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Smarter Digital Banking:
Leveraging New Capabilities
with Big Data
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Featured Presenter
Our speaker today is:
Marc Andrews Vice President,
Global Big Data Industry
Team,
IBM
© 2012 IBM Corporation
Smarter Digital Banking
Using Big Data to Transform the Banking Experience
Agenda
• Market Forces Driving Action
• The Future of Digital Banking
• Pursuing Next Generation Capabilities
5
Banks must continue to
deliver new, innovative digital
services and pursue alternative
revenue streams
Market Forces Dictate Action
6
Continued margin
pressures and
reduced profitability
in traditional banking
products
Other banks have
plans to deliver
enhanced mobile
and online
capabilities Large threat of
disintermediation
by non-traditional
financial service
providers
…Executives at New York-based JPMorgan expect low rates and
the resulting margin compression to cause a $400 million decline in
consumer and business banking net income this year…
…profit margins in Europe’s banking industry will remain under pressure as
the sovereign debt crisis curbs client activity and competition increases.
Pressure on margins and higher capital requirements “are the new normal.”
…intense competition and low interest rates are causing margin pressure
that will likely further erode the banks' already-weak
revenues and profits over the 12-18 month outlook
period…[one of] the main drivers of the outlook are margin pressure for
banks, owing to intense competition, low interest rates and limited loan
growth…
As a result of new global, regional, and national regulations, and
absent any mitigating action by banks or material changes in the
economic and competitive environment, return on equity for
retail banking Europe’s four largest markets is
expected to fall on average from about 10 percent to
6 percent, a decline of 41 percent…But individual banks can
rebuild ROE…substantial business-model realignment is
the single most important lever.
Mobile Innovation Plans Online Innovation Plans
Mobile is the deciding factor when switching banks
7
• Mobile banking adoption expected to approach 50% by 2016
– Was 15% in beginning of 2012
– Between age 18-34: 30%
– Between age 35-54: 15%
• 39% say mobile offerings were important in their decision to switch banks
• Mobile banking users who switched banks in the past year:
– 32% chose mobile banking as preferred attribute
– 24% fee level
– 21% branch convenience
– 21% customer service
– 9% deposit rate
• Opportunities for differentiation are opening for banks
Source: Alix Partners, http://www.alixpartners.com/en/MediaCenter/PressReleaseArchive/tabid/821/articleType/ArticleView/articleId/203/Smartphones-Rapidly-
Transforming-Mobile-Banking-From-New-Concept-to-Tablestakes-According-to-AlixPartners-Study.aspx, Feb 22, 2012
For customers already using mobile banking, mobile banking features are the
most important deciding factor (32%) when switching banks, more
important than fee (24%) or branch location (21%) or services (21%)
8
Drive outbound communication
and interaction when “customer”
considers valuable –
relevant, timely and helpful
Key Capabilities That Must Be Considered
Provide new services that extend beyond
traditional banking to help customers
make the most of their time and money
Access core banking services
from anywhere, anytime
with an ease that delights
integrated across all channels
9
CUSTOMER JOURNEY Part 1
Pierre, a native Parisian, goes out shopping one Saturday
powered by
10:00 AM Bouygues3G
OFN
1
OFN – Could you use more
spending money?
You’ve been pre-approved for a credit line
increase – would you like to learn more?
Cancel OK
powered by
10:01 AM Bouygues3G
Current Balance: €11,237
Current Line: €15,000
New Line: €20,000
Accept No, thanks
OFN Offers
You have been pre-approved for a €5000
increase in your credit line at your current
interest. Just click “Accept” now and
access additional funds immediately.
If you accept, you will receive 60 days
interest free payments on any purchases
made in the next 12 hours.
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10:48 AM Bouygues3G
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OFN – Save Receipt?
We noticed you recently made a significant
purchase – would you like to save the
receipt?
