Beyond Payments: The Digital Commerce opportunity for Banks. Giorgio Andreoli Managing Director Accenture Digital mcommerce

Beyond Payments: The Digital Commerce opportunity for Banks Giorgio Andreoli Managing Director Accenture Digital mcommerce Mobey Day Barcelona, Oct 8 th, 2014

Agenda 1. Digital disruption and the impact on the FS industry 2. Digital Commerce: which opportunity for the Banks? 3. Case studies and lessons learned Copyright 2014 Accenture. All rights reserved. 2

DIGITAL disruption waves, transforming the technology we use to live, work, consume Mobile Payments > 80% of mobile OS today in use have been launched after 2007 Wearables, Industrial Internet, After Square now Apple, Facebook and Amazon could disrupt Payments industry Financial Services In 2020, > 40 Billion devices will be connected wireless to Internet and it s not just about payments, it s about Banking! Copyright 2014 Accenture. All rights reserved. 5

PEOPLE are changing Digital transforming behaviors across generation boundaries 1 Highly 4,18h average number of hours per day spent by connected internet users on the Internet 2 Informed shoppers 79% of smartphone owners use their phone to help with shopping 3 Price Sensitive 4 Instant answer & delivery 64% of people will go 5-10 minutes out of their way to secure a better price 57% of US consumers are likely to abandon an online purchase if an answer to an online purchase is not immediately forthcoming 5 Socially Connected 30% of mobile time is spent on social media accounts not only affecting Millenials and Gen X/Y, but also Silver Surfers! Sources: US Census Bureau, InternetWorldStats, iconsumer, Mc Kinsey 2013, Poland Online Consumer_Mc Kinsey, 2011 Copyright 2014 Accenture. All rights reserved. Postnordlogistics, E-commerce-in-Europe-2014 6

COMPETITORS are changing, as Digital is transforming Banking customers expectations Change expectations Banks customers have Sell experiences that replace Banks ones Sell products that compete with Banks ones Direct Competitors Perceptual Experiential 32% banking revenues will be at risk by 2020 Copyright 2014 Accenture. All rights reserved. 7

Digital is disrupting traditional Commerce Brick and mortar reinvented Payments in the digital age Context is king Technology is revolutionizing the way brick & mortar retailers promote, sell and manage the relationship with customers, and the way consumers take a decision, shop and pay in the store Payments are being disrupted by new technology that eliminates the need for traditional infrastructure, making payments a seamless moment of truth within the shopping process Billions of always-on, location aware devices, as well as social networks, will produce an unprecedented amount of data that will be leveraged to make shopping experience more personalized and relevant Supply chain renewal Availability of real-time personal data, new productions paradigms (e.g. 3D printing) with express delivery (e.g. drones) will enable consumers to order and receive products on an as-needed basis Copyright 2014 Accenture. All rights reserved. 9

Brick and mortar reinvented Technology is revolutionizing the way consumers shop in-store Yesterday Traditional advertising Today and Tomorrow Standard customer experience Check-out at the cash barrier Geo-located marketing and context aware advertising New, connected in-store customer experience Pay anywhere in the store / seamless checkout Leverage data to improve performances Copyright 2014 Accenture. All rights reserved. 10

Payments in the digital age Traditional POS payment infrastructure being disrupted Yesterday Consumer equipment Cards Merchant equipment Contactless POS, Mobile POS, Check-out process Traditional Customer Verification Signature / PIN Today and Tomorrow Consumer equipment Smartphone, iwatch, wearables Merchant equipment Tablet cash register, Beacons Check-out process Seamless / ubiquitous check-out Customer Verification Fingerprint / eyes / voice Copyright 2014 Accenture. All rights reserved. 11

and Banks may decide to play as Everyday Banks at the center of the ecosystem, or to go for a utility-like role Brick and mortar reinvented Leverage existing relationship with SME clients and acquiring activity in order to expand product offering towards B&M retailers, adding merchant services such as promo, coupons, loyalty, and mobile payments Payments in the digital age Re-focus on payments with a new approach, i.e. exploiting payment (and pre/post payment) data so to better profile consumers and to offer valueadded services to retailers and brands Context is king Leverage Bank s multiple touch points with consumers (online & mobile channel, branch, ATMs, POS ) and other valuable data (transaction history) so to provide valuable real-time services to consumers and merchants Supply chain renewal Understand how to best support corporation and brands in the digital reengineering of the supply chain The Everyday Bank http://www.accenture.com/microsites/everydaybank/pages/index.aspx Copyright 2014 Accenture. All rights reserved. 12

