Fin·tech noun : an economic industry

composed of companies that use technology to

make financial markets and systems more

efficient.

The traditional FS landscape is being disrupted by

new entrants leveraging technology to deliver new

services in more relevant and convenient ways to

consumers and businesses

WHATWHY WHO WHERE WHENHOW

Fintech Disruptors: Friend or Foe?• Why should we be focused on Fintech?

• Who the key fintech companies and are they are enabling or disrupting?

And what makes them successful?

• Enabling? Blockchain, Backbase

• Disrupting?

• How are they impacting FIs?

• What challenges and opportunities do they present?

• Where can FIs take action to adapt their business, product and marketing

strategies to address the challenges and leverage the opportunities the new

FS landscape presents

• When is the right time?

$9 bn

Ubiquitous

data

Technology

innovation

Falling cost of

computing and

IT services

Financing activity

in the US grew by

200%, up from

$3bn in 2013 to

$9bn in 2014.

Growth in Fintech

is being driven by

a convergence of 6

key trends.

should Fintech be a key focus for your organization?The Fintech sector is experiencing rapid growth

Changing

customer

behavior - advice

from peers,

willingness to

adopt, and

expectations of

exceptional service

Digitization of

financial

services The need for

cost reduction

WHY

Emerging Fintech Markets

should Fintech be a key focus for your organization?Fintech is no longer a scattered collection of small companies… it is now

an emerging sector of the FS landscape

~ 30% of

all global investment

Growing at

31% CAGR

5yr CAGR was

2x global avg

$1.5b

$600m

$66m

Silicon Valley/San Francisco12,000 FTEs

New York43,000 FTEs

London44,000 FTEs

Annual Fintech Investment

Top 3

Fintech

Markets Silicon Valley New YorkLondon

Sydney

Singapore

Hong Kong

Berlin

Atlanta

WHY

WHO

Payments Lending

Personal

&

Business

Finance

Crowd

Funding

Crypto-

currency/

Blockchain

Capital

Markets

are the Fintech players?Fintech companies vary by market and cover a wide range of sub-industries. San

Francisco alone is home to hundreds of Fintechs

WHO

Payments Lending

Personal

&

Business

Finance

Crowd

Funding

Crypto-

currency/

Blockchain

Capital

Markets

are the local Fintech players? Are they enabling or disrupting?

Disruptors

Enablers

are they impacting Community banks?Fintech is unlikely to replace banks altogether, many Fintechs rely on existing bank accounts

To mitigate the threat of Fintech insurgents, traditional banks are exploring a range of strategies, including, closing bank branches to cut costs, investing in

digital servicing and acquiring Fintech companies

HOW

Community Bank Strengths

challenges do they present? Foes?

WHAT

Approval rates of small community banks have fallen over the past year from 50.6% to 49.2% while big banks continue to increase their approval rates

* Biz2Credit’s Lending Index

appeal of big banks is with Millennials, Minorities and Emerging Affluent

Big banks do best with Millennials, Minorities and Emerging Affluent

challenges do they present? Foes?

WHAT

72% of

millennials would

like to bank with

non banks like

Google and Apple

Consumers now

interact with their bank

15-20x a month,

up from 3-4 times in

the pre-digital era

Millennials are the largest

cohort and in 10 years they

will be the wealthiest

71% of

consumers

believe their

relationship with

their bank is only

transactional

67% of

millennials

want their FI to

provide tools

& services to

create/manage

a budget

Over 50%state that they’d

rather lose a finger or their sense of smell

than their smartphone

Community Bank Strengths Opportunities

trusted financial experts

opportunities do they present? Friend?

WHAT

can Community Banks take action?WHERE

So where can community banks take action to adapt their business, product and marketing strategies to address the

challenges and leverage the opportunities of the new landscape?

can Community Banks take action?A lesson from Life Sciences

WHERE

trees grow taller than others to allow them reach the sunlight - an adaptation critical for survival

Shorter plants have adapted their behavior to allow them to live in the shade with less sunlight

growing to reach the sunlight adapting to do more with less

develops a behavior that makes it more likely to survive

Comfortable with technology View branch employees as trusted financial experts

Liberty Bank of IL focusing on technology with its Simple Debit Plus Visa account: no checks, billpay, e-statements, P2P money transfers + customized photo of local images

advice on budgeting and setting financial goals

financial seminars

to take action: Reaching for moreMillennials

WHERE

Lending Enhanced Tools

alternative data and machine learning

predictive ‘mosaics’ to determine creditworthiness

shares its proprietary BizAnalyzer score

sophisticated pricing strategies

to take action: Reaching for moreAnalytics

WHERE

Secure Chat – Tangerine Bank Video ATM & Chat

to take action: Reaching for moreRevive lost conversations in the digital banking world

WHERE

Middleware: Blockchain:

to take action: Doing more with lessOperational Efficiency

WHERE

Community banks gain inroads with the fintech world

Community banks help startups test their products

Collaborative partnerships that enable community banks to access attractive lending markets

to take action: Doing more with lessPartnering

WHERE

is the right time? The time to act is now

WHEN

Today’s emerging business models are tomorrow’s challenges and opportunities

Progressive financial services firms are tracking this changing landscape

They are identifying which Fintech companies are foes and present a competitive

threat and which are friends, bringing partnership opportunity

They are exploring how they can prepare themselves for the future from strategy to

operations

Strategy Target Design Enable OptimizeAnalyze

PRODUCTS & INNOVATION

A business and technology consulting firm with offices in North America and London

Local model.Global results.

Combining strategic insight

and technology know-how.

3,500+EmployeesSeattle, WA

Headquarters

17 marketsOffices in

2001Founded in 750+

Clients

Slalom’s industry-focused professionals

work with an impressive set of local,

national and global Financial Services

and Fintech companies to understand

the threats and opportunities that Fintech

companies bring to the banking

landscape.