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7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 135
983111983151 983108983145983143983145983156983137983148 983151983154
983113983139983141983148983137983150983140983145983139 983110983145983150983137983150983139983145983137983148 983123983141983154983158983145983139983141983155 983105983155983155983151983139983145983137983156983145983151983150
983118983151983158983141983149983138983141983154 983090983094983084 983090983088983089983093
983110983145983150983137983150983139983145983137983148 983123983141983154983158983145983139983141983155 983137983154983141 983156983154983137983150
983112983141983150983154983145983147 983105983150983140983141983154983155983155983151983150
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 235
Henrik Anderss
henrik_anderssonmckinseycom
Favorite gadgetBose headphones
Favorite appVivino
Partner StockholmMcKinseyrsquos Business Technology Office
Leader in McKinseyrsquos Digital and ITTransformation Management practices
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 335
AGENDA
Financial services are going Digital
What should you do
Value at stake is significant
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 435
Digital is impacting financial services in a big way
SOURCE AIB httpyoutube8OIDv_NSSdU
At Allied Irish Banksmortgages can now opened in lt30 min
Resulting in gt70 uorigination costreduction
Automated approvaprinciple of gt80
Massive impact oncustomer experienc
30 minutes to handleapplication vs 10 da
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 535
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 635
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 235
Henrik Anderss
henrik_anderssonmckinseycom
Favorite gadgetBose headphones
Favorite appVivino
Partner StockholmMcKinseyrsquos Business Technology Office
Leader in McKinseyrsquos Digital and ITTransformation Management practices
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 335
AGENDA
Financial services are going Digital
What should you do
Value at stake is significant
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 435
Digital is impacting financial services in a big way
SOURCE AIB httpyoutube8OIDv_NSSdU
At Allied Irish Banksmortgages can now opened in lt30 min
Resulting in gt70 uorigination costreduction
Automated approvaprinciple of gt80
Massive impact oncustomer experienc
30 minutes to handleapplication vs 10 da
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 535
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 635
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 335
AGENDA
Financial services are going Digital
What should you do
Value at stake is significant
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 435
Digital is impacting financial services in a big way
SOURCE AIB httpyoutube8OIDv_NSSdU
At Allied Irish Banksmortgages can now opened in lt30 min
Resulting in gt70 uorigination costreduction
Automated approvaprinciple of gt80
Massive impact oncustomer experienc
30 minutes to handleapplication vs 10 da
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 535
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 635
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 435
Digital is impacting financial services in a big way
SOURCE AIB httpyoutube8OIDv_NSSdU
At Allied Irish Banksmortgages can now opened in lt30 min
Resulting in gt70 uorigination costreduction
Automated approvaprinciple of gt80
Massive impact oncustomer experienc
30 minutes to handleapplication vs 10 da
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 535
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 635
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 535
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 635
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 635
Digitization is fundamentally changing the financial
services landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 735
Mobile digital is becoming the preferred
channel for many consumershellipRecent survey of consumers
PervasiveldquoLet me shop
wherever I amrdquo favor retailers with a consistent cross-channel experience85
of interactions occurred over multiple brand channels56
PersonalizedldquoMake itrelevant to merdquo are willing to share personal information in exchange for more35
want to receive promotional offers that reflect their preferences72
of Netflix views now come from its personalized recommendat75
PrescriptiveldquoIrsquom in controlof the shoppingprocessrdquo
of tablet use is in bed21
of those who check prices in-store have delayed purchase bas65
now use their smartphones to check prices on the go50
of Walmartrsquos online sales are Buy Online Pick Up in-store~50
Participatory ldquoI have a voicenow and I am
going to use itrdquo of shoppers have created user-generated content online50
increase in sales when a product is posted on Pinterest or Tum70
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 835
69
73
56
32
69
59
32
5148
40
32 30
1914
hellipbut consumers are forced to be less digital in
the financial services environment in most countries
1 Percentage of all individuals having done an online purchase (any product or service) in the last 12 months
2 Base on McKinsey multichannel surveyrsquos question ldquoPlease indicate which channel you prefer for opening account (current savings credit card)rdquo3 Estimate based on Iceland online banking penetration and correlation between digital account opening preference with online banking penetration4 Respondents sample biased towards urban tech savvy population
