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Future of banking, future of retail banking, corporate banking, wholesale banking and private banking. Investment banking trends. Future of banking regulation and compliance in financial services. Future of insurance, mobile marketing and customer expectations, choices and lifestyle trends. Future of alternative payment methods including PayPal, mPesa and Bitcoin. How banking customers are changing. Future of consolidation and mergers in global banking.
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Dr Patrick Dixon Chairman Global Change Ltd www.globalchange.com - 5 million video views
Global Trends and their Impact on
Future of Banking
ALL BANKING TRENDS RELATED
What will your Bank (and your compe6tors) look like in 2020 ?
SIX FACES of a spinning CUBE spell the word
F U T U R E
Most debates about future banking and insurance
strategy are about timing and focus
What if global recovery / Turkey economy / mobile payments / retail
spending / bank regulation / inflation / demographics, the EU, Middle East and rise of Asian markets all change faster
than expected?
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Strategies often overtaken by eventsWorld can change faster than you can hold a board meeting
Further Shocks?
EU / EuroSyria / Iran / US / Israel
China / JapanMutant virus
Libor lawsuits
(Asbestos: 730,000 claimants - 8500 defendents - $250bn already)
WGP 1980-‐2013 (%,constant prices)
US GDP 1980-‐2013 (%,constant prices)
EU GDP 1980-‐2013 (%,constant prices)
Vietnam GDP 1985-‐2011
Bank Agility requires
Simplicity
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Future is about...
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You need more than
one banking strategy
•
£ 375bn
$2.3 trillion US + $65bn per month
$3.4 trillion
Reserves
2% inflation target likely to be discarded
Future Banking is aboutEMOTION
Yapı Kredi employees build relationships based on trust with all relevant parties utilising their banking knowledge, skills and commitment to corporate values; they trust those that they grant responsibility and authority. Consistent with the Bank’s corporate values, Yapı Kredi employees
keep their promises in a timely and accurate manner. They take responsibility for their customers’ problems, find rapid solutions and follow up on the results.
• Mother changed mind re banking online / mobile - in 3 hours, leapt 30 years
31
“Great customer experiences”
80% lost in seconds
Bank Customer / Client :
Simple, elegant solutions to complex problems
Anticipate, instinct, smartThought-leadership, common
sense, reliable adviceSuperb backup in crisis
>40% WDP by 2015� IMF - adjusted for Purchasing Power Parity
300 million move to cities in China and475 million to cities in Africa by 2030
1 billion over 60 year olds in 10 years
Europe Dying 4 couples to produce singlegreat-grand child
0-14 years old EU 15% : Turkey 26%>65 years old EU 18% : Turkey 7%
75% of all US and UK wealth owned by those over 65 -‐ mostly women
Can we stop ageing ?
•Pigs teeth grown inside rats•Mice grow new teeth from nerve cells / gum
Grow New Teeth
Repair Heart / Brain with stem cells
• After 20 years - 80% alive v 50% on normal calories• Less cancer, diabetes, heart disease, strokes, brain decay
46
Monkeys on diet live longer
Slow or no ageing is a reality in animalsJapan women gain 15 minutes of life expectancy every hour
• Rockfish, Turtles, some Whales
• No signs of getting old
lPeople like to belonglSense of identitylCommunity lFamilylPersonal advisor
“Relationship Banking”
50
85% of leaders of largest US corpora6ons say diversity is
key to innova6on
Forbes study
33% in UK don’t watch live TV
95% EU bandwidth soon video
1 trillionpages a month
Would recommend you to a friend ?
1 trillion pages a month
"Perfection!, Wonderful hotel. Good value, beautiful views.“
Telford UK, May 20, 2012This was the most beautiful hotel. Clean, friendly and good value.
“Worst hotel I have ever been in. Should be closed down.“
Paris April, 2012
NEVER stay in this terrible place. Rats, insects, dirty. Many guests got sick.
Italy: 58% increase in aggregator sales of insurance policies in first 6 months of 2013
v 2012
56% all private motor insurance salesGrowth 1-‐2% pa -‐ reaching saturaYon
30% of consumers select cheapest policy Further 58% select policy in top five cheapest
ObjecYve measure of brand value
UK Aggregators Threat
Weakness of all Aggregators
NationalismAttempts to skew markets
with government policy
Exchange rate warsCorporation tax spiralTurning blind eye to ....
