Chappuis Halder & Cie

Digital in Private Banking

3rd of April, 2014 Daniel Corrales dcorrales@chappuishalder.com

Patrick Bucquet pbucquet@chappuishalder.com

Stéphane Eyraud seyraud@chappuishalder.com

Introduction

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"The next big thing is digitalisation”

There are more wealthy people on Facebook,

Google+, and other networks than anywhere, and

what if they begin getting investment advice

through those channels?

-- Jürg Zeltner CEO, UBS Weatlh Management

September 16th 2013

Agenda

Paradigm shifts driven by the introduction of digital strategies

Leads to explore in Digital Private Banking

Our value proposition

3

The Banking industry is going through major changes, and banks are more and more challenged by new entrants

4

Data is the real

value, not

commission

… Next Gen

Banking

Banking is a

service, product-

agnostic

Regulation is no

longer a barrier

UX is key to provide a

service focusing on one

use, bank-agnostic

Governance bodies favor

financial inclusion, easing

new entrants into the

industry

There is a strong pressure on

commissions, banking business is now

about customer data use

800 million users (e-commerce)

8,5 million users, 40% of Kenyan

adults

1% of Whole Foods transactions after 1

month (US)

Alibaba is now one of the biggest financial service providers in the world, and is ready to launch a real bank

300 million users of Alipay (online payment) – 80 million

transactions par day

190 million users of Alipay Wallet

Yu’e Bao is the biggest funds (125 million customers, $90 Mds

AUM)

Zhao Cai Bao finances SME, based on a P2P model

Chinese banking regulator allowed Alibaba to launch

MYBank, a privately owned bank

5

Customers are now surrounded by new technologies and new devices transforming the way to interact with each others

6

Devices

Social media

Platforms

The web has now changed to become the “web of users”, users are much more trusting their peers than the brands

7

The wealthy tend to be part of connected digital communities who share their

ideas and opinions

2/3 of users are trusting their peers, 1/6 are trusting the brands

I want to be able to send

feedback to my bank so it can

improve my service

I am expecting personal

interactions with representatives

and a customized interface

I want my bank to be able to fit

to my specific banking usage

(personalized offers, “pay as

you bank”, personal savings &

budget management)

I want to get access to my

personal information and my

banking services whenever I

want and wherever I am (multi-

devices), with a real time update

I need to understand my bank to

make my life simpler

I need a simplified interface that

fits to the device I use

I want my bank to be present in

my day to day online social

environment

I want to benefit from my social

network(expertise,

recommendation, etc.)

I want to share banking services

with my community

Digital Era

Digital UX

The digitalization of day-to-day life brings customer’s new expectations, which are much more user experience oriented than service based

Loyal

Smart

Co-

construction Always on

Personal

Simple &

design

Social

Gamification

I want my bank to give me the

tools to take my own decisions

based on my analysis

I want to get access to the best

expertise from my bank when

needed

I want to get concrete benefits of

my relationship with my bank

(coupons, promotions, gift, etc.)

I want to use existing or new

services with fun

8

Different aspects of best-in-class attributes in digital banking

Agenda

Paradigm shifts driven by the introduction of digital strategies - examples

Leads to explore in Digital Private Banking

Our value proposition

9

Rational:

> Being first-mover to create

a competitive advantage

> Being different from

competitors

> Start local then move to

other market

New technologies open up incredible opportunity to build a new business model in private banking

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1

Private

Banking

New

generation

Basic digital

offer

2

3

Improved

digital offer

New Business

Model

> Standard offer

> e-banking, online

presence

> Different web and mobile offer

> Focus on smartphone use

> M-banking

> Big Data: analytics clients and prospects

> Costumed digital offers

> Introduce now products and innovating

services

> Refocus on UX (User eXperience):

useful, intuitive, fun and easy

Split zone:

> New technologies reach mass market

> New digital standards, coming from other sectors,

are deeply changing private banking and customer

experience

> Banks are not anymore the only providers of

banking services (P2P lending, etc.)

