DOCSLIB.ORG

Knowledge Area Review

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Knowledge Area Review Knowledge Area Review Impact of digitisation on business banking relationship management model July 2012 Disclaimer ICG has made good faith efforts to ensure that this Knowledge Area Review (KAR) is a high-quality publication, and a reasonable interpretation of the material it purports to review. However, ICG does not warrant completeness or accuracy, and does not warrant that use of the KAR through ICG’s provisioning service will be uninterrupted or error-free, or that the results obtained will be useful or will satisfy the user's requirements. ICG does not endorse the reputations or opinions of any third party source represented in the KAR. Confidentiality ICG and their clients compete in a marketplace that generates value through the creation and management of information. It is therefore important that both parties maintain the confidentiality of each party’s information. ICG will protect the confidentiality of all client information it receives and manages. Similarly ICG asks that its clients protect ICG interests and under no circumstances share, or in any other way distribute, ICG information without the explicit and prior written permission of ICG. Copyright Notice While third party materials have been referenced and analysed in this KAR, the content represents the original work of ICG's personnel. This work is subject to copyright. ICG is the legal copyright holder. No person may reproduce the KAR without the explicit written permission of ICG. Use of the copyright material in any other form, and in any medium whatsoever, requires the prior agreement in writing of the copyright holder. The user is allowed "fair use" of the copyright material for non-commercial, educational, instructional, and scientific purposes by authorised users. 2 © Internal Consulting Group 2015 “We know exactly where technology is heading. What we lack is the imagination [regarding] what to do with it” Samil Ismail Global Ambassador, Founding Executive of Singular University Convinced, as I am, that no industry sector or organization will be immune from digital transformation, I have spent the last two years looking at the effect of digitization on more traditional industries. My conclusion is that digitization is probably three steps ahead of our managerial capabilities to exploit it! Didier Bonnet Global Practice Leader at Capgemini Consulting and Executive Sponsor for Capgemini Consulting’s Digital Transformation program 3 © Internal Consulting Group 2015 Contents 1. Introduction 2. Key messages 3. Impact of digitisation 4. Lessons from retail banking 5. Digitising business banking Appendices 4 © Internal Consulting Group 2015 1. Introduction Introduction This document is a Knowledge Area Review (KAR). It summarises available public research and case studies on the impact of digitisation on business banking*. More specifically, it describes how the pervasive adoption of connected, cloud, and mobile technologies across industries is being leveraged to improve the efficiency, revenue or customer satisfaction of the relationship management model currently used by most banks to serve their business customers (‘the business banking model’). Much has been said and written about the impact of digitisation on consumer banking and other industries; not so much, though, on business banking. Business banking has so far not been at the forefront of application of new technologies, except for some digitisation of back-office processes. A recent CEB TowerGroup survey found business banks rolled out mobile solutions for the first time predominantly in late 2010 and 2011. In our view, this is because lending is the core product for most SME businesses. Credit assessment of these typically riskier borrowers requires the costly (for the customer and the bank) collection and maintenance of a large amount of information on the customer. This dependence on credit can be leveraged by the bank to cross-sell a number of other products. Thus business customers, especially the small and mid-sized corporates, have tended to have a single bank and long-standing relationships. Surely there have been for a many of years a number of players on the fringes of the business banking world providing payments and other specialised services. But so far no non-bank entrant has come in with an all- encompassing value proposition for mid-corporates with credit at its core. So the question is not so much one of what bank incumbents or new entrants are doing in Australia or other markets, but more one of to what extent digital technologies question the implicit assumptions behind the traditional business model centred on a relationship manager facilitating access to a range of product specialists. * ‘business banking’, throughout this document, will be used in a broad sense to mean providing banking products and services to 5 businesses with more than $1m of turnover (i.e. all businesses except micro-businesses) © Internal Consulting Group 2015 1. Introduction Introduction (cont’d) In other words, the question of the impact of digitalisation on business banking is more one of forecasting how digital technologies could impact the current business model. This document is structured as follows: 1. ‘Impact of digitisation’ asks what do new technologies mean and how are they changing our lives; it describes the types of technological innovation industries can experience and how responses need to differ, as well as