The disrupted banking value chainHow we got here and what’s nextSalvatore Iacangelo

7 June 2016S. Iacangelo 2

The most dangerous phrase in the language is,

"We've always done it this way.“(Grace Hopper1)

1 Grace Hopper (* 9 December 1906; † 1 January 1992), US Fleet Admiral and Computer Scientist

7 June 2016S. Iacangelo 3

It’s banking’s turn now

7 June 2016S. Iacangelo 4

?

Today’s clients expect a new kind of business & service model…

Client 1.0Old world

Client 2.0New world

Client 3.0Next world

Liliane Bettencourt

Elon Musk

Nick D'Aloisio

Bank’s value proposition

Wealth source

Mainly inherited

Mainly self-made Mainly self-made

Trusted advisor

Mainly banks

Mainly non banks ?

?

?

Investment behavior

Mainly delegator

Mainly self-directed

Financial skill Medium High

21%19%

61%

MixedInherited Self-made

26% Finance7% Real estate7% Technology

17% Finance13% Industrial8% Real estate

Top 3 occupations

Where my wealth comes from1

15%27%

31%34% 29%

44% 33% 29%

15%14% Advisor dependent

Self-directed

Advisor assisted

Event driven

UHNWI

HNWI

15%

Affluent

10%

How I invest my wealth2

1 Wealth-X, 2015 “World Wealth Report” 2 Spectrem Group 2015 “Advisor Relationships and Changing Advice Requirements” 3 Capgemini 2015 “World Wealth Report”

I expect a largely digital banking relationship3

55%

AuM $20mn+

74%

AuM $10-20mn

7 June 2016S. Iacangelo 5

Asset servicing Invest. solution design Investment advice

Incumbent BanksIncumbent Banks

718258

2014

2′064

2012

4′377

2011

2013

2015

8′362

LendingClub loan volume (USD mn)

4060

200

100

Family Offices

EAMs

Robo advisors

6595

6540

89

15

Indicative gross margin comparison (bps)

Shifting clients’ willingness to pay

New world

Old world

Accounts & Payments

Trading

Financing & investing

Non-Bank Start-ups

Communities, Forums

Robo Advisors

Family Offices, EAMsTech Expanders

Boutiques

New competitors capture the gap in the market… and the market in the gap

7 June 2016S. Iacangelo 6

FinTechs continue to grow albeit with significant regional differences

13.8

2.82.42.1

6.7

5.3

5.5

1.1

2011

2012

2013

+68%

2014

2015

12.2

19.1

2.40.3

2.80.4

3.9

Other FinTech investmentsVC backed FinTech investments

(e.g., angel investors, hedge funds)

FinTech investments continue to grow

1

2

3

60% of all global FinTech Deals56% of their volume60% of FinTech mega deals >$50mn

21% of all global FinTech Deals34% of their volume27% of FinTech mega deals >$50mn

19% of all global FinTech Deals10% of their volume13% of FinTech mega deals >$50mn

United States clearly leading in FinTech investments(data for 2015)

Source: KPMG/CB Insights 03/2016

7 June 2016S. Iacangelo 7

There is a clear focus among highest valued FinTechs on lending and payments

1.0

1.0

1.0

1.0

1.0

1.0

1.8

1.9

2.0

2.3

2.3

2.4

3.5

4.0

4.5

5.0

5.0

8.0

10.0

TransferWiseKabbage

SoFiStripe

Zhong An InsuranceLu.com

Coupa SoftwareChina Rapid Finance

Fundin CircleGusto

Oscar InsurancePropsper Marketplace

AvantAdyenKlarna

MozidoCredit Karma

One97Zenfits

Global FinTech Unicorns valued >$1bn have a combined valuation of $57bn42%of largest FinTech Unicorns focus on lending

32%of largest FinTech Unicorns focus on payments

LendingPaymentOther

Source: KPMG/CB Insights 03/2016

7 June 2016S. Iacangelo 8

Next big thing will be putting it all back together (but different)

Banking yesterday

Banking today Banking tomorrow

7 June 2016S. Iacangelo 9

What it takes to build a healthy Ecosystem

Piazza

PeopleStores

Road

Empty outside

mall

Empty high street

Road to nowhere

Piazza full of idle people

EcoSysInfrastructur

e

Community (people)

Content (producers

)

Commerce

(exchange)

7 June 2016S. Iacangelo 10March 2014 10