#1-5F. Digital Transformation [Part C] - Finance - (Innovation Strategy: Developing Your Fintech strategy).
" Effort of digitization on the stack
"With digitization, Tightly integrated stacks are broken down into layers with modules.
" What is the outcome of disruptive innovation
"new players to enter with innovation - that extend the bottom of the market to new customer groups - that previously could not afford a product of service, - these new offerings based on simplicity costs can refine faster - than existing products to the point when it become attractive at the high-end of the market.
What brings the nature of innovation w.r.t digital stack
Because they are loosly coupled - they are easy to innovate
In Strategy, the name of the game is ___________
Competitive advantage
" Biggest Challenge in B2C Space
Convenient, Easier and Faster - front-end of customer interaction
What is Hypercompeitition
Industry dynamics of constant disruption
" 3 Stage cycle of Disruptive innovation
Initiation | Selection | Stability
Define Resource Heterogeneity
Resources having a bundle of attributes that pushes them to enact in different strategies
Biggest Technological obstacles.
banks' legacy systems.
" Biggest Challenge in B2B Space
technical compatibility and connectivity.
" End User Expectations - Individualised and contextually relevant
* Clearly define user profiles. * User Specific Data. * Big Data analytics * personalised, tailored products * Users expect advisory services, * Provide : information and suggestions - based on their transaction and activity history
What would be the most benefial change. # "
The most beneficial change would be more standardised regulation - data usage, risk and transparancy - simulate competition and encourage progress
" "Question 2 In finance, it is expected that competition will turn more towards...
" Competition based on transient competitive advantages
" Three main principles of Digital Kaizen
"#1. Understand What matters and What does not matters #2. Understand tools where they matter - Dynmaic, Actionable and Aspirational. - Dynamic : Tools can be tailored to specific use + Guided by Strategy. - Actionable : Capture Inquiry + Why it works. - Aspirational : Provide aspiration for improvement. #3. Future matters and not the past.
What brings innovation w.r.t digital stack
"* Ability to change one module without changing the other modules. * Connecting different modules in different ways
How does Big Data generate value
"* Automate repitative services. * Reduce data processing time. * Identify very specific customer segments - to target them with customized value offerings. * Identify consumer preferences in real time. * Innovating value propositions. * Customize Products and offer them at the most convenient time
" What is the purpose of Hackathon
"* Brainstorm ideas in a particular area of relevance. * Narture the development community of potential partners
" Provide example of re-combinations
"* Camera - to scan invoices * Fingerprint sensor - to sign payments
" Name the different practices to enable FinTech Strategy
"* Define Innovation Enclaves. * " What are innovation enclaves # "Organization entities that have - More flexible Governance - Innovative Busienss Model. - Effective internal prioritization. - Effective Business cases. - rapid prototoyping. - more experimental culture - engage in high-risk moonshots
Example of Digital Stack - Mobile Phone
"* Device Layer : Handset with physical features. Example : Screen, Fingerprint Scanner, Camera. * Network Layer : Operating System providing basic operating func Example : Apple iOS. * Service Layer : Apps, Games. * Content Layer : News Article or FaceBook messages
" Building dynamic capabilities through Position
"Position of the firm = Specific Assets = Competitive position of a firm
What are the layers in the digital stack of a bank
"Product Layer Service Layer Distribution Layer Consumption Layer Device Layers
" End User Expectations - Real Time
"Real-time. The trajectory of digitalisation has led to - near-instant transactions and - up-to-the-second visibility over cash-flows
" What are the main challenges in Innovation
"Regulations that are in conflict with each other. Asking for more innovations. We ought to do everything by the book
What does competitive advantage represents
"Results of - strategies oriented to create value - they are not being implemented by competitors at a given point of time
" Main Char of End User Expectations
Accessible + Efficient + Real-Time + Intutive + Individualised and contextually relevant + Integrated and Flexible.
Innovations are created by ..
