Deloitte Link n’ Learn 2017: Digital Landscape in the IM Industry

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A new model for a new age

T H E C R E A T I V E D I G I T A L C O N S U L T A N C Y

Backed by the power of Deloitte, we’re transforming the digital journey in ways

an agency or traditional consultancy cannot.

is an award winning creative digital consultancy combining:

Strategy, Innovation & Design

Creative

Technology Delivery & Operation

Change

Insights from Data

Agile, Fast, Ambitious

Now leaders across client organisations can come to one place to have their ambitions brought to life.

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We imagine, design, build and run the future.

Look forward, explore

broadly

Iterative concept refinement,

prototyping, and planning

From concept to

reality

Agile operations to create

business impact

Successfully evolving is the difference between failing or flourishing in the digital age, and our foundational philosophy to digital transformation underpins all of our client service.

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A fresh start and

perspective

Powered by Deloitte, we can bring the breadth and depth of skills needed to take you from

idea through to implementation.

T H E C R E A T I V E D I G I T A L C O N S U L T A N C Y

Leading consultancy

Innovation agency

Mobile strategy & design agency

Proposition design agency

Full Service Advertising Agency

Creative & Advertising Agency

We’re a creative digital consultancy with a diverse and deep set of specialist

capabilities, suffused with creativity and a design led approach to solving

problems. We believe in designing everything, but we speak business too. And

we know technology.

Built upon the strengths and resources of our larger firm, Deloitte Digital was born

out of years of investment in emerging technologies, creative, commerce, web,

mobile, and customer solutions.

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We have a special relationship with Apple.

Tim Cook, CEO, Apple

“Deloitte, the world leader in digital strategy,

and Apple, the world leader in mobile

experience, are joining forces to accelerate

enterprise transformation”.

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Technology, behavioural trends and new entrants are accelerating the rate of change

The industry isbecoming more open

Technology haschanged the art of possible

Customer expectations have

been reset

Barriers to entry continue to fall

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7x more productive

Our research has identified the ‘8 traits’ of a digital business and has shown us that digital businesses are:

Competition is changing, digital businesses are different

Think exponentially

Create agile execution

Acquire capabilities to catalyse the

culture

Protect the people

Customer first

New ideas to solve old industry

problems

Design thinking

Focus on value

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5

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8

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DRAFT FOR

DISCUSSION

2015As at May 2017• +250k customers

• +£250m transaction value

Since January 2017• Ave. 5% weekly growth in

customers

• Ave. 7% weekly growth in

transaction volumes

Ambition to “change the way people

think about their money” and in the

longer-term aim: “to be a platform or

marketplace that gives people visibility

and control of all of their money,

whichever providers they use”.

Founded in

2015As at May 2017• 30% month-on-month application

growth

• £4bn value of sign ups

• +40% ave. mortgage size vs. national

ave.

• 9.5 Trust pilot rating

Founded in

2015As at July 2017• +740k customers

• +2.4k new customers per day

• +29m transactions

• £4bn transaction value

Founded in

User growth Transaction

volume

Users Avg. new users per day Transactions Total volume

741,920 2,400 29,292,662 $4,272,876,209

Jul 2015 Jul 2017 Jul 2015 Jul 2017

New proposition, competitors and possibilities are emerging across Financial Services

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If they can buy everything else with a few taps, why should financial services be different?

Customers aren’t just comparing our clients to other financial service providers

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DigitalisedAdvice begins to be digitalised

DeceptiveA lot of hype but incumbents ignore it

Disruptive Well funded players invest in Digital Advice and combine with human advice.

Demonetising Advice is free, like an app on you smartphone

DematerialisingAdd on big data, predictive & algorithmic analytics, etc.

DemocratisingAutomated advice is available to everyone

1 2 3 4 5 6

Digital Advice is here today

Looking at the impact of technology on advice

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Platforms will think with us and do

things on our behalf.

Value will take new and varied

forms.Products and services will be

commoditised and aggregated.

The industry will become more

meaningfully customer-centric.

