Banking & FinTech. From competition to partnership? FinTech Connect #2, Geneva, Oct. 08, Stephen PERIN

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1 Banking & FinTech From competition to partnership? FinTech Connect #2, Geneva, Oct. 08, 2015 Stephen OCTO , avenue des Champs-Elysées Paris - FRANCE Tél : +33 (0) Fax : +33 (0)

2 OCTO & FinTech? 2

3 Le «Why» d OCTO Why OCTO + Demander questionnaire 3

4 Digital Banking & FinTech White Paper (Oct. 2014) Octobre

5 French FinTech Day (March 2015) Octobre

6 FinTech: a short definition FinTech: contraction of " Finance " and " Technology". Company offering financial services based on technology. 6

7 even better FinTech are recreating a new world supporting, displacing and disintermediating the old world finance with technology. Fintech is a new market. It is 21 st century finance. Chris Skinner Bloggeur, The Finanser 7

8 8

9 an opinion shared by the FinTech! 9

10 FinTech an economic boom that is accelerating #FinTech Number of FinTechs $ Global investment in FinTech 15 Bs 1042 x5 x x3 3 Bs M Source : Venture Scanner 10

11 Many players attack all banking business 11

12 What about France? 12

13 What about France? 1. First of all France is widely known for the quality of its Mathematics, Statistics and Actuarial Science schools 2. Secondly, France has become a (much more) favorable country for entrepreneurs and investors over the last years 3. Thirdly, France has been rather quick to adapt to the new deal of FinTech from a regulatory and legislative standpoint 4. Last, France is a country of 67 million inhabitants, showing a potentially massive demand 13

14 Massive financial operations in the French FinTech sector 14

15 The French FinTech is organizing (& lobbying) 15

16 The shape of things to come 16

17 FinTech market valuation are growing some are now significant Tradi=onal Banks & FinTechs Company Market cap $M Created Employees count , , ,500 17

18 FinTech leverage existing business models by de-intermediating financial services and capturing most of the client value Today Tomorrow? The disintermedia=on of financial services by new entrants may leave the tradi=onal banking model only with the burden and cost of core banking infrastructure and capital charges 18

19 Understanding FinTech FinTech DNA 19

20 FinTech DNA Real- Time architecture Cloud based BigData Reac=ve design Blockchain Customer Centric Provide a unique experience and finance life coaching Focusing on one type of client and his/ her pain point XXI century technologies Specialist FinTech DNA Data Driven Transparency Short cycle / innovation Fees Client no=fica=on Explana=ons toward clients Lean startup approach Learning culture instead of delivery culture Invent new business model on the data Measure obsession BigData and analy=cs 20

21 Beyond confrontation How to surpass the confrontation? 21

22 From competition to collaboration... Source : 22

23 FinTech & banking are getting closer and closer 23

24 What are the interests to get close? Bank assets that interest FinTech The assets of the FinTech that interest banks Customer base Business expertise Certification Financing New business vision Ease of innovation Digital culture Focus on client pain point 24

25 Incubator Early stage seeds Investments Capital Risk Funding Some banks have already engaged their digital transformation Partnership Specific high- end services White label Robot advisor Acquisi=on Subsidiary IntegraHon Robot advisor User Experience 25

26 BBVA has created a deep connections with innovators Real =me payment SME loans, scoring 2.0 Partnership Acquisi=on Investments Bank 2.0 Design Big Data 26

27 AXA: Digital Transformation Born in 2015, AXA Strategic Ventures has a budget of 200 M. AXA Seed Factory, created in 2013 with 10 M, move to an FinTechs & InsureTechs accelerator AXA Labs in San Francisco is a center of excellence in customer experience and innovahon. AXA anhcipate the new digital trends through direct interachon with Silicon Valley s top talent 27

28 InsureTech the next big thing? " We re using technology and design to make healthcare simple, intuitive, and human. " Oscar has the new era tech pedigree to become the Spotify, Airbnb or Uber of health insurance. New York Times " Sixteen months after going live, the insurance company Oscar has joined the elite group of start-ups known as unicorns, or those with billion-dollar valuations (April 2015). " Disintermediation with Insurance as " Zenefits : " On the employer health insurance sector : Health insurance for your business and employees should be transparent, affordable, and easy to manage. That s why Zenefits built a new kind of benefits and health insurance brokerage firm. " Zen99 : health insurance for self-employed 28

29 Mutation Banks with the FinTech DNA 29

30 mbank have completed it in a few quarters to go fully mobile ,4 million customers Decision to move to a full mobile bank Design Driven No silos: teams consishng of IT, business, UX worked together (from design to launching the product) 70% of customers to use the new digital bank services

31 Fidor 31

32 CBA Digital Innovation on 3 axes: 1- IT infrastructure IT externalizad on Amazon Cloud 2- Enhanced UX («situation personalisation») 3- Apps ecosystems (M-Banking, Mobile Paiement,, etc.) The really hairy thing about a core banking modernisation upgrade is taking a 40-year legacy system, migrating all the customers off it, putting them on to a new system and then being able to process 6000 transactions per second on the new platform.» Ralph Norris, CEO CBA «Mobile payments app has had more than a - million downloads and had handled more than $9 billion in transactions.» Ralph Norris, CEO CBA 32

33 «Bon appétit!» 33

34 ING France s Chief Cannibal Officer? 34

35 The statistic that "kills" Only 9% of all companies in 'disrupted' industries survive. But 100% of that surviving 9% had set up a disruptive (new) business as a totally separate division of the parent company - "no exceptions." Source : Colin Morrison, Huffingtonpost, Harvard Professor Shows Traditional Media How to Cope With the Future, 28/06/

36 Disrupted disruptors 36

37 Disrupted disruptors 37

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39 The threats on the future of FinTechs Short term < 2 years 5 years < Mid term < 10 years Long term > 10 years OveresHmaHng new world of data science UnderesHmaHng RegulaHons Legacy Technologies & IS RegulaHons, restrichon, interdichon? Disrupted disruptors Can t reach crihcal mass DisrupHons by the BlockChains Condemned to innovate faster & constantly Ripple & regula=on : U.S. Treasury slaps virtual currency startup Ripple with $700K fine: Virtual currency exchangers must bring products to market that comply with our anh- money laundering laws, said FinCEN Director JC Shasky Calvery. Blockchain : Blockchains are transachon histories that use mulhple parhes for verificahon. The blockchain is a decentralized and networked. 39

40 THANK YOU! QUESTIONS? 40