Acquisitions and partnerships
More than half of the banks say what
Acquisitions and partnerships and Acceleartors are important to gain access to technology
" What is the objective of the PSD2 directive initiative
opens up the EU payment market to companies offering consumer- or business-oriented payments based on access to information about the payment account
Generic Strategy
"* Firms have competed by building strong positions and defending them. * They have tried to entrench themselves - in product and geographical markets. * The one with the biggest market share has enjoyed - highest economies of scale and - scope and - the highest profit.
Value of a Brand
"* Financial valuation with income of the firm or the business unit - as reference to forecast future profits due to brand management * Brand value through consumer prefernece
" Two elements that have radical impact on payments
'fintechs', and the - second digital ecosystems.
What is the mindset change required #.
."The time has come for one further change; a shift in mindset from one of competition to collaboration."
Investments in FinTech has grown to...
25 billion dollars in 2016
" What are Tech Acquisitions
Assess innovative Technologies and Capabilities.
" Defining features of Fin-Tech
Data Generation
" Disadvantages by most banks
Outdated communication protocols with their corporate clients
" What is the main objective of Strategy w.r.t Finance
Should not be about safe-guarding against disruption - it should be about creating the new disruption
Resource Based View (RBV) industry moves
"* First Mover advantage - With a critical resource + resource barrier. * Develop attractive resources internally - assess other competitive tactics that are not emergent in the similar asset * Lack of capacity to develop internal resources - leading to Merger and Acquisitions.
" Main Steps to understand FinTech Strategy
"* How digitization has a pulverizing effect on financial services. * Approaches to define Innovation based competition (a) Disruptive Innovation. (b) Hyper-competition * Combining Disruptive innovation and Hypercompetition - Implication of positioning of your FinTech Strategy
What is being dynamic
"* Identifying conditions that are difficult to immitate by the competitors. * Renewing organization competencies to match the capabilities of the environment
How does spotting disruption occur
"* Identifying development technology - that can make disruption happen. * Look at many innovations that seek to create true innovation. * Ask : Which tech development continue to develop faster * Follow the innovations : Will the innovation leading to market segmentation or full replacement ? * Sooner to determine the answers to the above - the better we are placed
" Name major disruptions in Finance
"* Mobile Payments * P2P Lending - new way of estimating risks. * On-demand Car Insurance - using improved connectivity and geographical tracking
" Importance of Partnerships
"* Offer clients cutting-edge added-value digital services * co-educating and sharing the burdens of compliance, * risk and investment costs."
" Traditionally how is the physical stack treated
"* Physical stack is tightly integrated * Front Office systems and Back-office systems are tightly integrated. - and is controlled by the bank * Tightly integrated systems are very hard to innovate * Ability to change all of it in - one coordinated and synchronized way
Char of API
"* Pipes - allow real time exhange of data. - ability to exploit data, extract insights and share them across multiple stakeholders - and decision makers
" Name the main elements in Innovation
"* Setup innovation enclaves or moonshot factories that take care of really radical innovation. * Second, all speed IT and DevOps. These are tools to speed up innovation delivery. * Third, data-driven innovation, where the digital artifacts in the company sets the ground for continuous improvement in the digital age.
" Name the repositioning strategies
"* Stay with an integrated model. * Focus on production or distribution. * Or transform to a platform model based on either the supply-side or demand-side.
" What is Integration Paradox
"* Tension vigilant when trying to integrate activites between... - Technology - Activiites required to deliver innovation
" Disintegration of Finance | Pulverizing Finance | Part I | Explain the digital stack of the bank - the traditional approach
"* The physical stack (Devices + Products/Services + Distribution + Consumption) - is tightly integrated - controlled by the bank. - Front office systems and Back Office Systems are tightly integrated. - Very hard to innovate. - Changes is needed to be made - one coordinated and synchroniuzed way
What is the basic nature of innovation
"* Use fundamental technology developments as a basis for - new ways of doing business. - new business models. - new processes * Use New Techologies enables innovations that might become disruptive
Name the basic two questions that you wish to ask
"* What do you want to achieve with the fintech strategy. * How do we develop the FinTech Strategy
" Producer Role In FinTech Strategy
"* offering to the customer is created by a minimum of two parties * One party creates the service, an external party distributes the service of the customers. * The producer role is explored by banks that is setting up accelerators, incubators, development portals, and hackathons across the globe
" Problem and Solution with FinTech Industry
"* possibilities for disintegration of the financial industries into horizontals rather than verticals. * Because the disintegrated horizontals are likely to better foster creative innovation and absorb digital shocks to the system * Structural Transformation. * Process Transformation.