how we can estimate the likely speed and quantum of digitisation in business banking 2. ‘Lessons from retail banking’ looks at disruptive innovation in consumer and small business banking; specifically, what new customer value propositions and business models are being created, who are some of the new players, and obstacles to offering an all-encompassing proposition to this segment that rivals the banks’ 3. ‘Digitising business banking’ revisits the traditional relationship management model and its rationale and asks a. how is the model evolving (how digital technologies are being deployed to sell and service business customers by banks and non-banks and possible future developments) b. how do data analytics create value; what’s the current state of development of data analytics in banking; how can analytics capabilities be developed; and how can ‘big data’ be leveraged c. to what extent are the implicit beliefs of that model being questioned by new digital technologies d. how it could be disrupted, i.e. how could banks be desintermediated e. how investments in digitisation should be prioritised 6 © Internal Consulting Group 2015 1. Introduction Focus of this document This document focuses on the relationship management model that is typically used by banks to cover their business customers (here defined as businesses above $1m of turnover). It excludes micro-businesses and financial institutions Micro Small Mid-corporate Corporate Financial Segment businesses business* / Middle Market Institutions Turnover <$1m $1 - 50m $50m - $500m >$500m Main Business owner Business owner / Finance Team interface Finance Director Typical • Branch staff RM based in Business Banking Centrally based RM + coverage Centre + BBC and HO-based • Branch-based Product Specialists model small business Product Specialists RM team Focus of this document * Some small businesses with complex needs may also be served by the coverage model typically associated with mid-corporates 7 Source: ICG analysis © Internal Consulting Group 2015 1. Introduction Sources used This KAR is a synthesis of relevant public domain materials obtained by searching the sources below using a multitude of key words §. Google Scholar §. Google Web §. Business and financial journal databases §. Management consulting firms’ websites §. Websites of major consulting firms 8 © Internal Consulting Group 2015 Contents 1. Introduction 2. Key messages 3. Impact of digitisation 4. Lessons from retail banking 5. Digitising business banking Appendices 9 © Internal Consulting Group 2015 2. Key Key messages messages §. The explosion of new digital technologies (broadband, mobile devices, cloud computing) – and the myriad of internet applications and new business concepts that ride on their cusp – are fuelling the imagination (and generating concerns) about how the traditional business banking model could be transformed. §. Most of this innovation has so far been in the consumer banking arena. The thinking is only now starting about the application of new digital technologies to business customers, especially at the front-end. §. Nevertheless, the time has well and truly come for the business market. Accenture argues we are reaching a tipping point where the relationship between the business customer and the bank is eroding and the traditional bundled product offer to SMEs (with credit at its centre) could be unpicked as a result of a combination of credit unavailability, lower credit needs, new technologies, changing SME needs and regulatory pressure to make switching banks easier. §. Most of the expected innovation in business banking is focused on new products and services leveraging the mobile channel (payments products being the most prominent). Nevertheless, we can easily imagine a world where a number of new technologies are leveraged to transform quite substantially the way a relationship manager performs his/her key activities. §. It is difficult to anticipate where disruptive innovation could come from (points of entry), but given the centrality of credit for most businesses, especially SMEs, innovation in lending is likely to be the
Load more

Recommended publications
  • Finnish Banking in 2010
    5 April 2011 Finnish banking in 2010 Federation of Finnish Financial Services Finnish banking in 2010 Federation of Finnish Financial Services 5 April 2011 Finnish banking in 2010 Tarja Kallonen CONTENTS Banks operating on solid foundation........................................................... 1 Bank structures and distribution networks ................................................ 2 Banks operating in Finland ......................................................................2 Personnel numbers unchanged ............................................................... 5 Banking operations ....................................................................................... 6 Demand for loans recovered ....................................................................6 Households confi dent in housing loan market .........................................7 Car trade vitalised fi nance houses ........................................................... 8 Growth in fi xed-term deposit accounts ....................................................9 Equity funds more attractive ..................................................................10 Long-term saving faltering .................................................................... 11 Single European Payments Area comes true ......................................... 11 Performance of banks ................................................................................. 12 Low interest rate levels hampered net interest income ..........................12 Credit losses halved
