In this presentation we look at the big trends likely to be seen in 2015 for retail banking. Will banks' obsession with customer centricity and user experience heighten? Will digital-only banks proliferate? We explore this and more...

1. Retail banking trends 2015:
meeting outside-influencers’ needs
Alex Kwiatkowski, Senior Marketing Strategist – Banking & Digital Channels

2. Market context

3. 3© Misys 2014 30 March, 2015
Prediction is very difficult,
especially if it’s about the future.
Niels Bohr

4. 4© Misys 2014 30 March, 2015
A future defined by overcoming the industry’s biggest challenges

5. 5© Misys 2014 30 March, 2015
Industry success based on four pillars
Customer
Experience (CX)
Performance
Management
Regulatory
Compliance
Risk
Management
Mandatory Mandatory Discretionary Discretionary

6. 6© Misys 2014 30 March, 2015
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7. Trends in 2015

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Meeting the demands of retail banking’s main outside-influencers
Customers
Customers’ demand:
 Improved user
experience
 Increased satisfaction
level
 Ease of access to
relevant products &
services
 Greater trust in their
chosen provider(s)
Regulators
Regulators’ demand:
 Increased visibility of
regulatory compliance
 Mandatory reports
delivered faster and with
greater accuracy
 Greater confidence that a
bank is aware of all risks
Investors
Investors’ demand:
 Improved Return on
Equity and Return on
Capital Employed
 Increased confidence in
bank’s long-term future
from improved financial
performance indicators
 Evidence of investing in
restlessly innovative
market leader(s)
Create
Strategy

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Misys’ outside-in approach for retail banking transformation
Customers Regulators
Investors
Create
Strategy
“Misys believes that the strongest
financial institutions will be those whose IT
strategy is aligned to an ‘outside-in’
business view, where customer relevance
and market agility, driven by faster product
innovation cycles, are the key drivers for
competitiveness and long-term
success.”
Nadeem Syed,
Chief Executive Officer

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 Banks’ obsession with customer centricity and user experience
will heighten
 Operational harmony between Sales & Service activities
improves
 Greater use is made of advanced analytics to extract full value
from data
 The search for innovation and differentiation demands
experimentation
 Digital-only banks proliferate (and not just driven by start-ups)
 Targeted strategic investments and M&A activity helps grow
revenue
 Cyber-attacks relentlessly seek to exploit vulnerabilities in
banks’ systems
 Legacy IT keeps failing painfully and publicly
 Wildcard: an established P2P lender is acquired by a big bank
In 2015:

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Banks’ obsession with customer centricity and user experience heightens
61% of surveyed*
banks have a
dedicated Customer
Experience Team.
20% will introduce this
in the next 3 years.
*n = 74
Source: Efma, 2014
Misys’ opinion
The obsession with customer centricity and UX is
well-founded, as a) banks are still closing post-
crises trust gaps, b) revenue growth is intrinsically
linked with customer satisfaction and c) other
industries are improving their service standards.

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• There are 173 million smartphone owners in the US. That’s 74% and growing. There are
over 1,900 financial apps in the iTunes App Store…beginning with the letter A. That’s a
40% increase in one year alone.
• How can you truly differentiate your online and mobile banking to really stand out in this
crowded market?
Find out in our latest digital banking whitepaper – Click Here
Digital banking: 5 ways to make your customer feel special

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Operational harmony between Sales and Service activities improves
Misys’ opinion
Achievement of revenue targets depends upon
banks’ ability to successfully harmonise Sales &
Service activities, combined with a similarly
balanced focus on existing and new customers.
Greater segmentation is also essential.
5.97 5.91 5.66 5.59 5.55 5.40
4.72
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
n = 32
Source: Efma
How important are the following management priorities for your bank’s consumer business?
1 = Very Low / 7 = Very High

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Greater use is made of advanced analytics to extract full value from data
Misys’ opinion
The most successful banks will develop expertise
involving the analysis of structured and
unstructured data to provide accurate insight –
and foresight – in real-time. But attention must be
paid to data privacy concerns (and regulations).
Volume
Variety
Velocity
Value
32%
24%
30%
8%
5%
24%
14%
27%
19%
16%
0%
5%
10%
15%
20%
25%
30%
35%
Current Plan < 1 yr Plan 1-3 yrs No Plans Don't Know
Business intelligence New products or services
n = 37
Source: Efma
Does your bank have any Big Data projects for collecting
and using unstructured information from digital channels?
Big Data  Big Privacy

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The search for innovation and differentiation demands experimentation
Misys’ opinion
Banks must explore different ways to interact and
transact with customers and prospects, taking
advantage of new consumer technologies and co-
creating with 3rd parties to help launch features
and functions faster. Bold is better than boring.

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Digital-only challenger banks proliferate (and not just driven by start-ups)
Misys’ opinion
The market for digital-only challenger banks will
become more crowded with the arrival of new
players. Existing banks must decide if they want
to compete (with their own digital-only offering),
acquire, replicate ideas, or keep a watching brief.
Launched Announced

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Targeted strategic investments and M&A activity helps grow revenue
Misys’ opinion
Having been forced into defensive positions in the
post-crises era, banks will take an increasingly
offensive stance to stimulate revenue growth.
Deals must take existing technological ‘fit’ into
account, alongside other operational factors.

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Cyber-attacks relentlessly seek to exploit vulnerabilities in banks’ systems
Misys’ opinion
Cyber-attacks will disrupt banks’ strategic plans
unless adequate protective measures are put in
place. Banks will be compelled to dedicate greater
resources to combat an increasingly sophisticated
enemy, whose motivation is not purely financial.

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Legacy IT keeps failing painfully and publicly
Misys’ opinion
Diffusing the ticking legacy IT time bomb takes on
greater urgency, as systems fail with increased
regularity. This will compel banks to transform
technology, taking advantage of componentisation
and new operating models (such as SaaS).

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Established P2P lenders become attractive targets for big banks…
Misys’ opinion
Banks cannot afford to sit back and watch P2P
lenders erode account balances. The interest
shown in 2014 will increase in 2015, and it is
conceivable that an acquisition will be made.
Probability is low, but the impact will be high.
…and at least one acquisition will be made during 2015

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Alex Kwiatkowski
Senior Marketing Strategist – Banking & Digital Channels
alex.kwiatkowski@misys.com