“Universal Banking”Scale - Innovation Speed
Is the bank large enough for the future ?Eat or be Eaten or more Strategic Mergers
Why “old” outsourcing story in India nearly over
� Training 25,000 IT graduates pa
Location based mobile
marketing
1500% growth car insurance black boxes
Telematics Scale
e-‐commerce hits $1.5 trillion in 2014
CUSTOMER CHOICE 200 million payments globally
• Kenya -‐ 17m customers• $9bn pa -‐ >33% GDP• Tanzania 9m people• 35 naYon links via HomeSend Hub•
74
1.7bn phone users are unbanked
$550bn in 2012 - 214m transfers150m immigrants globallyWorld’s poorest 48 nations = double FDI value33% of Liberia economy$55bn remittances by mobile in 2016•
Global Remibances
$76bn a year20% charge in Africa
Western Union
•
TabletsBoom
Paypal Mobile
PayPal $141m -‐ $4bn 2009-‐11
79
2m businesses use SQUARE in US
Square Daily Volumes soon handling 7000 Starbucks outlets
Secret and untraceable
Bitcoin Bubble and Bust?
82
• In UK alone....• Transactions >EU600 billion pa • Credit card debt >EU60bn• Average card interest rate 16%• 2% commissions worth >£EU12bn
Mobile BankingPayments Doorway
Free mobile devicescalls / web / TV / games / payHigher income model
2010 2013 2015
TelcoBanks
• Zettabyte = 1024 ExabytesExabyte = 1024 PetabytesPetabyte = 1024 TerabytesTerabytes = 1024 Gigabytes
BIGData
• 90% Microso+ R&D
CLOUD
Aramco - 30,000 computers hit - files lost
5.5 billion cybera;acks42% increase / year
>160Gbps in denial of service1000 major abacks / hr in UK
Worries about US Prism / security services
• Home• Work• Online• Offline• Sales• Entertain• Phone• Mobile• Chat• Inst Investor / UHNW / Corporate FD etc
ONECUSTOMER
Regulatory Swings
eg Capital Adequacy / ROI
Public pressure v Reality
$40 Trillion Green Tech Boom driven by oil price, cost cuts, green activism
Shale gas 33% US supplies
3.3m US jobs$468bn pa + more oil
produced than Saudi by 2020
200 years global supplyUp from 60 years in 5 years
Boom
Bust
5 coal plants replace with gas = 9000 megawaDs wind Coal prices fall = more coal burnt in Vietnam and China
57 coal plants closed in US in 2012
120,000 terawatts of sunlight /day7,000 times total power useQUEBEC from ARIZONAMOSCOW from SAHARA
Falling solar cell prices
120,000 terawatts of sunlight /day7,000 times total global power usePower Moscow from Libyan Desert
“40% EU power = wind by 2050”Surplus wind to hydrogen - to methane ?
Smart Power Regula6on UBlity Co controls consumpBon in homes / factories10% Australian power genera6on only used for 72 hours a yearEnergy prices can soar from $50/Mw hour to $10,000/ Mw hour
Germany Power Surplus
• In June 2013• Electricity prices became nega6ve • -‐ minus EU150 / MWhr !!
•Rapid growth HVDC Super Grids
• 500,000 S Korea jobs - $200bn Smart Grid Project
•China planning to power Moscow
Enough salt caverns planned to power Germany for a week
Power Storage
Only sell what you believe inand would sell to your family
and friends
The only corporate value worth having
BeyondCompliance
Perfect compliance will keep bankers out of prison but cannot protect brand, because public expectations change
rapidly - with severe judgment on those who justify past “unethical” behaviour on grounds that it was 100% compliant.
Poor insurance image with customers
�Marke&ng: We are here to protect you and family, to pay out generously and quickly if something happens to you, giving you peace of mind at a fair price.
�Investors: We make shareholders as much wealth as we can without breaking laws. We raise premiums as o@en as we can, and pay out as liAle as possible to finance dividends.
Hidden penalties for loyal customers will be seen as unethical
Truth about Retail Funds�Next miss-selling scandal?�Most actively managed funds fail to beat tracker funds,
when all charges deducted�Most fund managers I have surveyed (total > $1 trillion
under management) are reluctant to invest own money in own retail funds unless they are required to, and reluctant to recommend own funds to family / friends
� “50% of us sell funds of funds but only 5% of us invest in them”
�Ethical questions since whole purpose of active management is to protect wealth, not erode it (as is most likely outcome under current business models)
All sales based on a promisePurpose of business is to deliver
on the promiseProfit is your reward for doing so
Purpose of Business
Profit -‐ Purpose -‐Passion
COST CUTTING
Can be demoralising
All leadership and innovaYon comes from vision of a beher future
Idea -‐ Genius -‐SoluYon
Lesson from Non-‐Profit FoundaYons
Connect with all the passions people have and they will follow you to the ends of the earth,
promote what you do with pride, and may even be willing to work
for you for next to nothing
EU20,000 Challenge“4 word phrase is basis
of all markeYng, moYvaYon, change
managementand leadership”
Build a Better Worldindividual family community world
RESOURCES>500 videos of Keynotes
http://www.youtube.com/pjvdixon
Global Trends Website:http://www.globalchange.com
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