    [Show full text]
  • 12Thjune 2014 Helsinki Eba Clearing Shareholders
    REPORT OF THE BOARD EBA CLEARING SHAREHOLDERS MEETING 12TH JUNE 2014 HELSINKI Contents 1. Introduction 3 2. The Company’s activities in 2013 5 2.1 EURO1/STEP1 Services 5 2.2 STEP2 Services 8 2.3 Operations 15 2.4 Legal, Regulatory & Compliance 18 2.5 Risk Management 20 2.6 Other corporate developments 21 2.7 The MyBank initiative 23 2.8 Activities of Board Committees 23 2.9 Corporate matters 26 2.10. Financial situation 29 3. The Company’s activities in 2014 32 3.1 EURO1/STEP1 Services 32 3.2 STEP2 Services 33 3.3 PRETA S.A.S. 35 3.4 Other relevant matters of interest 36 Appendix 1: Changes in EURO1/STEP1 participation 37 Appendix 2: List of participants in EURO1/STEP1 40 Appendix 3: List of direct participants in STEP2 45 Appendix 4: Annual accounts for 2013 53 2 EBA CLEARING SHAREHOLDERS MEETING // 12th June 2014 // Report of the Board 1. Introduction 2013 was marked by the major changeover that the SEPA migration end-date for euro retail payments of 1st February 2014 represented for payment service providers in the Eurozone and their customers. SEPA migration-related activities were also the top priority for EBA CLEARING throughout 2013. The Company continued to strengthen and enhance the STEP2 platform and intensified its customer support activities to assist its users across Europe in ensuring a disruption-free changeover to the SEPA instruments for their customers. SEPA migration affirmed the position of the STEP2 platform among the leading retail payment systems in Europe. The timely delivery of its SEPA Services as well as the processing capacity, operational robustness and rich functionality of the system made STEP2 the platform of first choice of many European communities in preparation of and during this migration.
    [Show full text]
  • Treasury and Risk Management Applications Market 2010-2015
    APPS RUN THE WORLD Treasury & Risk Management Enterprise Applications Market Report 2010-2015, Profiles Of Top 10 Vendors 5/30/2011 Copyright © 2011, APPS RUN THE WORLD Table of Contents Summary........................................................................................................................................... 4 Top Line and Bottom Line ......................................................................................................... 4 Market Overview ........................................................................................................................... 5 Customers ........................................................................................................................................ 5 Top 10 Apps Vendors In Vertical ........................................................................................... 6 Vendors To Watch ........................................................................................................................ 7 Outlook .............................................................................................................................................. 7 SCORES Box Illustration ............................................................................................................. 7 2 Profiles of Top 10 Apps Vendors ........................................................................................................ 10 SunGard ........................................................................................................................................................
    [Show full text]
  • Finnish Banking in 2006
    15 May 2007 Finnish banking in 2006 Finnish banking in 2006 Contents Key developments on the banking scene in 2006 1 Changes in bank structures 2 Number of banks little changed 3 Employee numbers up 4 Payments go European 5 Banking groups perform well 7 Deposit banks work efficiently and profitably 8 Loan portfolio in healthy shape 9 Housing loans in demand 10 How interest rates impact home loans 12 Finance houses boosted by companies’ investments 13 Absence of wealth tax felt on deposit accounts 14 Fund investment posts strong growth 15 Unit-linked insurance attracts interest 16 Outlook for 2007 17 Annex: Summary of financial statements for 2005 and 2006 This survey was written by Tarja Kallonen, Head of Financial Research, with the graphs designed by Ritva Myllylä, Research Assistant, of the Federation of Finnish Financial Services. The information is based on banks’ annual reports and statistics compiled by the Bank of Finland, Financial Supervision Authority and Statistics Finland. A summary of the survey is available on the Federation website at www.fkl.fi. 2 Finnish banking in 2006 Federation of Finnish Financial Services 15 May 2007 Finnish banking in 2006 Key developments on the banking scene in 2006 In line with the preceding year’s performance, Finnish banks reported healthy results for 2006. Demand for financial, investment and insurance services remained strong, supported by the favourable financial position of both households and businesses. The Finnish economy continued to expand at an unexpectedly vigorous pace in 2006. This expansion boosted companies’ profits and improved employment figures. Finnish households had financial assets enough to invest in deposits, funds and pension and life insurance policies.