SOURCE McKinsey research
UK GermanyNetherlands Sweden PolandIceland France S
CHANGING CONSUMER EXPECTATIONS AND BEHAVIORS
Percentage of people having bou
Share of respondents preferring d
77
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 935
Digital channels are already a reality ndash
and adoption is accelerating
82
66
2014 2015
+25
Top-performer on-line
banking usage
Top-performer mobile
banking usage
4533
+36
20152014
Mobile ba
transaction
grew near
June 2013
SOURCE Finalta Digital amp Multichannel benchmark press research
Percent of customers using respective channel (90 days active channel usage) top-performer
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1035
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1135
Digitization is fundamentally changing the financialservices landscape
Digital
attackers
Price and margin
pressure throughtransparency
Blurring li between in
Winner takes all
dynamic Talent mis
Change in customer behavior
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1235
2004 2005 2006 2007 2008 2009 20
60
Physical rental
05
Digital rental
Incumbents experience disruption slowly then sudde
Netflix vs Blockbuster (2004-2010)Revenues USD billions
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1335
0
5
10
15
20
25
0 10 20 30 40 50 60 70 80 90
Cost out potential as of total costs
projected sales online in 2017
Consumer electronics
Flights
Mobile telco
Music retail
Grocery retailing
Insurance (PampC)
Apparel retail
Retail banking
Radical reshape
Post-digital
Enablement focus
Financial services are highly susceptible to disruptio
Three cluste
Enablement fouser behavioursignificant ldquoinpu
Post Digital N
models largely new norm
Radical reshap
Dematerializedmajority of costand servicing re
SOURCE McKinsey analysis
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1435
FinTech attackers are proliferating
FinTech startups
on the market today
12000+
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1535
Attackers are now moving into products that lsquohurtrsquoDistribution of Fintech activity
SOURCE McKinsey Panorama Fintech Database
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1635
Attackers always change the game on cost
42 22 31
38
12
26
31
08
04
Top 3majors
111
-66
ProductdistributionGampA
ACMI2 + fuel
Infrastructure(station feesground handling)
65
-41
38
Operating costs 2004(available seat kilometres)EUR cent per ASK Adjusted1
SOURCE IATA AETF AEA annual reports Expert interviews McKinsey analysis
300
10-2
Pure onlinebank
Traditionalbank
70-150
Customer acquisition costsUSD per customer
1 Stage length 800 km inflation adjusted to 2004 adjusted for seat density 2 Aircraft crew maintenance insurance3 Cost mainly on promotion per expertrsquos estimation 4 If they acquire the customers from the already existing platform users
Estimates based on expertsrsquo experience
EXAMPLE AIRLINES
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1735
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1835
Financial services are driving digitization initiatives in
Multi-channel
Socialmedia
Mobilechannel
Connectivity
Improved sales service andexecution channels
Tailored e-sales capabilities
Enterprise social network to driveproductivity through collaboration ldquoApprdquo-
ification
STPpaper-less
End-to-enddigitisation
Automation
Full straight-and paperle
managemen Improved ef
processing (workflow en
Digital-enabled
sales
Real-timeMIS
Nextproductto buy
Decision-ma
Data to offerpersonalisedproducts
Real-time en
to control sy Timely and r
managemensupport dec
Productinnova-
tionBusiness
modelinnovation
Innovationculture
Innovation
Leverage digital capabilities tomonetize new products
Customer intimacy through tailoredsolutions developed by leveraging
customer insights including newadjacent services
Re-invention of business modelthrough outsourcing and partnerships
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 1935
4
4-7
30-31
14-16
2
10-13
5-6
Margincompres-sion
hellipand there is significant value at stakeImpact from digital percent of net profit
Innovativenew offers bycompetitors
Increased revenues dueto innovative new offers
business models
Increased revenues Using data to cross-sell New products Distinctive digital sales
9-10
Lower operational cost Automationdigitization Transaction migration
Increased operationalrisk
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2035
Financial institutions need to undergo major transfor
From hellip To hellip1 30 of processes fully digitized gt80 of processes fully digitizedOperations
4 Two-speed IT architecture fastcustomer-facing part and stable + secutransactional core
IT archi-tecture
Inflexible legacy architecture
3 Extensive use of big dataadvanced
analytics
Data Massive amounts of internal
data unused
5 Two-speed organization with ring-fencedigital talent
Agile delivery with fully integrated IT anBusiness teams
Organiza-tion and
ways of working
Digital roles spread across theorganization
Business and IT workingseparately waterfall delivery
Silicon Valley style innovation culture
Combination of new digital talent withwith digitally upskilled existing talent
6 Innovation
cultureand talent
Internally focused innovation
failure not an option Traditional banking talent
2
Mobile-centric distinctive seamlessmultichannel experience with gt50 sale
and advice via remote amp digital channels
Simple transactions gt95 migrated todigital
Channels
Person-to-person centric viewwith separate digitalremote
channels mainly for simpletransactions and support
Transactions across all channels
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2135