Cancel OK
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Digital Vault Cancel
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Add to Home Inventory? YES
Add New Receipt
Take Photo
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11:30 AM Bouygues3G
OFN
1
OFN – Lunch Offer
We found a great deal on lunch at a
nearby restaurant, would you like to
take a look?
Cancel OK
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11:31 AM Bouygues3G
OFN Offers
Highlights Details Map
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11:32 AM Bouygues3G
OFN Offers
Highlights Details Map
30% off any entrée over €30
30% off
30% off any entrée over €30
Just present this offer and barcode to the merchant and pay with your OFN
card to redeem.
Bon appetite!
Data Monetization Opportunity via Mobile
17 Source: Consumers and Mobile Financial Services, Federal Reserve System, Mar 2012
What consumers are interested in using their mobile phone for
Biggest gap
Source: The CMO Site, Getting the Most from Mobile Marketing
powered by
12:58 PM Bouygues3G
Payments Logout
Mobile check deposit
Order foreign currency
Pay merchants
Mobile & Email payments
friend payments
powered by
12:59 PM Bouygues3G
Make a Payment Logout
TAP TO EDIT AMOUNT
€ 70
Payee Guillaume Audebert
+33 6 23 44 87
Message For train ticket to Geneva
Send Payment
+ €5 + €10 + €20 + €50
powered by
1:06 PM Bouygues3G
Payments Logout
Mobile check deposit
Order foreign currency
Pay merchants
Mobile & Email payments
friend payments
powered by
1:07 PM Bouygues3G
Mobile Deposit Logout
Camera
Make sure the entire cheque is inside the blue box and
touch the “Take Photo” button when you are ready
Take Photo
powered by
1:07 PM Bouygues3G
Mobile Deposit Logout
Deposit Details
Deposit
to OFN Current Account
Amount 70,00
Currency Euro (€)
Make Deposit
23
CUSTOMER JOURNEY Part 2
Pierre travels to Geneva for the weekend
powered by
11:21 AM Swisscom3G
OFN
1
OFN – Fraud Warning
We noticed unusual activity just now on
your OFN card. Please click OK to confirm
the transaction or alert us.
Cancel OK
powered by
11:21 AM Swisscom3G
OFN
1
Please Enter Your Pin
Cancel OK
* * *
11:22 AM Swisscom3G
Fraud Alerts Logout
Account Number: 12345678
Sort Code: 11-22-33
An attempted charge was made in Switzerland
(Watch Emporium). Please approve or reject the
transaction.
powered by
Reject Approve
Please let us know how long you will be in
Switzerland:
Call
2 days 6
Inform us
Call Me
Mobile Payments
27
2010 2011 2012 2013 2014 2015
North America $4.3 $14.2 $30.2 $53.8 $80.4 $109.4
Worldwide $58.9 $105.9 $171.5 $255.8 $352.7 $472.8
2010 2011 2012 2013 2014 2015
North America 105 347 736 1,261 1,934 2,694
Worldwide 2,007 3,580 5,707 8,468 11,806 15,993
Mobile Payment Transaction Volumes (millions of transactions)
Mobile Payment Transaction Value (billions of dollars)
Source: Gartner, “Forecast - Mobile Payment, Worldwide 2009-2016”, May 2012
Transaction value and volumes expected to grow in
North America by more than 3X in next 3 years
Hana Bank – Mobile Wallet for Everyone
28
Multiple Money Transfer Options
Direct Purchase or Mobile Gift Certificate
(15K+ stores)
• Balance
• Top Up
• Send/Receive
• Dutch Pay
• Wheel of Fortune
• Give Allowance
• Remote ATM Withdrawal
Includes non-Hana Bank account holders & unbanked customers
Cell phone number as a bank account
Online transfer or ATM to top up balance
29
CUSTOMER JOURNEY Part 3
Pierre spends a lazy Sunday morning at home reviewing his finances
10:00 AM iPad
OFN
3
10:00 AM iPad
OFN – Virtual Branch
Talk or chat with us now…
Accounts
Digital Vault
Payments & Transfers
Financial Manager
Spending Manager
Locator
Alerts 3
Jul 2, 2012 4:10 PM CET
Based on our analysis of your typical
spending, you may not have
sufficient funds in your current
account.