What it means…

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CustomerExperience

DigitalTransformation

Employee Experience(e.g. Distribution)

Customer Journey Design

Insight driven

Solutions

Developing new D2C

Propositions

Digitising Financial Advice

SFDC driven transformati

on

Re-engineering Distribution

Analytics

There are multiple dimensions to digital in Investment Management & Wealth

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“Day in the Life of” VignettesFunctional and Data Journeys and Designs Accelerator

CONFIDENTIAL

Retail and Institutional CRM capability maps

Retail and Institutional Sales and Marketing Journeys (Vignettes)

Live accelerator solution with foundational and aspirational

capabilities (e.g., AI and data analytics)

Experience and Accelerators for disparate global 3rd party data sources

Foundational design wireframes for core capabilities (e.g., opportunity

management)

The Asset Management Toolkit bring leading practice insight and accelerates time to deliver from strategy to execution

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BriefThe Deloitte team were engaged to architect a global CRM platform to support sales and marketing teams across Retail and Institutional business lines. A key driver of the solution was to enable strategic collaboration on shared clients and promote superior client engagement.

Solution• Over 200+ design workshops were conducted with business

leaders and SMEs to ensure local, regional & global requirements were surfaced.

• The solution was built using Salesforce Lightning technology providing a dynamic user experience on mobile and desktop.

• 3rd party data sources were integrated to create a 360 degree view of the client and enable data driven sales prioritisation.

• Global client and contact masters now reside in an MDM backbone for improved data quality.

ResultsThe programme was transformational in nature, bringing together eight business lines with 500+ users across 30+ countries, enabling collaboration for the first time on a global platform; accelerating the client’s ambitions to be a globally agile organisation across business and IT.

Mobile Collaboration Innovation

Global Asset Manager

An initiative to Transform Global Distribution Capabilities and Increase Sales Effectiveness

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We are currently working with a Zurich to design, build and launch a new consumer business.

They are building a business that will engage people in the hard financial stuff that their lifestyles will rely on. A business that has been designed from direct customer insight. A business that is built for the digital age. A business that moves them from being a behind-the-scenes player, to an organisation that works directly with their customers.

We’re enabling this business with a technology platform that integrates big data management with leading digital and CRM technologies.

We’ve implemented a new technology ecosystem to enable this digital engagement and to provide omni-channel service for customers that need support.

The primary digital experience is delivered over the web. We’ve implemented a new customer relationship management (CRM) suite to deliver customer-centric service across channels. Underpinning all of this is the Data Lake to combine customer and policy data from six disparate books of business.

Moving from vision to trading rapidly, we’ve taken a user-centred design approach to keep the customer needs at the heart of decision making as we’ve designed the proposition and made priority calls. We’ve combined this with agile delivery methods and created a development factory to deliver rapidly across multiple releases in parallel.

Importantly, we’ve been key to helping Zurich develop and embed a new culture based working practices they’ll use to take this business forward.

Zurich – FUTUREyou

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Aegon’s vision was to create a digital channel to provide customers with a simple, reassuring and engaging experience around their retirement planning. They approached Deloitte to help them design and build a digital service that would not only help users understand what kind of lifestyle their financial retirement goals could afford them, but also offer suggested actions to help customers achieve those goals.

Drawing on our experience and expertise across our digital, customer, technology and operations practices, we created an integrated suite of tools to allow Aegon customers to make informed lifestyle choices and improve their retirement-readiness.

The new service has positioned Aegon as leaders in the industry. Aegon has opened up its customer base to digitally native consumers by helping them plan, track, and work towards their retirement goals much earlier in life.

The ways of working, including the approaches we introduced for managing user centric design and agile delivery, were adopted by Aegon for the ongoing delivery and further projects.

AEGON - Retiready

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A ‘Private Banking new fund’ campaign is triggered.

“I receive product investment details that are appropriate to my organisation – and I view

these on my preferred digital channel.

When I call the company, I am always routed to the right person and they already know

my needs and wants.”

- Peter, Head of Research

I

II III

IV

Identify Client • Peter is progressed through the ‘client

review process’ in the CRM system

• His account is classed in the ‘VIP’ category

Personalised Landing Page

• Peter logs on to the Institutional site and tracks a new fund within his ‘My Fund Centre’ dashboard

• Content on Peter’s landing pages is personalised using search history

Keeping Peter Engaged• Content on Peter’s landing pages is refined to show

fund benefits and an email is triggered highlighting the latest articles from the fund manager

• Peter’s relationship manager is also notified of this activity

A Responsive Relationship• As a result of the article, Peter rings the IM firm and is

automatically routed to his relationship manager.