" Name three main dynmaic capabilities
"*. An ecosystem approach to sense market and technology oppertunities. *. Delineate structures + processes + procecdures + incentives for properly seize oppertunities. *. Prioritizing and Filtering of Oppertunities. * Alignmnet of specific assets.
Define Disruptive Innovation
"A Product considered to be very expensive and complicated - disruptive innovation makes the product more affordable and accessible - to the larger population
" Building Customer Relationships
"A firm first initiates the relationship when the customer buys the product - Building on the relationship : On continious repurchases of the same product. - Repurchases on different products. - As consumer needs are fullfilled - a unique relationship is developed. - Other consumer segments may exhibit a different need - which merits a different sol. - Developing the relationship with complementary products or services -- Firm is capable of capturing value from the relationship - Expertise and competence of the seller to provide reliable and valuable informaiton to the customer
" What is Transient Strategy
"A transient strategy, focus on the next opportunity, even before what is in the pipeline has peaked. - move beyond sporadic innovation to foster an organization - that on one hand builds an advantage pipeline - on the other hand enables the rapid ceasing of the returns from those advantages
" What is the main func of AI
"AI agent - - takes external data (structured and unstructured) - transform it according to a pre-defined rules - produce an outcome which is again introduced into the system. - Within time, the feedback loop improves the accuracy of the outcome
" Detail func of the AI Agent
"AI agents - use analytical techniques to find solutions - apply deductive reasoning techniques to infer and forecast outcomes (reasoning) - iteratively find a solution to approach without relying in predefined rules (machine learning)
" What is the differenence between Accelerators and Incubators
"Accelerators In accelerators, selected startups spend anywhere from a few weeks to a few months working with a group of mentors to build their own business. - Accelerators provide seed investments and intensive mentoring. - In Aaccelerators the objective is to scale that model. Incubators - In incubators, the time line is typically not defined. - Incubators make resources available, but it's up to the startups to grab them. - in incubators the objective is find the business model
" End User Expectations - Accessible
"Accessible. - Users expect channel convergence and - access to services on multiple devices (both online and offline) - through a consistent, easy-to-use and instinctive interface - with clean, modern aesthetics.
" Example Banking model
"Account information and payment services are - distributed by the banks online - and mobile channels to the customers.
Nature of current technologies in Fin-Tech
"Analyze the growing amount of data - that require ICT systems - focus on Privacy and Security of data - during Transmission, Storage, Data analysis and Data-driven innovation
" Improvemetns in B2B solutions
"B2B * Customer Cash Management. - Notification on currency pairings - Optimal Payment Method - advisory Services.
" Improvements in B2C Solutions
"B2C Solutions Adaption for treasury applications. - smart-device enabled paymetnts for corporate collections. - clearing. - Supply-chain finance workflows - e-invoicing.
" Distributor Role In FinTech Strategy
"Banks have been distributing funds of other actors and credit card services for a long time - he novelty here lies in the new possibilities to focus extensively on the distribution role as a main business model - as all banks have to enable access to their account information and payment services.
Traditional approach to Banking #
"Banks owned - products + channels + customers. - a perfect closed loop
" What is Open Banking
"Banks to create Open API. - We still have the products as before, - But the channels are competing with other channels in interaction with customers. - Competition in the payment area. - Introduction of Payment service providers - Introduction of entities to play in the banking area, without being a bank. - PSD2, More players are allowed to play. - Competition for Information about accounts + Payment Transactions
How does competence play a imp role
"By competence enhancing a product - - an organization can lead to better value propositions to customers
" The main question to ask in a FinTech Strategy is
"Careful balance between Integration and Autonomy Complementariness of Product Integration OR Continued innovativeness
" Disintegration of Finance | Pulverizing Finance | Part I | How do you bring innovation w.r.t the digital stack
"Changing one layer without having to change all of the related modules. - Connecting each of the modules to other modules in a new way
Example of Tech Acquisition
"Comm Bank Acquired TYME FinTech in South Africa. * Acquiring Technology and People at the same time. * Expand the bottom of the market - new customers in Africa - that previously did not use financial services.