Huge potential in process transformation towardsmore digitizationhellip
Number of FTE (lsquo000)
0 100 200 300 400 500 6
20
50
40
10
30
0
60
80
70
90
110
100
Number of processes
Top 20ndash30 end-to-end processesaccount for ~ 40ndash50 of costs and80ndash90 of customer activity
Top processes (banking) Account openingonboarding
Mortgage Lending Customer enquires
Top processes (insurance) Enquiring about life products Manage relationships with
intermediaries Buy life protection critical
illness cover
1 Operations
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2235
hellipboth in terms of cost and customer service
35
100 -65
10-15minutes
-992-6 days 100
24
Client example Account-opening digitization
No ofmanua
Processing costsIndexed to 100
Time to open accountCustomIndexed
From hellip
To hellip
Branch- based
32 processsteps 25automated
Automated
process 25process steps65 automated
E i t t d K i t k th i
2 Channels
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2335
Ever more integrated ndash Knip takes over the insuranc
3-page sign-up process
Taking over yourinsurance relationship
in minutesSelect where you think yoinsuranceVery little information reqHand over your relationsh
$X bn
SOURCE McKinsey
D t K bb lsquoR b rsquo f tli t3
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2435
Data Kabbage uses a lsquoRoborsquo frontline toapprove mid-sized business loans
3
SOURCE Company Web sites press research McKinsey
Kabbage vs Normal Mid-Corp experience
100 online and automatedlink existing accounts
Apply Start online then send inadditional financial data
Instant decision online Decide 2-3 days
Instant (Pay-Pal) 1-3 days Funds 3 days to 2 weeks+
12 for 6 months Fees 38 or higher for 6 months
Based on current usage Repay Fixed of total facility
$
T d f i ti4 IT architecture
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2535
Two speeds of innovation
2-speed IT architecture
Fast speed
Integration layer
Transactional core
Characteristics of the fast speed architecture(customer-facing part)
Datafication
Modularity
Deployment
Scalability
Characteristics of the transactional core
Stability
Security
Cost-
efficiency
Flexibleconfigurable
No delay and available cross chan
Analytics on big data pool is availareal time and easy to integrate
Platform scales automatically
Stable performance and close to
downtime for upgrades
Secure architecture
Cost-efficient technologies and pro
Digital transformation ill req ire a 180 degree shift5 Organization
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2635
Digital transformation will require a 180-degree shiftin ways of working for business and IT
Ongoing refinement of requirtogether with business and cust
Writing detailed requirementsdocuments
Continuously working together functional teams on developin
IT solution developed independently by ITdepartment then handed over for testing
Rapid prototyping and contin Extensive testing before release
(hence long release cycles)
From hellip To hellip
New digital culture required6 Innovation culture and talent
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2735
New digital culture required
LaCaixa crowdsourcing innovation eg hosting
developer parties to develop mobile apps
SOURCE httpwwwfinappspartycom
AGENDA
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2835
AGENDA
Financial services are going Digital
Value at stake is significant
What should you do
Transformation pattern is relatively predictable
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 2935
Transformation pattern is relatively predictable
Tipping point
Time
Laggshrink
ldquoNnorm
New technologyemerges
Innovativestartups disrupt
Early adoptersemerge
Advanced incumbentsstart adapting
Mainstreamcustomersshift
Start-upsexploitnew tech
Digitalmodels
proliferate
Customersshift and
Incumbentsstruggle
5 ndash 10 years
3 important lessons wersquove observed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3035
3 important lessons we ve observed
Tipping point
Laggshrink
ldquoNenorm
Itrsquos not about
the ldquoInnovatorrdquo ndash itrsquos abouttheir model
Pay attention to(new) customer
behaviour
Face up to thenew (superior)
economics
5 ndash 10 yearsTime
The lsquodigital playbookrsquo is by now well known
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3135
The digital playbook is by now well known
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
But the playbook is flawed
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3235
But the playbook is flawed
Risks running in the wrong dire
Doesnrsquot fix your core business
You are not an attacker
ldquoFaster horserdquo problem
Not really what banks are know
Doesnrsquot move the needle
You have too many people alr
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
I suggest an alternative play book
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3335
I suggest an alternative play book
Act thoughtfully
Transform your core business
Think like a winning incumbe
Focus on agility
Copy proven models
Invest at scale
Build new capabilities
Act quickly
Build new businesses
Think like an attacker
Focus on the customer
Innovate
Experiment
Hire new talent
Are you using your existing assets while you still can
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3435
Are you using your existing assets while you still can
Engage
Mine
Reshape
Digitise
Repurpose
Customers
Data
Balance sheet
Brand
Talent
Cash flow Invest
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you
7262019 Sff Iceland 2015 Mckinsey
httpslidepdfcomreaderfullsff-iceland-2015-mckinsey 3535
Thank you