1 million in cash and media coverage prizes, organizes a meaningful development program, and enables young entrepreneurs’ access to experienced and seasoned entrepreneurs. The bank also extends up to RM5 million in collateral-free financing to the Top 20finalists of the ChallengeAIS helps nurture the next generation of entrepreneurs with the Eco-Biz Dream Project, Malaysia’s firstenvironmental-themed business plan competitionfor tertiary students.
Eco-Biz Dream Project develops forward-thinking social entrepreneurs through training, coaching, mentoring, and funding. In May 2019, AIS launched SocioBiz, its digital social crowdfunding platform that helps disadvantaged individuals start or expand a business, or learn a skill to earn a sustainable livelihood. AIS has committed to bearing 100% of the platform and administration fees for the first year to enable individuals seeking fundingto leverage on this opportunity at no cost to them, and will match the contribution raised from the public.Kornreich concluded, “We are also proud of our AEIOU financial literacy program for Malaysianschoolchildren aged between 9 and 12 years old. The AEIOU initiative comprises three parts: the financial literacy lessons, the AEIOU FinancialLiteracy Comic Strip Challenge (Comic Challenge), and the AEIOU Financial e-Game Challenge. The Program has received two state awards from the Malaysian Central Bank for best financial educationand awareness program.”
Everything that we do, from building or innovating a product, to rolling out a solution, begins with being empathetic to our customers’ needs, and having the innate desire to act on it.
Joel KornreichGroup CEO of Alliance Bank
62 Efma review 2020
Cracking the small business ecosystemProviding seamless, integrated solutions to meet SMEs’ needs is essential for success in the highly competitive SME banking market, states Efma’s SME banking digest publication.
Small and medium-sized enterprises (SMEs) need help in areas outside their core business, such as payroll or accounting. They may also need advice on business development and their approach to customers. A 2018 report by Bain, ‘Small business ecosystems: banks’ next challenge’, found that SMEs contending with the complexity of different systems for payments, accounting, human resources and bank transactions would value a simple, one-stop shop through an integrated system.
Banks that provide that system, either by developing an easy-to-use ecosystem or integrating with an existing one, stand to create new opportunities for enhanced customer relationships and gain a competitive edge. Indeed, providing a broader integrated offering with relevant value-added services across multiple channels is now a necessity for banks in the face of constant competition in the SME banking market, according to a 2018 report by EY, ‘The future of SME banking’.
By providing services beyond the traditional core banking proposition, banks can gain access to new revenue pools that may not have been accessible to them before. As well as deepening the customer relationship and helping to deter SME customers from switching, a broader integrated offering will provide access to more data, which the bank can use to refineits offerings and improve operational efficiency. EYnotes an opportunity for banks to tailor current services and gain further insights into the SME banking sector. At the same time, says Bain, experience gained from new partnerships or go-to-market models could help speed up time-to-market and reduce the need for upfront investment.
Seamless, integrated solutions – rather than a broad, catch-allapproach are essential in order tocrack the small business ecosystem.
Lukáš DzuroškaSME expert at Efma
But to ensure success in the SME banking market, banks need to focus on credibility and find the rightpartners to develop value-added services. Bain says banks must establish their credibility for non-bank services, as well as improving performance in core bank services such as payments acceptance and cross-border transactions, which have become necessities for modern SMEs. Service design must also be raised to satisfy SME customers who have made it clear that they want an integrated platform.
SME BANKING
While established banks have worked hard to extend their products and services to retail customers across digital touchpoints, Forrester, in its report ‘The digital disruption of small business banking’, notes that digital banking for SMEs has lagged. SMEs are demanding an omnichannel experience that provides consistent customer interactions through multiple touchpoints. And where banks aren’t providing the services to meet SMEs’ needs, disruptors are filling the gaps. Toovercome the risk of disintermediation, digital banking teams need to shift from product-focused approaches to strategies and services designed around SME customer outcomes.
Avoiding broad, catch-all solutions is likely to be the best approach for banks. Bain identifies threeemerging approaches to a service ecosystem: segment-focused value propositions focused on a specific industry; life-event ecosystems that capture
broad needs during a lifecycle event such as starting a business or international expansion; and a complete solution to a recurring pain point, often using some form of payments ecosystem. Each of these approaches builds on strong existing platforms and uses partnerships to minimize complexity when entering adjacent services, and uses a focused theme, such as a narrow set of industries or stages in the small business lifecycle.