* Idea Generation." How do you bring in Reliabiltiy Vs Speed (TradeOff) in an organization
"Complete renovation of your IT organization that includes - governance, budget, architecture, risk, and compliance practices - Speed is managed at the individial service level - Agile is a default way of delivery - DevOps
" Necessary steps to work with the banks.
"Converstion from unstructured to structured, in order to leverage the possibilities offered by Big Data analytics - adoption of regulatory environment. - end-to-end deligence.
" Example Producer Role - A Bank
"Crédit Agricole. - the bank allows third parties to build distribution services on top of the banking platform - One advantage of the producer role is the potential revenue from increased market access - On the negative side are the -- increased costs and -- complexity of providing financial services through third-party providers -- Security is the major issue here. -- customers of Crédit Agricole's third-party distribution services have to be customers of the bank.
" Summary of Managerial Decisions
"Deceisions to be made to understand - ways to deliver value to customers. - Understand Life Cycle stage of the industry. - Position of the competition. - Understand firm boundaries. -- so that when an innovative product is launched, one avoids competition. - Identify the source of value. - Org Decomposibility -- Loosly connected Business units | Trade-off between autonomy and accountability. - Identify the right customer segment. - Identify feasible technologies embeded into the product and revenue streams. - Nature of Assets | Re-configure | Re-align | Usage of co-specialized assets to form Products | Protection of assets - Develop Capabiities - Learn, accumalate, transfer knowledge
Disintegration of Finance | Pulverizing Finance | Part I | Name the different layers of the digital stack
"Device Layer Network Layer. Service Layer. Content Layer - Communication between layers happen through APIs
" Disintegration of Finance | Pulverizing Finance | Part I | Explain the layers of the digital stack w.r.t Mobile phone
"Device Layer : Handset. Network Layer : Operating system of the Phone. Serivce Layer : Apps. Content Layer: News articles. Messages
End User Expectations - Efficient #
"Efficient. Users want processes to be streamlined and cohesive, - with key functions 'bundled' for user convenience. - For example, this might mean that ordering a service is simultaneous and synonymous with accepting an invoice and authorising a payment
" Well Fargo Accelerators
"EyeVerify : Simply by holding your phone's camera in front of your face in the same position you would assume to take a quick selfie, EyeVerify can authenticate a user's identity with the same security level as a 50-character password using the blood vessels in the eye. Kasisto : perform complex transactions on mobile devices through speech, text and touch.The virtual specialist can be activated through text or selecting a common question. Zumigo : identify whether or not you've truly made a financial transaction based on the proximity of your phone to the source of the exchange.
What is the important part of the Fintech Strategy
"Find ways to .* Sourcing arrangements * Buyer and Seller Relationships * Recognize the creativity of others * Channel the creativity of others ...into the fintech strategy * Creating partnerships * Creating Hackathons * Creating accelarators * Full acquisitions * Staff Swappings * Acquired unit managers to create integration road map
" How does FinTech add value to the ecosystem
"Fintechs often begin as small start-ups - that select a niche element of the transaction process (usually from the 'last-mile' of bank-client interaction). - They then create an alternative that is more efficient, - better rooted within the context of client usage, or - automated to a higher degree than traditional bank products - - as well as potentially lower costs. - offering superior convenience and - eliminating the remaining frictions in payment processes
" Advantage of FinTechs for Banks
"For banks, - the fintech culture and role as disruptor can be used as an advantage, - gateway to innovation
" What is Hypercompeitition
"Hypercompetition is a concept to describe the state of competition - in a very dynamic and fast moving industry. - characterized by unsustainable advantages - One phase of rapid change is followed by a very short phase of stability, and then again a new phase of rapid change.