    [Show full text]
  • EBA CLEARING Shareholders Meeting Report of the Board 30 Th June 2009 Contents
    EBA CLEARING Shareholders Meeting Report of the Board 30 th June 2009 Contents 1. The Company’s activities in 2008 3 1.1 Introduction 3 1.2 EURO1 / STEP1 Services 4 1.3 STEP2 Services 8 1.4 Operations of the Clearing Systems 12 1.5 Other relevant matters of interest 14 1.6 Activities of Board Committees 14 1.7 Corporate matters 16 1.8 Financial situation 18 2. The Company’s activities in 2009 21 2.1 EURO1 / STEP1 Services 21 2.2 STEP2 Services 23 2.3 Operations of the Clearing Systems 25 2.4 Other relevant matters of interest 26 Table of Appendices Appendix 1: Changes in EURO1/STEP1 participation 27 Appendix 2: List of direct participants in EURO1/STEP1 33 Appendix 3: List of STEP2 direct participants 41 Appendix 4: Annual accounts for 2008 47 layout: www. quadratpunkt.de photo credit: © Mihai Simonia - Fotolia.com 2 EBA CLEARING Shareholders Meeting 30 th June 2009 // Report of the Board 1. The Company’s activities in 2008 The period under report is 1 st January 2008 to 31 st December 2008. 1.1 Introduction 2008 was a year of unprecedented turmoil in the financial markets. The payments business has proved resilient during the crisis – providing stable and recurring revenue for banks – but it has not remained unaffected by the major changes marking the financial industry as a whole. The high profile of SEPA, the impact of regulation and the amount spent on bank-internal implementation and compliance pushes banks to realise savings based on the new payments infrastructure they have built.
    [Show full text]
  • Year-End Report for the Period January – December 2011 • February 16, 2012
    Year-end report For the period January – December 2011 • February 16, 2012 January−December 2011 Net operating profit Compared to January−December 2010 EUR M 4 • Net operating profit, excluding restructuring expenses of 5.7 million euros and an impair- ment loss of EUR 1.1 M for the Group’s shareholding in Burgundy, was EUR 1.1 M (January- 1 December 2010: EUR 1.0 M). -2 • Profit for the period attributable to shareholders amounted to EUR -6.5 M (-2.9). • Net interest income increased by 17 per cent to EUR 43.1 M (36.8). -5 • Net commission income increased by 5 per cent to EUR 38.7 M (36.8). -8 • Net loan losses were EUR 1.8 M (5.9), equivalent to a loan loss level of 0.07 (0.23) per cent. Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 • The Tier 1 capital ratio amounted to 8.4 (7.3) per cent at year-end 2011. Pro forma, taking into account the Finnish Financial Supervisory Authority’s grant of permission on February Deposits and lending 13, 2012 to calculate capital requirements for credit risks according to the Internal Ratings EUR M Based (IRB) approach for the Finnish household portfolio, the Tier 1 capital ratio was 10.0 3000 per cent. 2 737 2 567 2 547 2 600 2 550 • The Board of Directors proposes that no dividend be paid for 2011 (0). 2500 2 459 2 573 2 521 2 492 2 546 • The efficiency-raising measures that have been implemented and initiated during 2011 will lower the Group’s expense level by an estimated annual rate of EUR 8 M when they 2000 achieve their full effect.