Efma SME banking digest :Cracking the small businessecosystem from 26 piecesof research.
As these value-add services become more prevalent, we will see an evolution of needs, with more becoming core and fundamental to the market.
State of playThe emergence of ecosystems for SMEs, a global trend
The introduction of value-add services on top of traditional core banking offerings is allowing providers to position themselves in the centre of an SME’s financial network. Source: EY (2018)
Value-add needs
Core needs
Fundamental needs
Omni-channel
Risk
management
Liquidity
management
Financing
and funding
Personalized
services
Integration of
non-financial
servicesCredit solutions
and funding
decisions Integration of
business tools
Cross-border
trade and
assistance
Expense
management
FX and
payments
Intelligent
automation
Market
insights
Aggregation
services
Alliances and
partnerships
Download a copy of the Efma SME banking digest
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64 Efma review 2020
Efma launches Global executive SME banking programThe new program features numerous initiatives that will connect and engage the global SME banking community, says Lukáš Dzuroška, Efma SME expert.
SME banking is undergoing a transformation all over the world. Bankers require new means and methods to understand and adapt to a changing landscape. For this reason, Efma, as a global non-profit association forFSI professionals, is launching the Global executive SME banking program, to connect SME bankers from all over the world.
Led by Efma’s own SME banking expert, Lukáš Dzuroška, the program will include a number of ways for bankers to get involved. “The professional time of every banker is precious and they are overwhelmed daily by news, events, and offers in the SME financialspace. We are very much aware of this and we will focus on what is most critical to their strategic decisions and support them in staying relevant and succeeding,” said Dzuroška.
The program will serve as a platform to engage with peers and experts. There will be monthly webinars on topical SME subjects. A podcast series will be hosted by Dzuroška where he will interview SME bankers from all over the globe. As a facilitator of meaningful professional connections, Efma is also organizing SME banking council meetings held three times a year at Efma member institutions throughout Europe and the flagship Efma event, the SME banking summit, takingplace this year in November.
Finally, at the summit the first annual Efma Global SMEbanking awards will be held to recognize best-in-class SME offerings from all over the world. Everything is designed to promote and spread the best community intelligence to enable SME bankers to understand and take advantage of the latest trends.
Dzuroška outlined how this is only the beginning of Efma’s plans to be an essential part of an SME banker’s toolbox: “We plan to incorporate global leading partners into the program such as SME consultants, the biggest SME suppliers, IT providers, fintechs and even SME customers. We believe thatas banks are dramatically transforming their value proposition to meet new customer needs, Efma can change the way SME financial executives monitortrends, exchange best practices and co-create the future together.”
SME BANKING COFFEE
2020 SME BANKING AWARDS
SME BANKING PODCASTS
SME BANKING
COMMUNITY PLATFORM
SME BANKING ADVISORY PROGRAM
WORLD SME BANKING 2020
SME BANKING NEWS & REPORTS
SME BANKING COUNCIL MEETINGS
Sign in to Efma SME banking community:
efmasmebanking.slack.com
SME BANKING
AFFLUENT BANKING
The increasing diversity of the next generation of affluent customers has meant private bankers are coming up with novel ways to use digital tools to enhance the customer experience for these clients with elevated and unique expectations.
EVENT
Affluent & private banking council3 meetings a year (physical & online)www.efma.com/affluentandprivatecouncil
George [email protected]
Silvia [email protected]
EFMA EXPERTS
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How to digitize the affluent customer relationshipInnovation enthusiastic and Efma’s regional manager for Iberia, Africa and Latam, Silvia Cunill explores the new preferences of affluent customers in a recent report.
In the world of financial services, “Going digital”is nota choice, it is mandatory. Affluent and private bankingare no different. Customers, and their expectations, are changing rapidly. Affluent customers, both newand old alike, seek and require personal banking services different from previous generations. The retail banking sector has led the way in recent years with its digital transformations. Retail banking has employed an intensive usage of big data and AI to provide advanced personalization that meets ever-evolving customer needs. In affluent banking, as in retail banking, customerexperience has to be excellent due to elevated customer expectations. Products must be easy to use, friendly, and contain all the features that customers have come to expect from their banks. Innovation and touch must be the focus of differentiation initiatives. If banks are seeing their customers less and less, they must find alternative ways to understandtheir clients’ habits, needs, and desires. Firms also must explore new digital and hybrid business models that give clients the flexibility of omnichannel choices
to move seamlessly between digital and face-to-face interactions. While all of these new tools are great to think about, the real-world application is where it will be most critical. Digitalization and AI only offer a competitive advantage if they are deployed in a manner that delivers true value and insight for both the bank and the client. The quality of service is still the most important priority in the private banking segment. Firms that are able to utilize all means – technological, personal, financial– to provide the highest quality of service, will be thewinners in an increasingly competitive environment.