" Innovation at Danske Bank
"Implementing Innovation Enclave (Moonshot) * Communiction with Leadership. - Why Moonshot is important - Culture : Its ok to fail. - Generate Idea : Solicit Teams. - Cost, Benefits, Risks - Obtain funding. - Ask team members, who wants to work on it. - Define a team. - Provide the team an environment. - Track funding, Track Progress
" Name the main queutions asked when faced with FinTech Strategy
"In which position should we compete? Which horizontal to enter? So, what would you like to be? Production? Distribution? Or someone between the two layers?
" Char of Block-chain
"Information distributed system | Public Ledger. - Stores records of transactions that participants in the network has executed. - Transactions are grouped into blocks - Each block is secure, traceable and decentralized. - Each block is chronologically linked to the previous one. - Each participant verifies each transaction in the system without requiring a central party - A block can be modified only after recieving a participant's agreement. - A participant verifies a block using a digital signature
" Fintech and digital ecosystems - role in payments - current situation
"Innovative and nimble new players - fintech and digital ecosystems - have entered the payments game, creating increased competition for already-pressured banks. But without access to a client base. "
" End User Expectations - Integrated and Flexible
"Integrated and flexible. Users expect a one-stop portal - with seamless reconciliation across their user profiles, (for example between different accounts and financial services), - that is also standardised and agnostic (i.e. compatible and interoperable with other systems)
" End User Expectations - Intutive
"Intuitive. Artificial intelligence has been conceptualised for some time, - that has advisory capacities and - can search for, anticipate, and consult on user needs.
" How are payments made more convinient
"It makes payments more convenient for customers by - combining a range of existing payment technologies - including NFC (near-field or 'contactless' communication), - tokenisation (a security measure), - and existing POS (Point of Sale) hardware - within one customer experience
" What does sustainability represents
"Lack of ability from the competitors - to replicate the benefits of implementing a particular strategy
" How does innovation happen faster
"Loosly coupled systems * Ability to change one module without changing the other modules. * Connecting different modules in different ways
" What are the basic barriers in innovation
"Main Lessons in Innovation: * It is difficult to get an innovation idea, it Is even header to implement them. * Success of the innovation product could be cannabalizing its core business. * Incremental improvements are welcome by the system but high-risk, uncertain, game-changing innovation are shut down. Find approaches to bring these high-risk, game changing innovations to pave into the system
" What is disruptive innovation
"Market leaders in industry focus - too much on the high-end of the market and - ignores to innovate in the simpler low cost solutions.
" Main issue with Traditional appraoch to Banking (in the digtial era - where they are multiple channels)
"Might loose customer relationship. - Customers will start to think he/she is a part of Google and not a part of a bank.
" Disintegration of Finance | Pulverizing Finance | Part I | How do you thrive in the new world
"Modify the DNA of the company. - Embrace Change. - Be the driver of Change - See Oppertunities. - Seize Oppertunities. - Move away from competing under Market Stability. - Move away from competing under fortified positions.
Digital Transformation in Bank
"Obj : Bring Culture + People + Process + Customer togehter through digital efforts - digital transformation. * Look at from the customer standpoint - What are we doing differently for the customer to enhance their experience. - What can we provide for them when they need it. - How they need it. - Where they need it. - In the form they need it * Cultural Transformation : What is the state of Culture + People. * Infrastructure should support digitization. - Usage of Cloud platforms. - Have the required security in place. - Enabling API Framework. -- Partner with external and internal entities to enhance customer experience. - Propel Data Insights to create customer sitickiness. * Keep the customer interface + look at value add through Auxulary services - to enhance the experience of the customer.
" What is Artifical Intelligence
"One of the analytical techniques with potential to derive value from - analyzing big data.
