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?

What’s Changed

• Customer Expectations
• Delivery Channel
• Data

What Hasn’t

• The Business
• f Banking
• Trust

How Has Mobile Changed Banking?

• Buying experience
• Who owns the customer?
• Today’s Playing Field
• Startups
• Banks
• BigTech

How Has Mobile Changed Banking?

Connected Strategy

The Buying Experience

Latent Need Aware Research Options Decide Order Pay Receive

The Buying Experience

Connected Buying Experience

Latent Need Aware Research Options Decide Order Pay Receive

Automate Delivery Curate Coach Pre-empt

Build Better Products

VS

Who Owns the Customer?

Tech Platforms Don’t Own Product

Customer Relationship Key

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

Deposits and Payments

Today’s Playing Field

Startups Banks Big Tech

Building

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

(January 2019) (January 2018)

Building Buying

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

(January 2019) (January 2018)

Building Buying Partnering

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

(Lending) (Insurance) (Artificial Intelligence) (January 2019) (January 2018) (Investments)

Fintech Startups

Advantage

• Nimble
• Focused
• Slick UX

Challenges

• Customer Acquisition
• Competition
• Trust

Role: Partners or Fringe Players

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

Banks

<4 mins

to open an account

47mm

active digital users

JPMorgan Building & Partnering

Source: JPMorgan Chase Strategic Update (Feb. 27, 2018)

Consumer Platform Vision

Borrow Spend Protect Save

Source: Goldman Sachs Presentation to Bernstein Strategic Decisions Conference

Offered by Goldman Sachs Potentially offered/distributed by Goldman Sachs1

Personal Loans Savings Wealth Mgmt. Retire Credit Cards Mortgage Auto Life Health Payments Checking Consumer Loans

$3Billion $20Billion

Acquired Clarity Money Marcus Deposits

Banks

Advantage

• Cust Relationships
• Experience
• Trust

Challenges

• Legacy Systems
• Regulators
• Need to manage risk

Role: Financial Ecosystem

Banks

Fintech Fintech Fintech Fintech

Banks as Ecosystems

Big Tech

Messaging App 42 Million Users

• First Week:

2 Million Clients

• Now: 5 Million

Amazon’s Banking Entry Points

Payments Small Business Loans Cash Deposits Member Rewards

100M users of Amazon Payments $3B lent to small businesses on Amazon since 2011

Big Tech

Advantage

• Cust Relationships
• Data
• $$$

Challenges

• Trust
• Motivation

Role: ???

Banks

Fintech Fintech Fintech Fintech

Banks as Ecosystems

Banks

Fintech Fintech Fintech Fintech

Banks become a utility that powers new platforms

Fintech Playbook

Fintech Impact Strategic Vision Roadmap

$20.5B opportunity for CBs

$39.6B $60.1B

Bank Platforms & Processes

$5.7B

Operating income 2020 (after fintech adoption) Lines of Business

$7.9B

Channels

$6.9B

Operating income 2015

• Video-based advisor
• Mobile imaging for staff
• Mobile imaging for customers
• Chatbots
• Biometrics authentication
• Voice recognition
• APIs
• Fintech as a service
• Advanced credit analytics
• Customers analytics
• Robo-advisory
• Mobile wallets
• PFM
• Real time low value

payments

• Cloud computing
• Core payments

engine renewal

• Robotics process

automation

• Blockchain

Source: Accenture Research

Community Banks Operating Income (2015 – 2020, $B)

52%↑

Understanding Fintech Series

NEW RESOURCE

ABA.com/Fintech

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Questions?