> Banks propose other services than banking

services

Traditional banking

services

Today’s challenge is to reinforce market position, be a first-mover and capture new markets

Level 1 : Product-Centric

Level 2: Service-Centric

Level 3 : Client-Centric Online client servicing

includes advices and support

to financial planning

Sales team can rely on

efficient tools (on tablet, etc.)

Personalized offers are

pushed to the client (direct

marketing) using all client’s

data available (big data)

RM could be contacted by

different means (IM, video,

etc.)

Online client servicing is

mainly focusing on reporting

Client have real time access

(market data, alerts)

Pricers and simulators are

available online and can be

used by the client on his own

E-workflow / paperless processes

General information pushed to clients

Marketing documentation available

onsite

-

D

igit

al

Ma

turi

ty o

f th

e B

an

k

+

- Value Added Services +

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Trading platform is a

Client tailor-made tool

Banks transferred

services online (e-PB)

Client & Bank relations

are integrated

The digitalization of Private Banking is on-going, moving from a product-centric

approach to a client-centric approach, but without any major ruptures

Becoming Client-Centric is the final objective, but previous phases are mandatory to deploy Enablers

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Client Centricity must be limited to increase

the number of touch points…

… Which means changes to be deployed on

the different layers of the organization

Provide tools to RM to be

able to face the

customers with the same

tools they have at home

Review the role of the RM

Review IT to support e-

processes, e-offer and e-

customers

Design specific offer for

digital channels, and do

not add a channel for the

same offers

CRM

IT

Offer

Adapt Front-to-Back

processes to manage

digital channels

Process

Technology is now a “brain-amplifier”, providing users with many analytic tools, actually intermediating the banks

13

The wealthy are more technology enabled than ever before

There is an ongoing polarization in Private Banking, and Digital could increase market segmentation

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HNWI segment is declining in favor of Mass

Affluent and UHNWI… … and Digital just adds another risk

UHNWI

Mass Affluent

FAMILY OFFICE

HNWI

≈13 MILLION CLIENTS

$30 MILLION

$1 M – $5 M

≈344 MILLION CLIENTS

≈167 000

CLIENTS

$0.5 M – $1 M

RETAIL BANKS

Digitalization along with an always more bounding

regulation makes private banks less attractive to UHNWI.

They will seek more customization by joining family offices

92% of HNWI considering internet and digital technology

to be a major source of ongoing wealth generation and

planning to increase their usage

With Digitalization “mass affluent” will not be willing to pay

extra fees for services they can perform themself online.

At the same time retail banks improve and customize their

services to attract “mass affluent clients”

The “HNWI” market will get smaller and competition will

increase and become always more international

Source: Horizons bancaires, 2009

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Digital enablers are now an opportunity for Private Banks not only

to Improve but also to Innovate

Operational efficiency

(e-process to reduce

cost)

Anti-Fraud

Addressable

market

UX segmentation

New business

model

Improve Innovate

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Digital enablers could support Improvement (operational efficiency)

Improve authentication Simplify data collection

(KYC)

Second factor authentication + Voice

recognition + Behaviometrics (behavioral

biometrics) monitoring

Collect data electronically every year, avoid

to send paper to customers to streamline

client profile update

Source: Behaviosec Source: Jumio

Digital enablers could support Innovation

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Address new markets Propose different UX Develop new business model

Become a trusted market

place, connecting people and

service providers

Enlarge addressable markets

thank to new digital channels:

target mass affluent segment /

liaise with future HNWI

Adapt services to

expectations, get ready for

Young HNWI expectations

Private Banking business model is changing, pushed by new

entrants

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+ PRODUCTS

+ SERVICES

+ PEERS

+ CONTENT

Inspiring concept in Private Banking

A financial community helping people /

corporate to get funded

A social network, where users can follow best

practices / advice from others

An aggregation of data assessed based on

quality and relevant to user’s objectives

CUSTOMER

A new approach to help people to achieve

their financial needs, with an understandable

approach, step-by-step

Becoming A PLACE TO BE, Private Banks could increase trust and security and provide A TRUSTED PLACE, built on 5 main blocks