" What is the new Strategy to be adopted in FinTech
"Partnerships with firms providing innovative solutions Distribute services to the customers
What is a Hackethon
"People involved in software developmet work intensively for one or few days - to create a prototype
" Stages of development of block-chain
"Stage 1 - Initial Transactional peformance. - Ability to transfer money. - Ability to make payments. - Reduction of transaction costs. Stage 2 - Privacy - Smart Contracts - Central party is not required to oversee compliance of contracts Stage 3 - Ability to source services from other parties by using the ledger. - When other companies engage in the network -- the company is enabled to conduct outsouring operations -- that change the boundaries of the firm. Stage 4 - AI - ability to learn fromd data and develop managerial rules of action. " What is Big Data ! "Refers to data captured through - physical sensors, social media networks, pictures, videos, mobile phone signals, location and payment transactions.
" Building dynamic capabilities through Process
"Structural Transformation + Reconfiguration. - Organization processes - Managerial processes - Coordination and integration of activities. - Coordination and integration of technologies. - Learning through experimentation. - Develop repositories of Org Knowledge
" We have argued that digitalisation has a pulverising effect on finance. That it breaks up the previously integrated verticals in financial services. Please try to summarise the arguments for yourself here.
"That digital products and services are composed by layers of modules that are loosely interconnected. This means that one module can be changed without changing the whole stack.
What is the need of PSD2 directive
"The directive was created to regulate payment services and payment service providers within the EU and the European Economic Area - aiming to boost competition - let fintech companies and other non-banks enter the payments industry
" What is the advantage of the PSD2 directive initiative
"The regulators expect to - reduce costs, - encourage innovation and - improve consumer protection
What accelerators are
"The similarities are that both concepts - try to capture entrepreneurs - with early stage ideas, and - channel them into successful commercializations.
How is the banking model
"The traditional model in banking is that of an integrated vertical channel from products to services via distribution to the end customers
" Building dynamic capabilities
"Through Position | Process | Paths
" Disintegration of Finance | Pulverizing Finance | Part I | Role of Digitization w.r.t digital Stack
"Tightly integrated modules - are broken down into compoents. - the components can be changed without impacting all the other components or the stack. - components are connected to other components in different ways
" What is the advantage of having a established bank partner as a simplest option ?
"Time and Cost Savings. A pre-established provider-client relationship will allow the partners to bypass - the time-consuming and costly process of onboarding and - compliance requirements (such as KYC,AML and embargo filtering regulations). - This means that fintech firms that have already been onboarded as a banking client may find partnership with this existing banking partner the simplest option.
" Two main difficulties in FinTech
"Two of the greatest difficulties fintechs face - particularly in the B2B market - are access to a - sufficient client base (of corporates and their treasurers) and - the ability to successfully scale-up a functioning solution for mass usage.
" Nature of Big Data Sets
"Volume | Variety | Velocity | Veracity Volume - Massive amount of digital inforamtion storage Variety - Data can be originated by Market Research | Logistic Fleets | Service delivery operations | Customer Service Velocity - Data can be captured, analyzed in real time. Veracity - Huge amounts of data can be deemed as more reliable than small amount of data.
" Digitalisation has a pulverising effect on finance
"We know from the technology industries, that digital products and services are composed by layers of modules that are loosely interconnected. - This means that one module can be changed without changing the whole stack - from backbone financial products to the end customer - at the same time.
" When does the firm achieve a Sustainable competitive adv
"When a company create more economic value - than the marginal costs associated with the strategy
" Importance of Speed
"When an opportunity emerge, - we need to seize it. - The faster we can get there, - the long the time enjoy the sweet spot before our rivals catch up.
" What is sustained competitive advantage Vs Transient advantages
"we should forget about sustained competitive advantage. - The concept of sustained competitive advantage bids on the view that a company should build distinct capabilities that allows them to reap returns over a long period of time. - In this view successful companies defend their advantages against rivals, for example, a unique distribution network. - ompanies need a business strategy that accepts that the competitive advantages are often short lived - Transient advantages typically give an edge towards the whole industry, therefore generating high returns, but only for very short time. - As soon as a new technology emerge, there's room to move fast in a direction that will lead to new transient advantages - Companies that successfully compete on these advantages are therefore the ones that will focus on continuously building new ones. Instead of building an advantage and defending it.