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
powered by
10:00 AM iPad
Video Conference Talk to Agent Chat
7 available now
3 available now
2 minutes
Talk or chat with us now…
Accounts
Digital Vault
Payments & Transfers
Locator
Alerts 3
Jul 2, 2012 4:10 PM – You may not have sufficient funds in your current account
Recent spending
Based on our analysis of your typical spending, you may not have sufficient funds in your current account. We’ve reviewed
what others have done to come up with some suggestions about how we can help you resolve this situation – please click on
an option below to find out more, or feel free to contact us directly to discuss.
Date Merchant Location Amount Available Balance
03/07/12 15:30 Watch Emporium Geneva, Switzerland - 2895,00 € 3431,90
02/07/12 13:00 Villa Spicy Paris, France - 150,00 € 6326,90
02/07/12 11:00 Fnac Paris, France - 1023,10 € 6476,90
Recommendations based on your peer group and communities
Your typical non-discretionary monthly spend:
Remaining current account balance:
€ 4500,00
€ 3431,90
OFN Smart Sweep Personal Loan Overdraft
Financial Manager
Spending Manager
Jul 2, 2012 4:10 PM CET
Based on our analysis of your typical
spending, you may not have
sufficient funds in your current
account.
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
OFN – Virtual Branch
74% of
peers
13% of
peers
25% of
peers
powered by
10:02 AM iPad
Accounts
Digital Vault
Payments & Transfers
Locator
Currently chatting with Paul Bellanti…
Video chat with Customer Service Back End Call
Financial Manager
Spending Manager
Alerts 3
Jul 2, 2012 4:10 PM CET
Based on our analysis of your typical
spending, you may not have
sufficient funds in your current
account.
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
OFN – Virtual Branch powered by
10:01 AM iPad
Accounts
Digital Vault
Payments & Transfers
Locator
Apply New Balance Limits
Financial Manager
Spending Manager
OFN Smart Sweep Back
Minimum balance: € 4500,00
• If the balance in your Linked Cash Account drops below this amount, money will be automatically transferred
from the Linked Excess Account in order to maintain the minimum balance.
Maximum balance: € 7500,00
• If the balance in the Linked Cash Account exceeds this amount, the amount in excess will be automatically
transferred to the Linked Excess Account
€ 4500,00
€ 7500,00
Change Linked Accounts
OFN Current Account
Account Number: 12345678
Sort Code: 11-22-33
Linked Cash Account
Direct Savings
Account Number: 12345678
Sort Code: 11-22-33
Linked Excess Account
Alerts 2
Jul 2, 2012 5:30 PM CET
New – OFN Charitable Saver is now
available in France.
Jul 2, 2012 7:30 PM CET
Based on comparison with your
communities, you may be able to
save money on your utility bill.