• The relationship manager sees all of Peter’s information and recent activity in real-time, and has a prompt for the next best action

A best in class journey satisfies the “needs and wants” of key individuals within a client (e.g. wealth firm)

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•Standardised reports and templates

provide flexibility and support mass

customisation

•Single trusted source for Client and

investment data, and effective

governance in place to mitigate risk

•Streamlined and consistent data based on

multiple sources with a follow the sun

model

•Core / differentiating capabilities may

be provided from locations with spans of

control to deliver expected Client service/

quality

•Transactional, commoditised services may be

centralised/ provided at lowest possible cost

•Clear definition of the reporting lifecycle that

minimises exceptions

•Data strategy / architecture that is aligned with

the future state Client service vision

•Technology architecture that is efficient, fully

utilised, flexible and built for future growth

• Integrated technology solution set that positions

for future needs and other digital capabilities

(e.g. Factsheets)

Standardised Reporting Package1

Consistent Data Sources4

Clearly Defined Workflow 2

Integrated Tools / Technology 3

CLIENT EXPERIENCE

DRIVERS

Quick and efficient response to Client requests and questions

Segmented engagement model, tailored to different Client types (e.g. Investment consultants)

Reporting driven by Client preference by channel, combination of “push & pull”, consolidated reporting

Desired Customer Experience

Client Reporting – an emerging theme in our clients

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Deloitte recently completed a report focused on the huge wave of technology disruption which is heading towards the Asset Servicing industry today

“Disruptive” technologies look set to have a profound impact on the Asset Servicing industry with the capability to automate, re-engineer or replace many of the standard, repeatable processes undertaken today

Deloitte have examined and assessed three of the more prevalent technologies which we believe will have the biggest impact for our clients in the Asset Servicing industry:

Robotic Process Automation (RPA)

Cognitive Technology

Blockchain

In our report we describe where these impacts may be felt most, and outline actions that asset servicers

can take to ensure they can ride the wave of technology disruption without being consumed under it!

Background to the report

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Product

management &

marketing

New generation of investors

Technological innovations

Data surge

Stay in control (do it yourself)

Tailored & multi channel advice

Peers and social networks

Digital front-end

Downside protection, hedging

Yield and service of WM clients

Socially responsible investing

Blockchain

Robo-advisor

Robotic process automation

Machine learning

Digital payments

Digital platforms

P2P lending

Growing quantity sources and data

Need for powerful data processing

Allow for real-time information

Shifting mix of required analytical

capabilities

- Algorithmic

- Predictive

Now

GDPR

AMLD IV

IMR

PRIIPS

Solvency II

MIFID II …..

Complex and evolving regulatory landscape

Order

processing

Post trade

servicing

Tomorrow

Shared ledger

Smart contracts

Online payment

Cybersecurity

Regulation and cybersecurity

Fund

distribution

value chain

Mega Trends impacting investment management

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Data

Mobile

Social

Cloud

New core

Bioscience, energy &

materials

Mega trend categories

Technological innovation is resulting in an array of new capabilities & possibilities. The largest impact on business models will comes from multiple related innovations

Technology innovations

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Approximately 200,000 people worldwide in asset servicing today

Many providers are still constrained by the legacy of acquisitions, poor integration, multiple technology platforms, and a high level of customised manual activity

Some of the technology platforms still in use date back twenty years or more!

