Future Bank Summit 2014

Copyright © Liam Ó Móráin 2014
Breaking Open the Bank
Liam Ó Móráin

Top 50 Global Brands
Source & Copyright © Interbarnd 2014.
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Loyalty & Passion
Things that serve a purpose Things that people love
Emotional connections make great brands.
The relationship is often irrational!

Loyalty & Passion
Emotional connections make great brands.
The relationship is often irrational!
Things that serve a purpose Things that people love

Apple realized if it created everything itself it would greatly constrain the number
and range of apps.
Apple has become a platform where 3rd
parties can create products and
services known as ‘apps’.
Apple maintains the standards for publishing the apps and pays the developers.
Apple is the distribution channel in this co-created ecosystem.
Downloads to date
$ paid to developers to date
$ app revenue in 2013
15,000,000,000
60,000,000,000
Loyalty & Passion
10,000,000,000
iTunes accounts and credit card numbers800,000,000

mobile monthly active users
downloads to date60,000,000,000
1,000,000,000
$ revenue/user/year in US & Canada5.18
Co-created Ecosystems
average number of apps installed each day20,000,000
mins average time spend on Facebook per visit18
$ revenue in 20131,300,000,000
apps available1,200,000,000

An APP
A piece of software performing a single
task or small set of tasks which is very
different from the more traditional big
enterprise apps banks have built and
deployed.
The co-creators
The creations

Source NUI Galway & Gigaom Research 2014.Co-created Ecosystems….

Co-created Ecosystems….
What are the challenges facing banks today that
suggest the current business model is under threat
and that co-creation is a viable option?
How can banks draw inspiration from companies
like Apple, Google, and Facebook and offer
products and services created by others that
customers want?
Should banks copy Apple, Google, and Facebook
and develop their own co-created ecosystems?

Challenges facing (retail) banks!
While numerous, focus today is on:
The distribution model i.e. branch network
Physically constraint and very costly
Customers have an incredible digital retail experience in
most places except in retail banking (think Apple!)
Competitors are eating away at the fringes:
Wonga, Stripe, DWOLLA, Square, Ripple, Currency Fair, Tesco

Challenges facing (retail) banks!
Branch network:
Swallows nearly 50% of bank operational costs
Is not open 24/7
Legacy locations may not be fit-for-purpose
Product & Services: banks and in particular banking
processes make it hard for customers to love them!
Technology & Operations:
Held together with band aids
Smothered with compliance and fear of screwing up!
Legacy systems may not be fit-for-purpose.

Opportunity for (retail) banks!
Branch network:
Varied layouts and types of branches
Some full service; some very basic; some in between
Digital and Physical blend seamlessly
Perception of scale and ability to meet customer
needs any where, any time
Product & Services designed to meet varied and tailored
needs of customers often created by others.
Technology & Operations:
Operational excellence e.g. STP
Exceptions are rare!
FOCUS
TODAY

Co-created Ecosystems…
Offers huge customer base
Core business is a platform through which all
activity flows
Powerful network effect
Manages revenue collection and distribution
Major data and customer analytics
Why 3rd
Party Developers Love
these ecosystems?

Great customer base – low churn
Incredible depth of data on customers
Co-created Ecosystems…
Why 3rd
Party Developers would love to
work with banks?
What 3rd
Party Developers need?
A Platform
Access to the bank’s DATA VAULT!
Combine with other data sources to create
services of value.
Break Open The Bank!

BROAD customer
data
Bank Credit
Card
16
Day in the life of a customer What a Bank sees …
Customer: Joe Bloggs
• Withdrawal Grafton St. ATM
• Transaction successful
• Account: -€60
On the way to work, Joe calls his
friend in Berlin.
At work, he Googles to research
impact of the Ukrainian crisis
on the stock market.
Joe wakes up in the
morning. He checks
the news on his iPad.
At lunch, Joe goes to the ATM
to withdraw money.
He pays for a wedding anniversary gift
for his wife with his credit card.
Joe calls his Bank’s Relationship Manager, Shirley, to
confirm the position of his stocks given situation in
Ukraine. However Shirley was not available so he left
her a voice mail.
Going home, Joe uses Twitter, Facebook and
LinkedIn account, and watches YouTube.
1
2
3 4
5
6
7
8
Joe gets home and he goes online on his iPad to
read books and surf the net.
Customer: Joe Bloggs
• Credit card transaction
successful
• Merchant: Cartier
• Credit account: -€2,500
• Bank’s RM Shirley
receives phone message
to call Joe Bloggs.
Customers experience BANKS as a set of interactions through various
mediums throughout their busy lives, not as a number of “channels”.
On the other hand, a BANK sees the customer as a
series of discrete transactions with little context.
BANKS sees
these as siloed
transactions
within different
areas of the
bank…
How well do BANKS know their customers and understand their world?
DEEP customer data
Transactional Data
Connecting the dots...crossing the data & digital divide…
Back end
systems

ARMY OF 3rd
PARTY
DEVELOPERS will marry the
two data sets and discover
things of interest
Source: Career Rocketeer
DIGITAL FOOTPRINTAv Joe Footprint
DEEP
DATA
BROAD DATA
SM
ART
DATA
&
SERVICES
reaching customers
BROAD customer data
Google etc. great at mining!
This is BIG DATA. Offers
clues and insights
DEEP customer data
Transactional Data Business Intelligence
Answers to known questions

reaching customers
Customers post ideas on CA Store
‘Les Digiculteurs’ encouraged to
contact customer
Most apps have narrow but important
function
Process to manage apps and seepage
of malicious code
Breaking the Bank Open

reaching customers
Open source API and APP store for
banks
Kinder Bank
A PFM for children. Providing kids with
categorised money trail of transaction history.

reaching customers

Q1 Y1 Q2 Y1 Q3 Y1 Q4 Y1 Q1 Y2 Q2 Y2
Hackathon
Dublin
Open/Linked Data
Census Data, Revenue Data
Hackathon
Stockholm
Bank APP Store 1.0
Hackathon
London
Hackathon
Berlin
Hackathon
San Francisco
SDK & API
Transactional Data
Account ActivityBank APP Store 2.0
Customer Data
Global App Developer Base
Global Reach
Global Customer
Base
Group-wide
capability
Bank APP Store 5.0
Economically Viable Ecosystem
Breaking The Bank Open

Business Rationale
• A place to innovate and try new things
• Free Apps (targeted advertising)
• Paid Apps
• Revenue to Bank & Developers
• Positive reaction amongst key
influencers in digital community
• Target squarely at Digital natives and
device savvy customers
• Attracts non-customers
• Garner digital insights
• Understand better the digital footprint
and digital life of customers
Technology
• Identify and make available
customer data (anonymized)
• Build SDK and development
infrastructure
• Expose relevant APIs: a/c
balance, ID&V, SSO, a/c transfer
• Protect customer and data
privacy
• Build securely
• Build transparency, audit
capability

Legal
• Legal entity 1˚ removed from
parent bank!
• Toe-in-the-water approach. Easy
to pull and distance Parent Bank
and brand
• FSA/Central Bank and what is
permissible.
• Regulated entity?
Operational Structure
• Provide infrastructure to test,
validate, and approve Apps
• Management payment to
developers
• Manage advertisement network

Future Bank Summit 2014

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Future Bank Summit 2014