Digital Banking and The Evolution of Fintech

Abe KararFounder, ALCHEMY DIGITAL SOLUTIONSAdvisor, FINTECH GALAXYJune 15th, 2019

2 Agenda

✓ Introduction

✓ Case Study: 200 Year-old Bank Goes Digital

✓ Shift in The Digital Banking Landscape

✓ Fintech Evolution

3 ALCHEMY Digital Solutions – Fintech, Innovation and Digital

Transformation in Financial Services

Digital Transformation experts with over 20 years of experience supporting Banks and Financial

institutions with their digital transformation journey.

PIONEERS IN DIGITAL

TRANSFORMATION

• Led Large-scale transformational

initiatives accelerating the

evolution of Financial Services

organizations to becoming

leading in digital

STRATEGIC

PARTNERSHIPS

• Strategic alliances with

leading Fintechs and

top specialized delivery

partners across the

industry

Specialized

Expertise

• Unapparelled combination of

business & technology

expertise

• Access to a diverse pool of

talented developers,

designers and business

leaders

4

The Vision

Global Fintech innovation platform that promotes financial

inclusion, empowers startups and supports institutions in their

digital transformation journey.

The Mission

✓ Offer the region the first of its kind Financial Innovation

Ecosystem, which is comprised of Innovation Crowdsourcing,

Galaxy Ventures and the innovation Vault, which in turn

consists of the Innovation Sandbox and Fintech Marketplace

✓ Facilitate and cultivate a culture of engagement, alignment

and collaboration between Fintechs, institutions and

investors

✓ Help institutions grow their business through industry-leading

digital capabilities, differentiated customer and employee

experience, and strong control framework

Fintech Galaxy – Integrated Fintech Innovation Ecosystem

Innovation

Achieve industry leading innovation benchmarks in the region, while delivering solutions that are valuable and meaningful to institutions and their end customers

Financial Value

Drive value and financial return for Fintechs, institutions and investors, through lower costs, higher productivity ratio and data driven decisions

Partnerships

Accelerate deployment of Fintech solutions by leveraging strategic partnerships with investors, institutions and Central Banks

Strategic Growth

Leverage consolidated MENA platform to expand strategically in select global markets, enabling global exposure and growth for our Fintechs

Policy Lobbying

Ensure consistent and robust understanding of regulatory policies and their nuances across the region, with focus on lobbying for policies that promote innovation

Strategic Priorities

5

Innovation

Crowdsourcing

Co

mm

un

ity

Innovation

Crowdsourcing

Ecosystem

Building

Fintech

Experts

FinX Event

& Awards

Innovation

Vault

Bu

sin

ess

Innovation

Sandbox

Fintech

Marketplace

Business

Development

Market

Insights

Galaxy

Ventures

Investm

en

ts

Investment

Insights

Investor

Match-Making

Start-up

Valuations

Equity

Funding

Vertically integrated connecting institutions and investors with startups

Fintech Galaxy – Integrated Fintech Innovation Ecosystem

6 The Innovation Vault – High-level View

FintechsInstitutions &

Investors

Marketplace Sandbox

Auto Provisioning Oversight

Monetization Engine Developer Portal

Innovation Vault

Case Study: 200 Year-old Bank Goes Digital

8

is one of North America’s largest financial institutions, offering a

highly diversified range of personal and commercial banking, wealth management and

investment banking products, services to more than 12 million customers and conducts

business through three operating groups: Personal and Commercial Banking, Wealth

Management, and BMO Capital Markets.

BMO Bank of Montreal - 200 Year-old Bank Goes Digital

Profile:

✓ Total Assets: $642B

✓ Number of Employees: 47,000 worldwide

✓ Number of Branches in Canada: 940

✓ Number of Branch Employees in Canada: 4,000

9

Industry Leading Customer & Employee Experience

Streamlined Processes Simplified Procedures Simplified Knowledge Repository Employee Idea Exchange

Customer Feedback Enterprise Reusability Process Metrics Workflow Automation

Capacity Creation

Sales and Service Optimization through enhanced

processes, simplified procedures and integrated

operating systems

1Cost Efficiency

Leverage digitized infrastructure to drive cost

efficiency across the value stream

2Control Framework

Incorporating technology enhancements into

oversight, management and control of risk

3

Human + Intuitive + One Bank

Digital Infrastructure

Customer Centric Culture

Great Experience Built on Brand Pillars and Digital Capabilities

10

*annually

The Current State – Paper Inefficiency

11 The Current State – Paper Inefficiency

12 The Personal Banking Paper Trail

13 The Personal Banking Paper Trail

14 The Personal Banking Paper Trail

15 The Personal Banking Paper Trail

16 The Personal Banking Paper Trail

17 The Personal Banking Paper Trail

18 The Path to Digital

Information Capture / Ingestion

DigitalRepository

Workflow

Identity/User Management

System integration

19 The Path to Digital

20

One BankHuman Intuitive

The Path to Digital

21

-92%

-66%

Account Opening Errors Dropping Dramatically

22 Success That Translates into Enterprise Business Value

23 Success That Translates into Enterprise Business Value

24 Success That Translates into Enterprise Business Value

25 Success That Translates into Enterprise Business Value

26

The 2017 Celent Model Bank

Award in the area of Process

Automation – For the most effective

deployment of technology to

automate business processes or

decision-making. BMO won amongst

150 nominations, a record since

2012.