" Main Technology Techniques in Fin-Tech
* API | Block-chain | AI | Big-data
" Example of Cisco w.r.t Disruptive Innovation
* Acquiring companies based on promising ideas.
" Secondary Sceanario of Partnerships
* Alternative providers of niche financial services. * Mix and-match niche providers * Central platform that connects to niche providers' products. * Develop connections - bilateral or multilateral partnerships.
" Future of Financial Institutions.
* Automated Asset managers. * P2P Lenders * Leveraging of Virtual channels * Non-financial value adds. * more customer-driven virtual experience
" What is to change the DNA of the company
* Competition - moving away from - established positions and market stability to - new ways of competition
" A FinTech must look for what attributes of a bank
* Compliance Needs * Regulatory Needs * Treasury * Liquidity * Infrastructure * Process and Systems * Open API * Fx Function() * Investment * Processing * Settlement * Clearing * 3rd Party component connectivity * Licence Mgmt * Crisis Assessment * Risk Assessment.
Main Objectives.
* Delivering above 12.5% ROE. * Enhancing Economies of scale. * Segmenting market places. * Reaching market segments - considered impractical or uneconomical to engage. * Improved Interoperability. * Improved Simplicity. * Added Value. * Speed * Accuracy. * Reduce Transaction cost * Reduce service cost * Enhance Converage of hetergenous mobile platforms by 60% * Enhance Multi-Channels Integration footprint by 90%. * Customer Function usage to be enhanced by 90%. * Quality of Just-in-time visibility of transactions to be >= 95%. * Quality of Suggestions and Information provided to be >= 95% and to be Customer contextual in nature. * Improving Customer Experience.
" What is the mindset allignment
* Digitization : The new differentiator for banks * Leadership - more important than management. * Business models will have to change, * Talent - more important than management. * The need to invest time and resources. * Fast Decision-making logic * Innovation * New alliances with fintech's
" Role of Regulation
* Drive the market in the specific direction. "* Support the framework. - Ensure Financial Stability. - Ensure Seamless Payment * Support Open Banking
" Role of Banks w.r.t API
* Embracing API as a protocol. * Introduction of an API - into a sensitive environment. - into rigid infrastructure. * Protect Internal System. * Accessing up-to-date bank data * Protect Client Information.
For the implementation of PSD2, what is the basic support required.
* Existing Payment infrastructure - complements and supports most of the theoritical use cases enabled of PSD2.
" Third Scenario of Partnerships
* Financial institution - embedding their service into Customer's daily lives - exploring innovations in mobile. - exploring virtual transactional channels. - meeting customer demands.
" Primary Scenario of the partnership
* Focus on their own core competence. * Leverage their expertise. * Create - full suite of financial products. * Access to data * Disaggregation of ownership over customer-relationships. * Create online seamless, digital customer experience
" A Bank when looking for a partneship with a FinTech must look for which attributes ?
* Management Setup * Standard and values * Market Understanding * Market Lending Business Model. * Tech Skills - Human Resources - Web Technologies - Smart Devices - Algorithms - Big data - Tangible Assets * Customer - Understand Life Context - Customer Centric Approach. - Understand Customer Behaviour
" What is Innovation
* New Business model. * Adapting existing processes or frameworks - to use different channels - to use different devices
" What is required by the Banks
* Open API * Systems and processes are flexible and interoperable.
" What is the prime aspect w.r.t Financial Startegy. Give an Example
* Relocating team structure. * Adjusting development practices * Determine quality and quantity of code contributions over time * By implementing the conditions of high performance teams at cost to company * Enable low performance teams to improve * Digital capital can be used to measure, optimize and adjust
What are the market changes w.r.t PSD2
* Segmentation. * Development of the market. * Creation of their dedicated specialist bank or branches - for open banking purposes. * API Standardization. * Quick adapters of Open Banking Platform - promotions through events like hackathons. * Regulation in regards to - Electronic Identification and Authentication. * Regulation : Secure Open Standards for Communication * Regulation in regards to - Trust Services for Electronic Transactions. in the Internal market. (eIDAS Regulation) * Regulation : General Data Protection Regulation * Regulation : Integration of PSD2 with General Data Protection Regulation * Define Regulatory Sandboxes. * Strictly following regulatory agenda - adopting their solutions in accordance to the legally define timelines.