    [Show full text]
  • Essays on Credit Contagion and Shocks in Banking
    MERVI TOIVANEN Essays on Credit Contagion and Shocks in Banking ACTA WASAENSIA 332 ECONOMICS 9 Reviewers Professor Koen Schoors Ghent University Reep 1 BE-9000 Gent Belgium Professor Ari Hyytinen University of Jyväskylä, School of Business and Economics PL 35 FI-40014 Jyväskylän yliopisto III Julkaisija Julkaisupäivämäärä Vaasan yliopisto Elokuu 2015 Tekijä(t) Julkaisun tyyppi Mervi Toivanen Artikkeliväitöskirja Julkaisusarjan nimi, osan numero Acta Wasaensia, 332 Yhteystiedot ISBN Vaasan yliopisto 978-952-476-630-2 (painettu) PL 700 978-952-476-631-9 (verkkojulkaisu) 65101 VAASA ISSN 0355-2667 (Acta Wasaensia 332, painettu) 2323-9123 (Acta Wasaensia 332, verkkojulkaisu) 1235-788X (Acta Wasaensia. Kansantaloustiede 9, pai- nettu) 2342-2238 (Acta Wasaensia. Kansantaloustiede 9, verkkojulkaisu) Sivumäärä Kieli 168 Englanti Julkaisun nimike Essays on Credit Contagion and Shocks in Banking Tiivistelmä Tässä väitöskirjassa käsitellään sokkien vaikutusta pankkeihin finanssikriisien aikana. Tarkemmin ottaen tarkastelun kohteena ovat tartuntariskit pankkien välisillä rahamarkki- noilla Suomessa ja Euroopassa. Lisäksi tarkastellaan pankkien pääomaan ja likviditeettiin kohdistuvien paineiden vaikutusta euroalueen pankkien lainanantoon ja makrotalouteen. Ensimmäisessä esseessä tutkitaan kotimaisten ja ulkomaisten tartuntariskien välittymistä Suomen rahamarkkinoilla. Tulokset osoittavat, että kotimaisen tartuntariskin takia kes- kimäärin noin puolet Suomen pankkisektorista joutuu vaikeuksiin 1990-luvulla ja 66 % vuosina 2005–2011. 2000-luvulla ulkomaisen
    [Show full text]
  • Service Description IBAN Calculation for Account Numbers and Checking the Validity of Accounts
    Service description IBAN Calculation for Account Numbers and Checking the Validity of Accounts 31.12.2017 The service is intended for calculating the IBAN number for accounts and checking the validity of account numbers. With the service, customers can convert domestic account numbers in their systems into the IBAN format and check the validity of their account numbers. 2 Table of Contents 1 How the service works ............................................................................................................................................. 3 2 Record descriptions ................................................................................................................................................... 5 Batch record ........................................................................................................................................................................... 5 Transaction record ............................................................................................................................................................ 6 Amount record ...................................................................................................................................................................... 7 Danske Bank A/S, Finland Branch Registered domicile and address Helsinki, Televisiokatu 1, FI-00075 DANSKE BANK Business ID 1078693-2 3 1 How the service works Service identifiers = IBAL (sending), IBAN (retrieval) Danske Bank offers services for calculating the IBAN identifier
    [Show full text]
  • Strategies, Opportunities and Lessons
    Creating Female-Friendly Financial Services: Strategies, Opportunities and Lessons Product Code: VR0837MR Published Date: August, 2012 TABLE OF CONTENTS 1 Executive Summary .............................................................................................................................. 7 2 Introduction ............................................................................................................................................ 9 2.1 The Global Market ................................................................................................................................... 9 2.2 Local Market Snapshots ........................................................................................................................ 10 2.3 Financial Advisers and Women ............................................................................................................. 11 2.4 Female Entrepreneurs ........................................................................................................................... 11 2.5 The Business Case for Targeting Financial Services at Women .......................................................... 11 2.6 Female Business Case Snapshot ......................................................................................................... 13 3 Financial Education for Women ......................................................................................................... 15 3.1 The US ..................................................................................................................................................
    [Show full text]
  • Financial Market Report 2004
    SUOMEN PANKKI y BANK OF FINLAND Financial Markets Department Financial Markets Report 2004 - No. 1 • Sound results from Finnish banks last year • Housing loan growth continues to rise briskly • Record dividends from listed Finnish companies • Risk premiums at exceptionally low levels on non-financial corporation loans • Banks seek significant savings through more efficient processing on payments 24 Mar 2004 Contents Project team 1 Financial intermediation 3 Pertti Pylkkönen, chairman 1.1 Housing loans growing fast in some euro area countries 3 Timo Iivarinen 1.2 Record dividends from listed Finnish companies 4 Karlo Kauko 2 Banks and insurance companies 6 Heli Paunonen 2.1 Banks did well in 2003 6 Hanna Putkuri 2.2 Performance of major European and American banks improved Katja Taipalus in 2003 7 Mervi Toivanen 2.3 Broad restructuring in insurance sector 9 Jukka Vauhkonen 3 Securities markets 11 3.1 Continued growth on the share markets 11 Nina Björklund 3.2 Risk premiums at exceptionally low levels on non-financial Kati Salminen corporation loans 12 Petri Uusitalo 3.3 Mutual fund markets showing strong growth 13 Janne Villanen 4 Infrastructure 15 Taina Seitovirta 4.1 EU: Swift introduction of comprehensive legislative framework Korhonen Ilkka for retail payments 15 Lehto Ulla 4.2 Banks seek significant savings through more efficient processing Park-Ahonen Louise of payments 16 Puttonen Eija 5 Major development projects in regulation and supervision 18 Tervonen Eija 5.1 The Committee of European Banking Supervisors commenced operations 18 Coordination 5.2 Regulatory initiatives for securitisation in Europe 19 Financial Markets Management Group 6 Key corporate arrangements and events in the financial sector 21 POSTIOSOITE PL 160, 00101 HELSINKI POSTADRESS PB 160, 00101 HELSINGFORS POSTAL ADDRESS P.O.