AFFLUENT BANKING
Note: Question asked : « What are you primary criteria for selecting a wealth management firm? please drag and drop the services into the relevant box.1. Most important (one only),2. Also important, 3. Not important,» The above values represent HNWI importance levels of criteria for selecting a wealth management firm, sum of values of Most important and Alsoimportant have been shown as the importance levels in the chart above
In a digital era, firms must successfully incorporate digital tools to enhance their offerings while maintaining the high level of service that clients have come to expect.
Silvia CunillEfma's regional manager for Iberia, Africa and Latam
Source: Capgemini Financial Services Analysis, 2019; Capgemini Global HNW Insights Survey 2019
Figure: Primary criteria for wealth management firm selection, Q1 2019 (global)
Service quality of the fir
Riskdiversificatio
Attractive fee structure
Historical performance of the fir
Qualityof wealthmanagers
Discretionarymanagement
Productportfolio/niche solutions
Strong brandreputation
Access to preferable geographies
Enhanceddigital capabilities
Advice bypeers
pour
cent
gae
of re
spon
dent
s
91,2%100%
75%
50%
25%
0%
85,5% 84,2% 84,1% 81,5% 80,5% 78,9% 75,5%66,7%
55,3%48,7%
67
Adapting to a more diverse affluentcustomer baseNykredit’s Lotte Månsson, managing director for private banking elite & investment advisory at Nykredit in Denmark, explains the evolving landscape of affluent banking.
Is the affluent segment ready to be managed remotely?I do not believe the question is whether the affluentsegment is ready or not. The right question to ask is whether we, as financial institutions, can addadditional value to the affluent segment by managingthem remotely.
From my perspective, affluent and private bankingis a relationship business. Hence, we have to make sure we create the right conditions for our private bankers to form strong relations with our clients. Clients expect us to offer digital services that allows for distance and convenience, but they also expect us to offer a coherent and relevant experience.In providing the right experience to our customers, it is up to us to find a new balance between digital and humanservices.If we can add value and serve our clients better through technology, we will do it. If there is a non-technological way to serve our clients better, we will do that too.
How can affluent customers use remote channels but still feel like VIPs?Feeling like a VIP comes from their experience and interactions with our bank. As a private banking partner, the service and advice we provide our clients should be the most tailored experience. Remote and digital channels can provide convenience, instant feedback, and other valued aspects that creates a VIP feeling, but we have to ensure that our system and processes are fitted to provide a VIP experiencefrom the beginning to the end of the journey.
How are you using remote solutions to manage affluent customers (including the use of social media, messenger apps, etc.)?Our key focus is to invent remote solutions that support the relation between private banker and client.At the moment, we are looking to increase the number of self-service options on our mobile banking platform with a focus on the onboarding process.For our next generation clients in the affluent segment,we are developing an app specifically designedaccording to their preferences for remote interaction. Regarding social media, we are targeting affluentclients through content on LinkedIn linking to our online investor universe, InvestorInsights.
How are you currently managing affluent account creation and customer onboarding? How do you expect this process to evolve in the future? We are at the beginning of a new era in private banking and the affluent segment. In the future, wehave to rethink the value creation we are providing as the segment is changing demographically and thus, their demands. We are already seeing the changes today. The segment is more diversified thanit was 5-10 years ago. That creates a wider range of customer expectations and puts pressure on our private bankers and their emotional intelligence.
The segment is more diversified than it was 5-10 years ago. That creates a wider range of customer expectations and puts pressure on our private bankers.
Lotte MånssonManaging director of Nykredit
68 Efma review 2020
Openbank and its 100% digital wealth management propositionOpenbank, which is Europe’s largest fully digital bank and part of the Santander group, has chosen Germany as the first destination of its international expansion.