Investment managers and asset servicers still receive tens of millions of instructions by fax, and cut thousands of cheques every year

Investment management and service providers continue to perform manual, repeatable tasks

The value of assets under management have been rising over the past two years

However the market hasn’t always been able to keep expenses under control which are on the rise again

While technology has evolved, the industry has failed to keep pace

New technologies can replace back and middle office repetitive, manual and cost-inefficient processes, with improved process automation - delivered on a continuous basis

The Asset Servicing Industry today

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Robotics is the use of software to replicate the actions of a human user interacting with applications

It’s cross-functional and cross application software, agile and non-invasive, works with existing IT architecture

RPA could replace much of the manual work involved in processes such as transaction processing, reconciliation and reporting

The average cost savings expected is between 30-40%, with growth absorption / capacity creation of between 50-70% ……

There are also non-financial benefits too – RPA is designed to be more predictable, consistent and less prone to errors therefore reducing operational risk

Whether this is a threat or an opportunity for low cost offshore service providers remains to be seen

Regulatory reporting

Client on-boarding

Client reporting

NAV dissemination

Account maintenance

NAV reconciliations

Position reconciliations

Robotic Process Automation

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Comprises several areas including natural language processing, computer vision, speech recognition, OCR, ICR

More often deployed in conjunction with RPA

More advanced than bots - mimic human judgement in its ability to recognise handwriting, identify images and use natural language processing to interpret information. Machine learning capability allows these tools to improve over time

Today, investment management firms use intelligent automation to review and analyse portfolio data, documentation and contracts to determine meaningful metrics and generate natural language reports for their clients and stakeholders

Assets under management by robo-advisers are estimated to increase 68 percent annually to about $2.2 Trillion in five years

55% of Investment Managers recently surveyed said Robo and AI technologies will have the greatest impact on their business

Cognitive Technology

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The World Economic Forum has forecast that by 2025 at least 10% of global GDP will be stored on Blockchain platforms

A highly secure, tamper proof, shared online ledger enabling the exchange of value, storage of data and usage of smart contracts with no third party involvement

Typically contains a validated list of digital assets and instruction statements such as transactions made, their amounts and the details of the parties to those transactions

Focus beginning to narrow down e.g. KYC, distribution and regulatory reporting

Risk and performance

Trade and cash

management

Fund accounting

Investment manager and

servicer

Global custody

Depository

Transfer Agency and

Fund distribution

solutionsImpact of Blockchain

Highly affected

Affected

Reality Check!• Traditional technology is not redundant or obsolete• You will still need to integrate data from other systems

Blockchain

It is expected that Blockchain will result in an industry that looks very different 5-10 years on from now

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Most likely outcome is whereby the industry will be disrupted, but will not disintegrate entirely

However, in order to capitalise on the upward growth trend and increase profits, asset servicers will need to invest in new technology to meet the need of their evolving client base

Possible Outcomes

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Regulations Digitalisation Innovation

The Rise of RegTech

Now is the right time to start exploring the existing opportunities offered by RegTech to become more effective, more efficient and possibly gain competitive advantage

RegTech is a subset of FinTech that focuses on technologies that facilitate the delivery of

regulatory requirements more efficiently and effectively than existing capabilities.

Key drivers

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Account Management

Transaction Processing

Cash Management

Client & Regulatory reporting

Distribution Back-Office

Distribution Support

Main compliance

aspects

• Contractual consent• Identification and

trust service • KYC• AML and sanctions

screening • Data protection • Data privacy• Data security• Data segregation• Record keeping• Customer protection• Investor’s eligibility

• Arrangements with counterparties

• Performance review & supervision

• Record keeping

• Market access rights• Contractual

disclaimers• Data privacy• Internal monitoring

and compliance• Record keeping• Cyber fraud• Pre-contractual

information• Marketing materials/

website contents

• Data confidentiality• Accounts segregation• Safekeeping

requirements• AML / KYT (Know Your

Transaction)• Cyber fraud• Failed trades• Due diligences

• Asset segregation• AML screening• Safekeeping

requirements• Trust service• Cyber fraud• Contractual

settlement

• Adequacy• Timing• Content & format• Data protection• Data privacy• Supervision• Record keeping• Regulatory compliance• Cyber fraud

Regulatory developments

Contract law

E-identity and trust services regulation (EU 910/2014)

PSD II

PRIIPS

Contract law

MiFID II

General Data Protection Regulation (2016/679)

Consumer Rights legislation

UCITS V

AIFMD

AMLD IV

Professional secrecy regulations

Illustration: EU regulatory framework governing IM shareholder services

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Typical Activities

Fintech / Regtech Solutions

Fintech RegTechExamples

• AML/KYC • Cyber security • Fraud, Forensics • Data privacy • Fund marketing compliance