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Private Banking = “Trusted Finance Amplifier”

(much more than mere finance)

Protection

Empowerment

Guiding & Education

Social Intimacy

Using the UX as a corner stone, CH&Cie already identified potential

innovations for Private Banking

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Reporting

Alerts

Aggregators

Financial Goals / Simulators

P2P comparison

Nudge Marketing / “levels” to

guide and educate users

Automate Improve Innovate

Protection

Empowerment

Guiding & Education

Loyalty / Rewards

Social

Intimacy

Direct contact with RM on any

medias

Information collection and

analysis on customers

Services for entrepreneur “CFO

in a pocket”

E-Trading

Access to experts and reports

Ranking of external advisors

Market trends

Consolidation of reports / data

etc.

Alerts on market changes E-Vault

Stronger authentication

E-Reputation management

Validation of comments and

sharing between users

Concierge Specific discounts based on

customer habits

Partnership with top players :

UBER, AirBnB for villas, etc.

Access to expertise online Crowdfunding

Currency transfer between

customers

P2P advisory

Collective intelligence

To benefit from the digital opportunities, Private Banks must change their way of working

Leverage on technology enablers to keep ahead of the game

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Borrow ideas across the world to trigger innovation

"The next big thing is digitalisation: there are more wealthy people on Facebook,

Google+, and other networks than anywhere, and what if they begin getting investment

advice through those channels."

-- Jürg Zeltner

Focus on uses, get into the life of the users

Don’t think only about Finance, user’s life is much bigger!

Agenda

Paradigm shifts driven by the introduction of digital strategies – examples

Leads to explore in Digital Private Banking

Our value proposition

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Framework for digital strategy thinking

Wealth presentation

Advisory Smart push

Investments and financial services

Customized offer

Security and data protection

Full availability Social Networks

4 5 6

7 8 9

Transaction services

1 2 3

A comprehensive digital offer has different functional blocks. They are customized to changes

according to clients’ needs. Each of the following blocks should be carefully thought to build a

consistent and suitable offer.

*Note: This is a non exhaustive list

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Kick-Boost-Launch Approach M

eth

od

olo

gy

De

live

rab

les

Define the approach

Transparency

Blueprint

Line up the different players

Realize

Establish a roadmap 1 2 3

KICK BOOST LAUNCH

Objective: – Understand the commercial

strategy – Validate digital as a catalyst

Workshop/brainstorming for each block with CH&Cie experts

Bank context

Expertise

Market insights

Objective: – Understanding of « best practices »

and main features of digital banking

Stakeholders involved

Objective: – Identify and structure an opportunity to

kick of an realize the vision – Formalize the roadmap for digital

strategy

Project perimeter: proposed value, components of the offer, customer experience, etc.

Prerequisite and action plan

Common vision shared Different level of maturity of

stakeholders Roadmap and key steps – 3 years Description of main projects (1

slide per project + budget)

Define kept operational blocks Different storyline with stakeholders

in order to share / validate / improve

Small team Top management

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Chappuis Halder & Cie is a Financial Services consulting firm, bringing ideas and delivering solutions across the globe

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Chappuis Halder & Cie is a consulting company specializing in Financial Services. We have

expanded geographically from our origins in Geneva, now serving clients in all of the major financial centres

across the globe. Our main focus is on 4 business areas: Retail & Private Banking, Corporate & Investment

Banking, Insurance, and Commodity Trading.

CH&Cie expertise is anchored in the deep sector and functional knowledge of our consultants; all of us

have a financial services background, and know the sector inside out. Because we do nothing else, and we

operate across the globe, we are able to bring a rich seam of best practice ideas and benchmarking data to

our clients.

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