To begin its activity in Germany, the bank has developed a new 360 degree socially responsible banking strategy in which all the products it offers fully support Openbank’s commitment to society and the sustainability of the planet. It will provide a fee-free current account that allows free transfers to any EU country via the Openbank website or mobile app. This account comes with a free debit card that allows customers to use all mobile payment systems (Apple Pay, Google Pay, Fitbit Pay, Garmin Pay and Openbank Wallet). This relentless customer focus has earned market recognition, with Openbank named best bank in Spain in 2019 by Forbes while achieving the best ‘Net Promoter Score’ (NPS) among Spanish banks.
100% digital automated investing Beyond the essential digital tools that customers have come to expect from their banks, Openbank will placeits automated investment platform at the fingertips ofGerman customers. This new system allows anyone to access best-in-class investment management and advisory services, as it combines three services into one:
• A roboadvisor, that continuously and activelymanages the investment strategy to automaticallyalign it with market movements. The Openbankinvestment committee, advised by BlackRock, is incharge of constantly monitoring the investments ofevery customer.
• Goal-based investing allows customers to defintheir financial goals, helping them save for a car,house, trip, higher education, or simply to increase ormaintain their wealth. This new system allows usersto create an investment portfolio for each goal, andadjust strategies to the desired amount and period.
• Micro-investing allows Openbank customersto save from one euro per day, week or month,automating a process that used to be tedious andtime consuming.
The strategies that Openbank offers to its customers are composed of diversified portfolios with moneymarket assets, fixed income, equities and real assets,not correlated to financial markets. With this launch,the bank has started to include SRI products in its various automated investment portfolios, in line with the responsible banking strategy developed in Germany.
This system, along with the ‘You invest’ platform which offers more than 1,500 funds and ETFs from more than 50 different providers and stocks from over 25 markets, means anybody can have a state-of-the-art digital private banking service. To date, this type of service has only been available for high-net-worth individuals. This service simplifies the universe ofinvestment funds, allowing access to these products in a simple, intuitive, transparent way which is targeted to achieve specific goal .
AFFLUENT BANKING
Changing customer habits and the sharing economy are disrupting traditional insurance business models. Adapting to the new ecosystems that have been created, via new technology and updated business models, is paramount for insurers going forward.
INSURANCE AND INSURTECHS
EVENTS
Insurance council3 meetings a year (2 online and 1 physical)www.efma.com/insurancecouncil
Innovation in insurance awardsSummer 2020 - By invitation onlywww.efma.com/innovationininsurance
Insurance ConnectNovember 2020www.efma.com/insurance20
REPORT
Insurance review Efma, March 2020
Innovation in Insurance Trends 2020Efma-Accenture, Fall 2020
New acquisition models in retail insuranceEfma-Roland Berger, June 2020
EFMA EXPERTS
Rene van der [email protected]
Yvon [email protected]
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70 Efma review 2020
The impact of changing customer behaviors for insurance companiesJean-Marc Pailhol, head of global strategic partnerships at Allianz Group, previewed his upcoming presentation at Efma's Insurance Connect conference on the trends shaping the insurance industry.
At Efma’s Insurance Connect conference in Milan, I hope to contribute to an understanding of the ongoing evolution of the market and the emergence of new digitally-central customer segments, with completely different behaviors and needs. There is a really big shift in what insurance companies are used to doing and proposing to clients and what they will have to do for these digital segments in the future.
When you want to address the digital native needs of the future, you have to think in a completely different way. We know that digital natives want to use and not to own. The traditional B2C service in retail is based on ownership. So, if you consider that a huge percentage of individual ownership will disappear in the future, the impact on the business is enormous. Companies have to find solutions to ensure they arenot left behind in the sharing business models of the future.
The shift, from B2B to B2B2C, will require innovation in business models and offerings. Innovation in insurance will be pulled by the technical innovation and the change in the behaviors and value propositions in the market. Insurance companies need to understand that they are mainly data companies, and because of that they have the capacity to make new business by sharing data with partners.
I hope that people will understand that if they want to build the future of their companies, they will have to disrupt their business models internally, which is extremely complex to do. You are obliged to accept that the behaviors of your clients, the needs of your clients, will be completely different, and adapt accordingly.
With my presentation, I hope to explain how to address client needs because they are different and changing rapidly. If I succeed in that, it will be a good step forward for the companies in attendance.
Insurance companies are not here to sell products, they are here to understand claims, manage claims, manage customer data, and calculate and create new insurance solutions for the market.