" "Explain Mobile Payments (as a part of Disruptive Innovation)
* Started as an SMS Payment - Poor Product - But has many use cases * Variety of Products * Create Segmentation. * Develop in Performance with Alternative solutions. * Increase in Quality. * Reduction in Cost. * Would it be a real alternative - - alternative to cash | cheque | credit card.
" What is the basic nature of the Partnership model
* To leverage a fintech-offering as a white label product * Bank to pay a licence fee.
" What do you look for in a ideal partnership.
* achieving low cost connectivity + * update infrastructure
Payments
* integrating billing, * mobile payments, * streamlining payments * cryptocurrencies * peer-to-peer transfers. * security developments
Problems faced by Banks #
."1. The regulatory burden (when to bring innovation) - necessary prioritisation of compliance - to meet new standards of reporting -- know-your-customer requirements -- anti-money laundering -- anti-fraud 2. Increase in Operational Costs 3. new capital adequacy rules - have demanded higher levels of capital be held on banks' balance sheets 4. low interest-rate environment 5. investor demands regarding returns on equity
" Barclay's accelerator builds on 4 pillars
1) co-working space, 2) seed investment, 3) mentoring and 4) a demo day.
" Name the 4 main technologies
API | Block-chain | AI | Big-data
The biggest part in data analytics is.....
About finding right questions
" Name the 3 main market based resources
Brands | Value Offerings | Customer Relationships
What is the business strategy (in Generic)
Building unique resources and capabilities that have been hard to imitate
What is a digital Stack
Collection of digital modules together form a whole w.r.t functionality
" Main objective of Big Data
Deliver insights that create economic value
Define Resource Immobility
Difficulty to make available own resources to competitors
What is understood in "Selection"
Entereing into a phase of natural selection into a few different alternatvies
" Some of the brightest ideas come from...
External sources
" What is disruptive innovation
Innovation and Technology Practices that fundamentaly alter the structure of the industry
" In Finance - Generic Strategy to have a large customer base
Large number of offices and front desks
" Parameters for continious innovation
To meet the demand for technologies - that drive efficiency, lower transaction costs and boost convenience.
Name the different set of resources
Org Practices | Knwoledge | Experience | Customer Relationships
Name the different set of assets
Patent | Brand | Access to Capital | Access to Knowledge Mgmt.
" Current Problems "
Payment Options - Designed for Payroll. - Limited - Inefficient - Slow - Costly. - Lack of capacity for data rich flows.
" What is performance in financial industry
Ratio between cost and quality
What causes Competitive Dis-advantage
Resources - NOT Valuable + NOT Scarce + NOT exploited
What causes Competitive Parity
Resources - Valuable + NOT Scarce + exploited
What causes Competitive Temporary advantage
Resources - Valuable + Scarce + exploited + But replaceable by Competitors
What causes Sustainable Competitive Advantage
Resources - Valuable + Scarce + exploited + Not replaceable
" Nature of Resources
Resources heterogenetiy + Resources Immobility
" What is PSD2
Revised Payment Service Directive
Initiation Phase | Disruptive Innovation
Targeting low-end of the market - who have a very particular niche position in the market
" Nature of the digital Stack
The layers are loosly coupled and connected through standard interfaces
What is understood in "Stability"
What already exists does not get completely replaced
" Platform Roles in FinTech Strategy
two different platform roles focusing on the demand and supply Example Demand-Side Platform - A Bank # "The company, Leveris, provides the demand-side platform. - the platform is the app that the customer use. " Example Supply Side-Platform Role - A Bank # "* SaxoTraderGo App * Saxo Bank is a financial trading platform that enables trade in thousands of financial instruments on a multitude of exchanges. - Saxo Bank connects all of these trading products to the customer, - to its own distribution channels * But Saxo Bank is also increasingly connecting these instruments to the customers through its partner * Saxo Bank expects that more than 50% of all trades will be generated by partners within soon