In order to help Merchants in their digitalization journey, an Everyday Bank should focus on pre- and post-payment Value Added Services (VAS) Pre- and post-payment are key to help SME customers digitalizing the shopping process MERCHANT EXPERIENCE Pre-Payment Payment Post-Payment Targeted Ads Promotions Coupons Location Based Marketing Social Marketing 40-75% Plastic, Loyalty (Points 1-3% virtual accumulation, redemption) Remote, c-less Social recommendations Credit, Debit or Big Data analytics Prepaid 2-20% Mobile Payments Digital Commerce Awareness Knowledge Preference Choice CUSTOMER EXPERIENCE XX YY% Share of value Merchants are open to share across the value chain Repeat choice (loyalty) Socialize (word of mouth) Source: Accenture analysis Copyright 2014 Accenture. All rights reserved. 13

By helping merchants digitizing their commerce business, an Everyday Bank may also provide a valuable experience to Bank s retail customers During the shopping process, an Everyday Bank can 5 Merchants / customers matchmaking 1 By leveraging Bank s SME and acquired merchants network, and customer base Banks can enable & improve the Digital Commerce experience Leverage transaction data to provide users relevant offers and services 2 Personalize the shopping experience Gather additional data pay in a simpler way 4 Provide a seamless shopping experience including coupons, loyalty points accrual, etc. Bank s core business 3 finance (or insure) the purchase Copyright 2014 Accenture. All rights reserved. 14

Case study Sixdots (Belgium) Case Overview In 2013 BNPP Fortis and Belgacom started up a m- Commerce initiative with the objective to be first in the market with in-app payments and value-added services, prepare NFC launch, and anticipate Internet players threat After the announcement, 3 other Banks (KBC, ING and Belfius) joined Sixdots JV. All Belgian MNOs are endorsing it In May 2014 Sixdots launched first production release, while a large scale commercial launch is planned on next months Service Model Sixdots mwallet concept will initially enable: Online and in-app payments Identity management Ticketing (transportation, events etc..) Coupons Loyalty Mobile Operators and Banks are leveraging respective strengths: High penetration overall in the country Brand, trust, relationship with merchants Relevant distribution network (branches, MNO shops) Wide share off handsets distribution market Large amount of transaction data to be monetized Copyright 2014 Accenture. All rights reserved. 16

Case study mbank (Poland) Case Overview mbank (formerly BRE, part of CommerzBank Group) is 4 th universal Bank in Poland with > 4 Mil customers, also present in Czech Republic and Slovakia First Poland s Internet Bank in 2000, mbank started in 2012 an ambitious, 360 digitalization program with the objective to be the first true Digital Bank of Poland Service Model Multi-channel UX and technology redesign: full redesign of a state-of-art multi-channel Customer Experience, with seamless integration between Digital and physical channels (branch, ATMs) Innovative apps leveraging Mobile Identification, and offering LBS, selling, deals, PFM, P2P M- payments Merchant-Funded Loyalty: mokazje is an application available on Facebook, offering users personalized discounts (5-50%), based on user s transaction history The user can browse deals and send them to friends or directly purchase the products via debit, credit card or bill payments Video chat PFM P2P money transfer (SMS and Facebook) Gamification Copyright 2014 Accenture. All rights reserved. 17

Conclusion 1. Digital pure players, such as Google, PayPal, Facebook and Amazon, are rapidly establishing in the m-payments and Financial Services space 2. Banks have the option to become Everyday Banks building an own economic ecosystem, leveraging their assets and network of local relationships, or to become utility Banks 3. Supporting SME customers in their digitization journey by enabling Digital Commerce, is a key objective for an Everyday Bank 4. While supporting merchants in the digitalizion of the shopping experience, Banks should focus on pre- and postpayment value-added services Copyright 2014 Accenture. All rights reserved. 18