OFN – Virtual Branch powered by
Currently chatting with Paul Bellanti…
Alior Bank – Launching a Virtual Bank
35
Virtual Branch interface provides
online teller interaction… New brand created
for “Virtual Bank”
…virtual teller can assist
with transactions
Mobile app enables customers to
take pictures of bills…
…and electronic payment is
automatically generated
Global Banking
Innovation Award
10:01 AM iPad
Digital Vault
Payments & Transfers
Locator
My Views
Spending Manager
Accounts
OFN – Virtual Branch
My Wall 1
powered by
Talk or chat with us now…
OFN Personal Loan Form Close Send
Personal Information Calculate and Review Confirm and Submit
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
powered by
Pierre
PIERRE
RUPERT
M
10:01 AM iPad
Digital Vault
Payments & Transfers
Locator
My Views
Spending Manager
Accounts
OFN – Virtual Branch
My Wall 1
powered by
Talk or chat with us now…
OFN Personal Loan Form
Pierre Rupert
123-45-6789
14/05/1964
(647) 555-1212
(416) 555-1212
IBM
14/05/2002
€250,000
Close Send
Personal Information Calculate and Review Confirm and Submit
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
10:01 AM iPad
Digital Vault
Payments & Transfers
Locator
My Views
Spending Manager
Accounts
OFN – Virtual Branch
My Wall 1
powered by
Talk or chat with us now…
OFN Personal Loan Form Close
Personal Information Calculate and Review
Send Back
Confirm and Submit
€30,000
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
10:01 AM iPad
Digital Vault
Payments & Transfers
Locator
My Views
Spending Manager
Accounts
OFN – Virtual Branch
My Wall 1
powered by
Talk or chat with us now…
OFN Personal Loan Form Close
Confirmation and Agreement
Back Send
Jul 2, 2012 5:30 PM CET
You qualify for a special rate on an
OFN Secured Personal Loan
10:05 AM iPad
Talk or chat with us now…
25%
10% 15% 20% 15%
15%
Mortgage
Utilities & insurance
Food & Drink
Entertainment
Travel
Other
My Average Monthly Spending
0%
5%
10%
15%
20%
25%
30%
35%
Mortgage Utilities & insurance
Food & Drink Entertainment Travel Other
Monthly Spend vs Peer
Average Spend
Peer
My Communities +/-
Forecasting / Planning
Average Monthly Spending
Budget Planning
Current Spend vs Budget
Accounts Timeline
Payments Map
Auto-Profile
Advanced Profile
Doctors
Spending Alerts
Jul 2, 2012 7:30 PM CET
Based on comparison with
your communities, you may be
able to save money on your
utility bill.
1
Recent Transactions
Date Merchant Amount
03/07/12 Watch … -2895,00
02/07/12 Villa Sp… -150,00
02/07/12 Fnac … -1023,10
02/07/12 Monopr… -347,48
01/07/12 Boulan… -315,24
01/07/12 Paul … -5,74
01/07/12 Airbus … 14 231,00
30/06/12 Café R… -2,88
30/06/12 Patisse… -32,33
28/06/12 Moulin … -149,83
Top Merchants
1. Nina Ricci
2. Preen
3. Helmut Lang
4. Miu Miu
5. Emilio Pucci
6. Roberto Cavalli
7. Dolce & Gabbana
8. Prada
Category
OFN – Spending Manager powered by
10:15 AM iPad
Jun 26, 2012 1:45 PM CET
Italian, Spanish Government
Notes Slide on Debt Sales as
German Bunds Drop
Jun 26, 2012 1:12 PM CET
Oil Trades Little Changed as
Storm Threat to U.S. Gulf Crude
Supply Fades
Jun 25, 2012 10:59 PM CET
BRICs Biggest Currency
Depreciation Since 1998 to
Worsen
Talk or chat with us now…
News Feed +/-
My Communities +/-
Forecasting / Planning
Investment Activity +/-
Company Last
Trade
Position
AAPL 347.48 +1.92
BAC 315.24 -2.20
CGREN 5.74 -0.04
CRDA 2.88 +0.16
ERJ 32.33 +2.31
IBM 149.83 +1.01
MERR 2.85 -1.20
SLV 18.70 -4.12
My Portfolio
Portfolio Performance
Asset Allocation
Return Calculator
Retirement Calculator
Investment Research
Auto-Profile
Advanced Profile
Doctors
Research Alerts
Jul 2, 2012 7:30 PM CET
OFN Research has just
released a new report on
Apple…
1
OFN – Financial Manager powered by
0
50
100
150
200
250
300
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12
