Fintech Risks and Opportunities New Mexico Bankers 2019 Lenders - PowerPoint PPT Presentation

Fintech Risks and Opportunities New Mexico Bankers – 2019 Lenders Conference Tyler Mondres Research Specialist Emerging Technologies

How Has Mobile Changed Banking?

How Has Mobile Changed Banking? What’s Changed What Hasn’t • Customer Expectations • The Business of Banking • Delivery Channel • Trust • Data

How Has Mobile Changed Banking? • Buying experience • Who owns the customer? • Today’s Playing Field Startups o Banks o BigTech o

Connected Strategy

The Buying Experience Latent Research Aware Decide Order Pay Receive Need Options

The Buying Experience

Connected Buying Experience Pre-empt Curate Automate Delivery Coach Latent Research Aware Decide Order Pay Receive Need Options

Build Better Products VS

Who Owns the Customer?

Tech Platforms Don’t Own Product

Customer Relationship Key Balance-sheet Provision Origination/Sales Lending 301 1,239 Current/checking account 526 131 Deposits 174 44 Transactions/payments 483 Asset management and insurance 577 Total revenues 2,075 (54%) 1,750 (46%) Total after-tax profits 436 (41%) 621 (59%) 6% ROE 22%

Deposits and Payments

Today’s Playing Field Startups Banks Big Tech

Building Launched “Round-Ups” and “Smart Stash” features to automate savings. (January 2019) Now users can hold up to 28 currencies in one “borderless” account, which comes with a debit card (January 2018)

Building Buying Launched “Round-Ups” and “Smart Stash” features to automate savings. (January 2019) Now users can hold up to 28 currencies in one “borderless” account, which comes with a debit card (January 2018)

Building Buying Partnering (Investments) Launched “Round-Ups” and “Smart Stash” features to (Lending) automate savings. (Insurance) (January 2019) Now users can hold up to 28 (Artificial Intelligence) currencies in one “borderless” account, which comes with a debit card (January 2018)

Fintech Startups Advantage Challenges • Nimble • Customer Acquisition • Focused • Competition • Slick UX • Trust Role: Partners or Fringe Players

Banks Banks that ignore fintech stand to lose… $15B …in revenue over the next 5 years Banks that invest have a revenue opportunity of $20B

JPMorgan Building & Partnering <4 mins to open an account 47mm active digital users Source: JPMorgan Chase Strategic Update (Feb. 27, 2018)

Consumer Platform Vision Borrow Save Spend Protect $3Billion Personal Savings Payments Life Loans Consumer Loans $20Billion Credit Wealth Checking Health Cards Mgmt. Marcus Deposits Acquired Clarity Money Offered by Goldman Sachs Mortgage Retire Potentially offered/distributed by Goldman Sachs 1 Auto 1 Subject to applicable law Source: Goldman Sachs Presentation to Bernstein Strategic Decisions Conference

Banks Advantage Challenges • Cust Relationships • Legacy Systems • Experience • Regulators • Trust • Need to manage risk Role: Financial Ecosystem

Banks as Ecosystems Fintech Fintech Banks Fintech Fintech

Big Tech

Messaging App 42 Million Users • First Week: 2 Million Clients • Now: 5 Million

Amazon’s Banking Entry Points Payments Small Business Loans $3B lent to small businesses on Amazon 100M users of Amazon Payments since 2011 Member Rewards Cash Deposits

Big Tech Advantage Challenges • Cust Relationships • Trust • Data • Motivation • $$$ Role: ???

Banks as Ecosystems Fintech Fintech Banks Fintech Fintech

Banks become a utility that powers new platforms Fintech Fintech Banks Fintech Fintech

Fintech Playbook Fintech Impact Strategic Vision Roadmap

$20.5B opportunity for CBs 52% ↑ Community Banks Operating Income $60.1B (2015 – 2020, $B) $5.7B $7.9B • Cloud computing • Core payments $6.9B $39.6B • Fintech as a service engine renewal • Advanced credit analytics • Robotics process • Video-based advisor • Customers analytics automation • Mobile imaging for staff • Robo-advisory • Blockchain • Mobile imaging for customers • Mobile wallets • Chatbots • PFM • Biometrics authentication • Real time low value • Voice recognition payments • APIs Operating income 2015 Channels Lines of Business Bank Platforms Operating income 2020 & Processes (after fintech adoption) Source: Accenture Research

Understanding Fintech Series NEW RESOURCE

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