• AML/KYC

• Website • Client solutions • Shareholders communication

• Client relationship

• Account opening• Account & register

maintenance

• Orders routing• Settlement• Safekeeping

• Cash management• Cash account

maintenance• Reconciliation• Claims chasing

• Specific reporting• KIID, Factsheet• Fund registration &

notification

• Distribution agreements• Trailer fees management• Payment

• Market intelligence• Tax support• Regulatory watch and

intelligence• Fund setup assistance

Direct to customer distribution channel

Automation Cash Transactions

Currency Payment & Settlement

Transaction Reporting tools

Direct to customer distribution channel

Robot Process Automation for Back office activities

Automation of fund setup activities

eArchiving& Doc Mgt

Fund Performance tool(Shadow NAV, etc.)

Automated order aggregation

Analytics for Risk Mgt

Cloud basedReconciliation tool

Regulatory Reporting tools

Regulatory Reporting tools

Regulatory Watch

Activity monitoring

eArchiving& Doc Mgt

Direct to customer distribution channel

AML/KYCeArchiving& Doc Mgt

Analytics forRisk Mgt

Website & Portal

Use of Social Media (Big Data)

On demand Reports

AutomationAccount Op

Security/eID eID/Data encryption

eMoney/Bitcoin

eArchiving

Illustration: New solutions are emerging within the shareholder services value chain

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RegTechUnvierse

Transaction

MonitoringCompliance

ReportingIdentity

management and control

Risk Management

Identity management

Identity controls

Scenario modellingand forecasting

Risk reporting

Risk exposure computation

Reporting solutions

Regulatory watch and online library

Project Management

Health check

Web due diligence and security

Transaction monitoring and auditing systen

The RegTech universe is expanding

150 RegTech companies in the known universe

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13% 5%

4-10 years 10-20 years 20+ years

52% 30%

0-3 years

The RegTech universe is expanding

Years since inception

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32%43% 17%

8%

1 – 10 Employees 11 – 50 Employees 51 – 200 Employees 201 – 1000 Employees

The RegTech universe is expanding

Number of Employees

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RegtechUnvierse

Transaction

Monitoring

Compliance

ReportingIdentity

management and control

Risk Management

Identity management

Identity controls

Scenario modellingand forecasting

Risk reporting

Risk exposure computation

Reporting solutions

Regulatory watch and online library

Project Management

Health check

Web due diligence and security

Transaction monitoring and auditing systen

The rise of RegTech

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Initial selection

Risk Based Approach

Ongoing monitoring

KPIs

Reporting

Know Your Distributor (KYD) D2D2 (“Digitial Distributor Due Diligence”)

• Transmission of the DDQs to distributors• Address possible questions from distributors

as they seek for guidance• Chasing distributors in case of delay /

missing data • Assistance with “open-questions” which may

not be answered in an automated way by the tool (by allocating an initial rating, for final review)

• Provision of a Regulatory Watch on relevant matters

• Address “ad-hoc” questions as to how to update / re-structure the DDQ if need arises (e.g. following a regulatory development)

• Provision of status reporting

The rise of RegTech

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Kaleidoscope - Regulatory watch solution

Enabling Board of Directors and Executives to anticipate their challenges and opportunities• Web based repository• Compiling public and private information, i.e.

regulatory topics, heatmaps, alerts, dashboard for each topic in scope

• Selected alerts and analysis• After any regulatory event relevant to your business,

Deloitte produces a synthetic or detailed alert with key impacts analysis at function/department/country level.

• Single point of contact with Deloitte• Periodical meetings Q&A repository• Regulatory Dashboard• After any regulatory event relevant to your business,

Deloitte compiles information in the dashboard: business scope, geographical scope, deadline, status, etc.

• Privileged access to regulatory experts and services on all Financial Services Industry hot topics

• Preferential access to Deloitte subject matter expert resources as well as advisory and consulting services (timing and rates)

• Heatmaps for Board of Directors meetings• Business risks are summarised in maps based on the

timing and importance of regulatory impacts

Addressing the challenge of identifying relevant regulatory updates

The rise of RegTech

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