Value of My Portfolio vs Advanced Peers (Start of period = 100)
0
500
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12
Value of My Portfolio (Start of period = 100)
My …
10:15 AM iPad
Jun 26, 2012 1:45 PM CET
Italian, Spanish Government
Notes Slide on Debt Sales as
German Bunds Drop
Jun 26, 2012 1:12 PM CET
Oil Trades Little Changed as
Storm Threat to U.S. Gulf Crude
Supply Fades
Jun 25, 2012 10:59 PM CET
BRICs Biggest Currency
Depreciation Since 1998 to
Worsen
Talk or chat with us now…
News Feed +/-
10%
20%
30% 15%
20%
5% Cash
Stocks & Shares
Gilts & Bonds
Structured products
Funds
My Asset Allocation
0%
5%
10%
15%
20%
25%
30%
35%
Cash Stocks & Shares
Gilts & Bonds
Structured products
Funds ETFs
Holdings vs Advanced Peer
Current Holdings
Advanced Peer
Investment Activity +/-
Company Last
Trade
Position
AAPL 347.48 +1.92
BAC 315.24 -2.20
CGREN 5.74 -0.04
CRDA 2.88 +0.16
ERJ 32.33 +2.31
IBM 149.83 +1.01
MERR 2.85 -1.20
SLV 18.70 -4.12
My Communities +/-
Auto-Profile
Advanced Profile
Doctors
Research Alerts
Jul 2, 2012 7:30 PM CET
OFN Research has just
released a new report on
Apple…
1
Forecasting / Planning
Portfolio Performance
Asset Allocation
Return Calculator
Retirement Calculator
Investment Research
OFN – Financial Manager powered by
Banks Trying to Help Customers Save More Money
44
Citibank and Mint.com Provide Spending Categorization via Tablet Apps
SmartyPig and Erste Bank Provide Special Apps to Drive Savings
Pursuing Next Generation Capabilities
45
46
Digital Centric designed to operate branch-free and
contact-center-lite to minimize
impact on existing infrastructure
Agile Development
Data Driven
enabling phased delivery of new
functionality in small incremental
cycles, leveraging existing
infrastructure and capabilities
to ensure communications and offers
are relevant to customers and
deliver added value
Delivery Requirements for Success
Smarter Digital Banking – Technology Conceptual
47
Core Banking Systems
Rapid Development & Integration
Enterprise Service Bus
Business Analytics
Channel Integration
Platform
Marketing Mgmt
Data Analytics
Payments
External Payment Gateway
Big Data & Analytics
Core
Systems &
Processes
Payments &
Commerce
Multi-Channel Consumer
Applications
Infrastructure & Development
Se
cu
rity
Smarter Digital Banking – Technology Descriptive
48
Core Banking Systems
Rapid Development & Integration
Enterprise Service Bus
Business Analytics
Channel Integration
Platform
Marketing Mgmt
Data Analytics
Payments
External Payment Gateway
Big Data & Analytics
Core
Systems &
Processes
Payments & Commerce Multi-Channel Consumer
Applications
Infrastructure & Development
Secu
rity
• Data Aggregation
• Master Data Management
• Advanced Analytics
• Campaign and Offer Management
• Process and Rules Management
• Performance Management
• Customer Experience Management
• Data Access
• Personalised Content Delivery
• Secure, Real-Time, Two-Way
Communication
• Client Reporting
• Content Management
• Collaboration & Community Services
• Electronic Forms / Signature
• On-Demand Scalability (Platform as a Service)
• Multi-Device Mobile App Framework • Diverse Device Testing
• Endpoint Management (Apps and Devices)
•A
uth
entication
•A
uth
orization
• Payment Gateway
• Wallet
• Baskets & Order Management
• Development Lifecycle Management
Smarter Digital Banking – Technology Logical
49
Core Banking Systems
Infrastructure Management, Monitoring & Governance
Rapid Development & Integration
Enterprise Service Bus
Collaboration Services
Business Analytics
Channel Integration
Platform
Marketing Mgmt
Process and Rules
Mgmt
3rd party Data
Mobile Application
Security Services
Data Analytics
Commerce
Payments
External Payment Gateway
Data Mgmt
Smarter Digital Banking – Technology Components
50
Core Banking Systems