Jean-Marc PailholHead of global strategic parterships at Allianz Group
INSURANCE AND INSURTECHS
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Rene van der Poel, program director and chairman of Efma Insurance Connect, speaks about the upcoming event in November 2020.
“Ecosystems are key to future development in the insurance industry” explains Rene van der Poel, program director and chairman of the Efma ‘Insurance Connect’ event in November 2020. “Insurers everywhere are making longstanding partnerships at both the global and regional level. Insurance Connect 2020 will focus on two main ecosystems: health and mobility. Bancassurance is still growing in importance. The key issue of transition towards digital bancassurance will be showcased.”
There are seven key trends in the insurance industry that will be discussed in November:
1. Insurers will invent new business models around theecosystems. Solutions for clients will change from massproduced packages towards personalized uniquesolutions. Data analytics and customer interaction willbe key for success.
2. Artificial intelligence will lead to faster handlingof claims, minimization of fraud and cyber risks, andimprovement of efficienc .
3. Insurers, supported by insurtechs, will change frompassive product suppliers into active risk managers.
4. Where data analytics are key for success,mainstreaming blockchain technology becomesimportant. Blockchain will enable an easy and securedtransfer of data across organizations and stakeholders.
5. Improvements in the value chain will be presented,including the need to lower distribution costs.
6. The demographics and required changes in skillswill result in a war for talent in the industry.
7. I expect that (in the near future) every individualcustomer will have his/her own “personal robotassistant (PRA)”.The PRA protects personal data of the customer(financial, health, genetics, etc.) from the outsideworld. In parallel the PRA will identify and select theright personalized (insurance) solutions out of theecosystems.
Insurance Connect 2020: all about ecosystems and digital bancassurance
Insurance ConnectNovember, 2020efma.com/insurance20
Rene van der PoelProgram director and chairman of Efma Insurance Connect
72 Efma review 2020
This report by Efma and Roland Berger aims to equip insurers with essential knowledge and in-depth analysis on the impact of AI on their industry, and just how to leverage it.
Insurance has been and is expected to remain one of the industries that will be the most impacted by AI in the coming years. “There is increasing need to have a clear view on where and how AI is creating value in insurance and how insurers can take advantage from the opportunities it creates,” outlines the report. Faced with the rise of insurtech, developing a well-defined roadmap on how to further leverage AI mustbe a top priority for insurance companies. And with new pilots and proofs of concept being developed all
the time, insurers must rapidly seize the opportunity to incorporate AI or risk losing ground to competitors who will. With on-the-ground research of over 150 tangible AI use cases and interviews with 30 insurance players across Europe, this research categorizes the main fields of application currently being deployedin the insurance industry and takes a look at segment-specific AI solutions that are being developed inmotor, home, and health insurance.
INSURANCE AND INSURTECHS
AI: challenges and opportunities for insurers
Download a copy of the report: AI: challenges and opportunities for insurers
Mapping of AI fields of application across the value chain
Business model & product innovation
1
23
45
6
7
8
9
• On-demand, usage-based business model• Miniature insurance policies• Non-insurance, risk related add-ons (deploy predictive analytics capabilities in di�erent setting: e.g risk for health events)
• Enhanced coverage• Sales support tools
• Instant issue products• Underwriting documents veri�cation• Internal agent chatbot
ProductDevelopment
Sales &Distribution Underwriting Policy
Admin.Billing &
CollectionsClaims
Management
Revenueenhancement
Underwriting& pricingassessment
Riskmodeling
Riskprevention
Claimsassessment
Fraudprevention
Customerservice
Generaloperationale�ciency
Impacted Partially impacted
• Model speed enhancement• Premium calculation - personal data• Premium calculation - non-personal data
• Risk detection• Preventive measures
• Fraud detection• Fraud investigation support
• Chatbot for �rst notice of claim• Cost estimations for agents• Instant claim processing• Claim matching machine
• Basic customer actions chatbot• Inquiries virtual assistant• Process follow-up tool• Digital content personalization Not speci�c to the
Insurance industry
• E-mail classi�cation• Document classi�cation• Document analysis• Document search
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How health techs are revolutionizing the insurance industryEfma’s Anne-Laure Jozan highlights the main ways in which health techs are changing the game in the Efma Insurtech digest publication.
The insurance industry is undergoing a profound transformation as health techs continue to enter and grab an increasing share of the market. These new players’ innovative approach and use of technologies – including artificial intelligence, augmented reality,the internet of things, big data, and machine learning– have the potential to rival the years of experienceand insurance know-how accumulated by even thestrongest of incumbents.