    [Show full text]
  • Finnish Banking in 2009
    20 April 2010 Finnish banking in 2009 Federation of Finnish Financial Services Finnish banking in 2009 Federation of Finnish Financial Services 20 April 2010 Finnish banking in 2009 Contents 1. INTERESTING YEAR FOR THE BANKING SCENE 2 2. BANK STRUCTURES AND DISTRIBUTION NETWORKS 3 2.1 Market shares 3 2.2 Personnel numbers decreased slightly 7 3. SERVICES OF BANKS 8 3.1 Demand for loans reduced 8 3.2 Households still in housing loan market 9 3.3 Demand for fi nance house products unchanged 10 3.4 Funds withdrawn from fi xed-term deposit accounts 11 3.5 Record-breaking profi ts from funds 12 3.6 New options in long-term saving 13 3.7 Electronic services make payments more effi cient 13 4. PERFORMANCE OF BANKS 14 4.1 Banks’ results dropped only slightly 14 4.2 Growth in credit losses slowed down 16 4.3 Capital adequacy and effi ciency of the banking sector improved 17 ANNEX Financial statements for 2009 and 2008 This survey was written by Tarja Kallonen, Head of Financial Research, with the graphs and layout designed by Johanna Mäkinen, Information Specialist, of the Federation of Finnish Financial Services. 1 Finnish banking in 2009 Federation of Finnish Financial Services 20 April 2010 1. Interesting year for the banking scene The economy showed fi rst signs of recovery already during 2009, despite the fact that Finland’s GDP fell by nearly 8%. Interest rates stayed at record-breaking low levels during the entire year, and all players in the fi nancial sector faced unusually challenging markets.
    [Show full text]
  • EBA CLEARING Shareholders Meeting Report of the Board 14 Th June 2011 Contents
    EBA CLEARING Shareholders Meeting Report of the Board 14 th June 2011 Contents 1. The Company’s activities in 2010 3 1.1 Introduction 3 1.2 EURO1/STEP1 Services 3 1.3 STEP2 Services 6 1.4 Operations of the Clearing Systems 10 1.5 Activities of Board Committees 12 1.6 Corporate matters 16 1.7 Financial situation 18 2. The Company’s activities in 2011 22 2.1 EURO1/STEP1 Services 22 2.2 STEP2 Services 25 2.3 Operations of the Clearing Systems 27 2.4 E-services 28 2.5 Other relevant matters of interest 29 Table of Appendices 30 Appendix 1: Changes in EURO1/STEP1 participation 30 Appendix 2: List of direct participants in EURO1/STEP1 33 Appendix 3: List of direct STEP2 participants 42 Appendix 4: Annual accounts for 20 10 54 layout: www. quadratpunkt.de photo credit: © Jean Schweitzer/Shutterstock.com 2 EBA CLEARING Shareholders Meeting 14 th June 2011 // Report of the Board 1. The Company’s activities in 2010 The period under report is 1 st January 2010 to 31 st December 2010. 1.1 Introduction Over the past year, EBA CLEARING continued to maintain and evolve its pan-European payment infrastructure in line with the needs and expectations of its shareholders and users. The Company closely coordinated all develop - ment and implementation activities with its users to ensure that the pace of change suited all parties involved. At the same time, EBA CLEARING continued to leverage its core competencies of operational robustness and strong cost management. The Company also strove to maintain the dynamism to underpin its core ongoing activities.
    [Show full text]