Infrastructure Management, Monitoring & Governance
Rapid Development & Integration
Enterprise Service Bus
Mobile
Com
munic
atio
n
Managem
ent
Deposits
Card
s
Loans
Wealth
Collaboration Services
Secure, Real-Time, Two-way
Communications
Community Collaboration
Services
External Connectors
Business Analytics
Campaign Insight
Business Insight
Predictive Analytics
Fraud Analytics
Performance Management
Web & Mobile
Experience Analytics
On-Demand Scalability (Platform as a Service)
Hybrid Integration – Cloud & On-Premise
Endpoint Management, Monitoring & Reporting
Multi-Device Mobile App Development Framework
Diverse Device Testing Collaborative Development
Lifecycle Management
Channel Integration Platform
Common Data
Repository
Common Channel Services
Data Handlers
Data Transformers
Data Mappers
Service Invokers
Presentation Services
Data Caching
Marketing Management
Campaign Mgmt
Campaign Scheduling
Campaign Delivery
3rd party Data
Demographic
Credit Scores
Geographic
Weather
Social Media
Secure, Real-Time
Comms
Community Collab.
Services
Local Connectivity
Support
Context Mgmt
Wallet Notifications
Local Analytics
Mobile Application
App Mgmt
Native Device
Features
Credential Store
Secure Database
Skin-able Reference Applications
On-Device Caching
Location Data
Collection
Audio / Video Chat
Augmented Reality
Security Services
Authentication
Authorization
Biometrics
Data Analytics
Text Analytics
/ NLP
Image Recognition
Content Analytics
Commerce
Product Catalog
Shopping Basket
Order Management
Data Management
Master Data Mgmt
Warehouse
Information Integration
Operational Data Mgmt
Content Managemen
t
Exploratory Data Mgmt
Information Lifecycle
Governance
Payments
External Payment Gateway
Wallet
Financial Network
Connectors
Core Banking Connectors
Service Mgmt & Invocation
Service Registry & Repository
Oth
er(
s)
General Ledger
Process and Rules
Management
Business Rules Engine
Process Models
Business Process Manager
Event Detection
Electronic Forms
Electronic Signature
Value Tree for Benefits of Smarter Digital Banking
51 Indirect/qualitative measure Key Direct/quantifiable measure
Direct profit impact of smarter
digital banking capabilities
Profit/Margin Expansion
New revenue sources enabled by smarter digital
banking
New Revenue
New cost reduction opportunities enabled by smarter digital banking
Cost Reduction
Transaction fees
Additional services to third-parties
Additional services to end-users Other margin
expansion opps
PTI
Cross sell existing products
New customer acquisition
Increase of assets under management
Brand benefits (marketing)
Other Benefits
Other indirect benefits enabled by smarter digital
banking
Social impact
Reduction of average transaction cost
Reduction of client loss rate
Reduction of expansion cost
Support of government agenda
Potential Ways to Get Started
• Establish Vision and Priorities
o Consider business model and digital capabilities
• Assess Current Capabilities and Gaps
o Data and technology required to deliver capabilities
• Develop a Roadmap
o With phased delivery and supporting business case
• Prototype/Pilot Selected Use Cases
52
Questions?
Submit questions to the presenter via the on-screen text box
Marc Andrews Vice President,
Global Big Data Industry
Team,
IBM
Thank you for attending
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Smarter Digital Banking: Leveraging New
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new-capabilities-big-data
Big Data in Banking Whitepaper:
http://public.dhe.ibm.com/common/ssi/ecm/en/imw14653usen/IMW14653
USEN.PDF
Study: The Real World Use of Big Data https://www14.software.ibm.com/webapp/iwm/web/signup.do?source=csuite-
NA&S_PKG=Q412IBVBigData&S_TACT=109HF63W&S_CMP=_bdhub
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