Efma healthtech digest from 35 pieces of research
Health techs are revolutionizing the insurance industry from enhancing the prevention and diagnosis of certain diseases and conditions, to improving customer experience and underwriting efficacy, to becomingan everyday partner for their customers. Examples of their far-reaching impact abound. Our findings aresupported by an inspiring collection of examples of 20 health techs leaving their mark across the world.
Source: Accenture 2019
Insurers are facing disruption and need to evolve quickly
IoT healthcare tech worth
2014
$5.8 billion
Within the industry, health tech is a rapidly growing market, as wearables and sensors become more advanced, more affordable and more prevalent in our everyday lives. Source: Zion Market Research, 2018
The internet of things in healthcare organizations
Source: Ray Parker for readwrite 2018
87% plan to implement IoT technology by 2019, above the average of 85% across various industries
89% have suffered from IOT-related security breaches
87% 86% 96% Nearly 60% have introduced IoT devices into their facilities
2022
$14.6 billion
Health techs and ecosystems are blowing up the insurance industry
of insurers agree technology is no longer advancing in a linear fashion,
but rather at an exponential rate
of insurers believe innovation must happen at an
increasingly rapid pace to retain
a competitive edge
Nearly 64% of IoT used in the healthcare industry is in the form of patient monitors
73% use IoT for maintenance and monitoring
of insurers think digital ecosystems
are having an impact on the
insurance industry
Download a copy of the Efma Insurtech digest
74 Efma review 2020
Connected insurance and ecosystems award
AXA (Germany) for LightGuard Connect
Innovation in insurance awards 2019The fourth annual Efma-Accenture innovation in insurance awards showcased the best examples of insurance technology innovations, attracting 395 submissions from 287 institutions in 54 countries. Winners were announced in June at the awards ceremony in Amsterdam.
Customer experience award
Nippon Life Insurance Company (Japan) for TASKALL
Global innovator of the year
Zurich (Switzerland) for its 2019 innovations
Insurtech award
CCS (Netherlands) for Marketplace
It is the first bicycle eCall in Germany combininga smart bicycle light with a certified crash sensor,a safety app called WayGuard and a casualty micro-insurance product. The sensor communicates to the app when an accident takes place and sets in motion a certified emergency process, sending rescueservices to the exact GPS location of cyclists in the case of serious accidents.
This new TASKALL tablet for sales representatives is equipped with cutting-edge technology, including artificial intelligence, to supplement and enhance thequality of sales activities and customer service.
The Core insurance transformation award for moje.puz.pl, a self-service portal offering customers a wide range of property and life insurance, investment and medical care products in one place, in cooperation with banks, other intermediaries and its affiliate networks; and the Workforce transformation award forits RPA the Robotic Process Automation for PZU group employees and customers is a precise tool that allows the company to effectively use employee time for the benefit of customers, i.e., themanagement of workloads and efficiency
The innovations include: the “Zurich innovation world championship,” its first global insurtech competition that seeksthe best startups to collaborate with its business units; the “Make the difference” program, which empowers employees to make Zurich a better place for colleagues and customers by focusing on simplification, innovation and trust; and a platform poweredby CoverWallet that enables businesses to assess their insurance requirements, quote and buy online, seek advice from professionals if needed, as well as store their policies and background data online in a hassle-free way.
It is a cloud-based ecosystem with best-in-class apps that enables a one-to-many approach, instead of point-to-point, with apps that can be quickly activated and paid for based on usage (e.g. per quotation, policy, claim, etc.).
Core insurance transformation award
& Workforce transformation award
PZU (Poland) for moje.pzu.pl
View the full repository of innovations efma.com/innovationininsurance
INSURANCE AND INSURTECHS
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Lessons learned from Efma’s Insurance summitYuri Stepanov, general manager at Mapfre, shares his personal key learnings from Efma’s Insurance summit, which took place last June in Vienna.
1. Disruption has two main causes:Technological progress, which is faster than everbefore; and changing customer behavior, especiallyamong the new generation.
2. New technologies bring new risks:
This triggers the need to improve incumbent insurers’internal processes. Shifts in customer behavior requirenew ways of managing relationships: from the firstcontact, to selling insurance, to claims handling.
3. Go beyond just selling a product: Switching from simply selling a product toaccompanying society as it develops, and advisingand preventing risk, instead of merely reimbursing thecost of damage incurred.
