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How to meet the challenge of
the changing environment of
banking?5th Retail Banking Forum, 1 – 2 June, 2017
BACK TO1972…
La cabina
A. Mercero – J. L. Garci: La Cabina
What does it mean?
Imre Antal
ABOUT THE NATURE OF BOXES
Efficiency in the box
CBS - The Big Bang Theory
Efficiency in the box
CBS - The Big Bang Theory
Limited by the box
‚Adventure programs are, to put it mildly, memory
hogs. They eat bytes with long text descriptions,
vocabulary lists, and map tables. Remember that
the earliest were for big computers. If you have
disks and disks to spare, memory is no problem.
But, we're writing for a tape-based 16K TRS-80.
You'll learn how to conserve and still get what you
want.’ Frank Dacosta
WHEN BOXES ARE DANGEROUS?
The Plane of Paradigm
?
?
?
?
?
?
?
Paradigm change
Paradigm change of the 90s
The fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in
critical contemporary modern measures of performance,
such as cost, quality, service, and speed.
Drivers of change in the 90s
Branch
Example - loan application
BEFORE REENGINEERING
Application Investigation Review Decision
Central organization
Clarifying
needs
Checking
rating
Review
rating
Preparing
application
Making
decision CORE
Branch
Example - loan application
AFTER REENGINEERING
Application Investigation Review Decision
Central organization
Clarifying
needs
Preparing
application
Checking
rating
Review
rating
Making
decision Core
SCORING
EDM, digital communication
Shop
Sales front-end
Onsite
front
Paradigm change today
Drivers of the Change today
Disruptive
technologies
Changing
customer
behaviour
xTechcompanies
New
competitors
Onsite
front
BIGTECHSIN
TE
GR
AT
ION
LA
YE
R
FINTECHS
BANKS
FR
ON
T-E
ND
SY
ST
EM
S
BA
CK
-OF
FIC
E S
YS
TE
MS
AP
I
LA
YE
R
The reengineering of client
relations
FinTech services
Account Information Services (a.k.a. PFM)
Payment Initiation Services
Money transfer
Social Lending
Crowdfunding
Private banking
Other (blockchain, insurance etc.)
Onsite
front
BIGTECHSIN
TE
GR
AT
ION
LA
YE
R
FINTECHS
BANKS
FR
ON
T-E
ND
SY
ST
EM
S
BA
CK
-OF
FIC
E S
YS
TE
MS
AP
I
LA
YE
R
Why is it a paradigm change?
Client contact
Client contact
The Pace of Change Today
2011
NOKIA’s share dropped below
20% & leading position lost.
2013
NOKIA’s share under 5% &
the branch is sold to Microsoft.
2000
NOKIA has the biggest share on
mobile phone market.
2008
NOKIA is still the biggest (43%),
but the first crack appeared.
HOW DOES REGULATION
ACCELERATE CHANGES?
The Icebreaker
Fleet of regulations
accelerating changes
DIRECTIVE (EU) 2015/2366 on payment services in
the internal market (PSD2 Directive)
Open Banking Standard (UK)
SEPA Instant Credit Transfer (SCTInst) scheme
under Regulation (EU) No 260/2012
DIRECTIVE (EU) 2014/92 (Payment Account
Directive)
REGULATION EU 2016/679 (General Data
Protection Regulation)
…
Objectives of PSD2
1. Improve market efficiency and integration
2. Enhance competition
3. Ensure the security of payments
4. Protect customers
Objectives of Open Banking
Improving market integration
Extending regulation scope for all payment in the
European Economic Area (EEA) including
non-EEA currency between Payment Service Providers
(PSPs) in the EEA
one-leg transactions in any currency between PSPs in the
EEA and in the external regions
Restricting the opportunities for exclusions (eg.
limited networks, low-value digital purchase)
Regulating passporting and authorization rules
Enhancing competition
Allowing registered Third Party Providers (TPPs) to
provide:
Payment Initiation Services (PISPs) and
Account Information Services (AISPs)
on the consent of the clients through accessing client
accounts at Account Servicing PSPs (AS PSPs).
All currently available online services should be
opened for TPPs
AS PSPs should treat data requests of TPPs without
any discrimination
Ensuring security
PSPs should fulfil requirements for authorization (eg.
initial fund, own fund etc.)
PSPs should establish a framework to protect clients
from fraud:
Assessing security risks
Collecting statistical data on fraud
Classifying major incidents
Reporting incidents to authorities
TPPs can rely on AS PSPs authentication
AS PSPs and TPPs should use Strong Customer
Authentication (SCA)
Protecting customers
Providing information for clients on services prior
contracting
Unconditional refund rights of 8 weeks
Obligation to respond complaints within 15 days
Member States should monitor compliance and
handle disputes
Is PSD2 a paradigm change in
itself?
No, because..
PSD2 regulates only payment services, does not
regulate eg. credit, debit products
PSD2 requires only to publish current online services
Different online services -> different APIs -> barriers
of entry
however PSD2 is not the last in the row of
changes…
WHAT COMES NEXT?
HOW TO MEET CHALLENGES?
Growth of the FinTech market
0
5000
10000
15000
20000
25000
30000
35000
2010 2011 2012 2013 2014 2015 2016
FinTech investments worldwide, M$
USA Europe Asia Other
Source: Accenture, The Future of FinTech and Banking, 2016
FinTechs’ attitude towards
Banks
Source: Accenture, The Future of FinTech and Banking, 2016
0%
20%
40%
60%
80%
100%
2014 2015
World
Competitive Collaborative
0%
20%
40%
60%
80%
100%
2010 2015
Europe
Competitive Collaborative
The GAFAA Impact
Openness User experienceSingle account
FinTechs + BigTechs = ?
FinTechs
FOCUSED
SIMPLE
ERGONOMIC
AUTOMATED
CHEAP
BigTechs
UNIFIED
OPEN AND
INTEGRATIVE
Strategic option for banks
1. Comply with PSD2
2. Offering new services for TPPs
3. Set up TPPs
4. Building an Ecosystem
How should IT be modified?
Front-end systems
NetBank Smartphone PSD2 APIs SC Inst
Technological integration platform
ESBOrchestration
EngineGlossary
About the Nature of competition
