Banking & Capital Markets - Open Banking Executive Briefing Center, Brussels, February 8-9 th 2018

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1 Banking & Capital Markets - Open Banking Executive Briefing Center, Brussels, February 8-9 th 2018 Joanna Molik, joanna.molik@microsoft.com Vivek Warrier vivekw@microsoft.com Co-created with customers attending the EBC workshop

2 Open Banking Marketplace ecosystem for customers and partners corporate (B2B) retail (B2C) SMB & Digital Transformation

3 Business model Partner Onboarding journey

4 Key Partners Technology platform provider (Data, AI,ML, APIs, Bots ) B2C and B2B Marketplace offers / business services: banking (own & third party bank products investment, savings, cards), insurance, e-commerce career (LinkedIn), Telco / utilities, travel & hospitality, gaming & entertainment, B2B services: Invoicing, factoring Tax, accounting Payroll, HR, recruiting FX, risk, legal Cashflow forecasting Liquidity management Automated returns/claims Key Activities Branding, marketing Customer acquisition Customer service New product/offer development Partnership framework Partner selection, Onboarding, due diligence Billing / telemetrics Fraud prevention/cybersecurity Exception handling Key Resources Business unit / org. entity to manage marketplace Marketplace platform API sandbox Partner / developer portal Platform intelligence - Data Insights, AI, ML, Cognitive services Value Propositions Value for Clients Marketplace for financial & non-financial products and services one-stop shop Trust Speed and cost of acquiring a product/service Try/explore before buying Time saving Value for Partners Access to new markets and customers Balance sheet / risk management capabilities Data access KYC/AML Value for the Bank / Marketplace Owner New revenue sources & partnerships Brand strengthening Personalization at scale Synergies/process efficiencies/cost reduction Value chain optimization Standardization Driving innovation through collaboration and communication Focus on core services marketplace to fill the gaps/differentiate PISP/AISP third party services (from Fin-Techs) Customer Relationships Highly personalized, tailored to individual client needs (based on Data Insights/ML/AI) segment of one Low-touch, self service digital agent, engaging in a conversational manner Matching needs with offers / solutions Automated/subscription based services Channels White label / own (bank) label Direct / indirect (via third party solutions) Mobile app/agent Social media (LinkedIn/ FB/Twitter ) Messenger platforms (chatbots) Contact center Virtual/video branch Partner / developer portal (APIs) Customer Segments B2C: Digital / technology savvy Gen X Millennials Gen Z (igen) B2B Small and Medium Business Corporate Advertisers Cost Structure Scalable cost to run the cloud and other services (small up-front investment) Employee costs ( IT developers, customer & partner support, customer service) Marketing, customer acquisition cost (paid services) Security costs to prevent fraud and ensure customer protection (KYC, AML) Revenue Streams Freemium model basic (free) and premium (fee-based) offers/services Banking product fees/commissions Third party commissions / customer acquisition fees Paid advertisements Monetization implications cost of not having a marketplace, threat from GAFA Business Model Canvas source framework:

5 Marketplaces Partner onboarding journey Partner signs up Partner responds application, questionnaire. Due diligence ends. Final Go, nogo? Agreement in place & Partner onboarded Preliminary Go, no-go Stop here if basic criteria not met. Technology integration testing. Pilot testing with selected audience. Partner guided to Bank s marketplace portal. Due diligence starts Commercial, Pricing and billing model. Benefits Benefits Start Stop Stop Continue Continue Reach market innovation in services to customer Reach market base through innovation partners. in services Increased to customer customer base through satisfaction partners. and loyalty Increased Increased cross-sell customer and satisfaction up-sell and loyalty Improved operational efficiency Increased cross-sell and up-sell Increased Improved channel operational breadth efficiency Increased channel breadth Firm up underpinning strategy and criteria upfront. Evolve as you learn. Focus on simplification.all the time. Share data, as best you can to get the most from partners who play in the marketplace. Personalization of services through analytics driven segmentation and wide choices for partner value-add. Stop doing redundant, repeatable Stop processes. doing redundant, automate repeatable where possible. processes. Requiring customers automate where to manually possible. Requiring integrate customers services to manually integrate services Restricting customers from performing Restricting customers from transactions anytime, anywhere performing transactions anytime, Scaling cost with transaction volume anywhere Scaling cost with transaction volume Providing banking services anytime, Providing anywhere banking services anytime, anywhere Serving customers over any partner channel Serving Increasing customers sales over of products any partner and services channel Increasing customer satisfaction Increasing sales of products and services Increasing customer satisfaction

6 Enabling Technologies Enabling Changes Business Changes Benefits Investment Objectives Business Drivers Customer Relationship Management New navigation optimized for analysis, search & engagement 360-degree view to provide insights into a customer s preferences and needs. Increased revenue by cross-selling and up-selling with value added services Improve acquisition, retention and development of profitable customers Margin pressures and cost reduction Blockchain services Develop relevant insights with real-time account data, news, activity and connections Shared information and customer views to enable collaboration and optimize operations Improved profit margins and operational efficiency Reduce costs and enhance efficiency Generate greater revenue from products and services through cross-sell and upsell Business intelligence Seamless integration with varying partner interfaces and systems. Bankers, specialists and partners identify customer needs and recommend the right services Unified Partner ecosystem to present a single face to the customer Provide consistent customer experience across all channels Customers are increasingly seeking a targeted personalized approach Data Management Efficient deployment which enables a robust, reliable, scalable and secure system Improved customer retention and loyalty Enterprise Integration Development Platform

7 New Capability Provides Enables Partners and Marketplace portal Modular Architecture Push Notifications Timely Updates Telemetry Modelling Cost per Transaction Sustainable Offerings Complete Data View Customer Insights Extreme Personalisation Mobile Payments Intelligent Personal Apps Open APIs + Extensible Platform Machine Learning 3 rd Party KYC Integration Marketplace Partnerships Future Opportunity Identification 100% Digital Origination Product Experimentation and Innovation Lead rather follow the market Accessibility Challenged Customers Consumer Engagement & Rewards The capabilities provided by the platform will overcome inherent obstacles with the current core banking platform Intelligent Financial Advisor 7

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