4. Partnerships are the future:As technologies become more complex, partnershipswill become indispensable for insurers, both to obtainnecessary data to underwrite risk, and for productdistribution. Embedding insurance into products andservices will become increasingly important.
5. Balance tradition and innovation:Some incumbent insurers are focusing on internaldevelopment – tools to increase efficiency, reducecosts, and offer more competitive pricing. Othersare more focused on investment and collaborationwith startups. There’s also a third category which hasalready completely rebuilt its processes using newtechnologies and starts showing impressive results.
6. Blockchain and AI hold great potential:They can help incumbent insurers become moreefficient. AI is also a proven solution for underwritingclaims handling activities.
7. Six key areas of innovation:Mobility, connected living and IoT, health, enhancedenterprise, SME, platforms.
8. Blurred lines between reinsurers andinsurers: The difference between insurers andreinsurers is likely to blur, as both take on a similarcapital-intensive role.
9. Let’s learn from the banking industry:The banking industry is ahead of the insurance industryin terms of disruption, and as such provides usefulexamples and lessons, for instance with open bankingplatforms and mobile applications.
Note: Views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Mapfr
Yuri Stepanov, General manager at Mapfre
76 Efma review 2020
“Facebook has launched a preventive health service throughout the United States,” explains Efma’s Kevin Spangenberg. “The tool is called Facebook health and is designed to help prevent the top two causes of death in the US every year: heart disease and cancer. The primary focus is delivering information about cancer screenings, heart checkups, and flu vaccines.” It takesa user’s age and sex from their Facebook profile andprovidWes them with a list of recommended screenings based on those two data points. The preventive measures are largely covered by insurance, but the tool also provides a map of federally qualified health carecenters in underserved areas throughout the United States that provide services regardless of a patient’s ability to pay.
This appears to be one of Facebook’s first steps into thehealth care space. Previously, they have promoted local blood drives in both the United States and India. This could serve as an innovativeway for Facebook to provide its vast user base with a potentially lifesaving tool.
Data privacy is a primary concern for customers and critics. It is notable that this service is being launched only in the United States. America lacks strong consumer data privacy protections compared to Europe. Federal privacy protections that limit how health care providers can use and share medical records no longer apply once patients transfer their data to consumer apps. However if the Facebook health venture works out, it is clear that just as with financialofferings, tech giants are not settling for being mere social media and video sharing companies.
INSURANCE AND INSURTECHS
Facebook takes first step into health services
Facebook will provide a digital health care service tool in the United States explains Efma’s Kevin Spangenberg.
AlloVoisins is cultivating the solidarity economy in France
Edouard Dumortier, cofounder of AlloVoisins, explains his company’s incredible growth as a collaborative platform and how it is creating value through social connections.
Created in 2013, AlloVoisins is now the leading free collaborative platform for neighbor-to-neighbor assistance, with over 3.3 million members across the country. It continues to grow substantially, with over 3,000 new members per day, and today AlloVoisins represents over 76% of the French market for online requests posted. The success of AlloVoisins is in part due to its innovative approach of using a demand-based rather than suply-based model.
The key life moments of the platform show when members want to move homes, renovate their house, do some gardening, or when they plan to retire.“By collecting other types of data that members enter when posting their requests, we can see whether they have children, pets, whether they live in a house or an apartment,” says Dumortier. This data is very useful for brands in the banking/insurance sector which can become AlloVoisins partners. They are indeed able to leverage on sales, develop local content, and network and identify new prospects.
Collectively, this solution addresses certain issues facing caregivers in regard to the people they are caring for, which in turn helps to reduce absenteeism enabling some companies to position themselves as a super-
concierge. “In the framework of a hospitalization contract, we can for example find a neighbor to look after a pet, oroffer services in addition to those provided by the insurer such as finding someone to do their shopping or cooking,”says Dumortier. “Regarding retirement and personal health, we can find neighbors to share activities and avoid socialisolation. We also offer services that can provide assistance to people with reduced. And in terms of car insurance, we offer services to help with maintenance and repairs.”
Dumortier concludes: “We are on board with the broader trend, namely the collaborative, social and solidarity economy. We think our initiative makes sense, just as we think that French people don't necessarily want to change what they’re using but they do want to change how they are using it.”
Edouard DumortierCEO and Co-Founder AlloVoisins
Tackling industry challenges in 2020 and beyond
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