Success That is Recognized by The Industry

The 2017 Most Innovative Digital

Business Model Award; recognizing

innovative use of technology-enabled

capabilities to highlight "Best-in-

class" financial industry initiatives

launched within the past 12 months

and to offer insight as to

developments in digital innovation.

The 2017 Xplor Application of the

Year Award. Recognized in Orlando

at Xploration® 17, Lutz, FL —

February 21, 2017 – Xplor

International, the Worldwide

Electronic Document Systems

Association.

27

Reimagine

End-to-End

Experience

Customers at The Core

Enterprise Technology Reusability

Rethink How We

Work

Use Common Currency

Key Success Factors …

Shifting The Digital Banking Landscape

29 There are 4 Primary Pillars of Digital Banking

BUSINESS

TRANSFORMATION

CUSTOMER VALUE

DIGITAL-FIRST PLATFORM

Digital Banking

Value Drivers

01.Omni

Banking

02.Modular

Banking

03.Open

Banking

04.Smart

Banking

Omni-Banking

Streamlined and optimized channels, offering with 360o customer view and superior

experiences any touchpoint in the customer journeys

Modular Banking

Composable architecture consisting of series reusable, container-style digital building

blocks, allowing speed, ease and flexibility of enabling/swapping functionalities as needed

Open Banking

API based platform enabling connectivity with both internal bank systems and external

third parties through open APIs, introducing new value-add products and services

Smart Banking

AI and Machine Learning collect, analyze and mine data, driving hyper-personalized

customer interactions, boosting digital sales and customer retention

30

✓ Tailored Advice

✓ Hyper-Personalized Experience

✓ Real-Time Support

✓ Financial Insights

✓ Factionless Interactions

One Size Does NOT Fit All! Hyper Personalization is in!

31 The Area of Opportunity

Nu

mb

er

of C

usto

me

rs

000,0

00’s

00,0

00’s

000,0

00,0

00’s

INFLECTION

POINT

F I N A N C I A L

S E R V I C E S 1.0

F I N A N C I A L

S E R V I C E S 2. 0

F I N A N C I A L

S E R V I C E S X.0

F I N A N C I A L

S E R V I C E S 3.0

Traditional : Evolution around

Core Banking

Core Banking

Re-invention

LifestyleData & Marketplace

Financial Services

Step change banking Revolution : its not about banking,

it’s about personal data.

AREA OF OPPORTUNITY

No Core Banking Technology

AI Driven Support

Built Around Personal Digital

Data

Open Banking Connectivity

Marketplace of Financial and

Non-Financial Products

Daily (Intraday) Processing

Act Like a Data Company

Creating Financial Services 3.0 Centered on the Customer , Data and Marketplaces, with enablers for Financial Services 4.0.

32 Deliver Bank 3.0; Prepare for Bank 4.0

Bank 0.0• Creation of lenders & depositors (2000 BC)• Customers went to the lender/ depositor• Banking is something customer has to go to• Trust established through accounting & security of funds

Bank 1.0• Movement of basic account details & transaction to self- service, e- channel• Banking something customer does.• Beginning of customer analytics & insights at scale• Trust established through self- service & transparency

Bank 2.0• Multi- channel and multi- product integration via e- channels• Evolution of self- service (more products, complexity)• Trust established through enhancement of Bank 1.0 functionality

Bank 3.0• Complete channel integration, seamless transition (Omnichannel)• Trust established through 24/7 access and KYC but from customers

advantage standpoint (not compliance)

Bank 4.0• Always there but never present”, integration of bank products into daily

(non FS) activities• Trust established through providing the right products, at the right time in a

way that facilitates experience and utility of products versus efficiency of delivery o f products)

The internet of everything (loE) is Driving the Next Big Evolution.

• Dial-up experience• Email Contact Center• Online Brochure• Databases• CRM

• Web-based account origination

• Online calculators and Bill pay

• Click to chat & call• Data warehouses• KYC

• Seamless experience• Full-Function

smartphone apps• Internal & hybrid

cloud• Click to video• Big data & analysis• 360 degree customer

view

• Digital bank, Digital branches

• Rich cross-channel collaboration & advice

• Omnichannel analytics(Structured & unstructured data)

• Market of One customer- certainty

• Intercloud

E-Banking

Multichannel Integration

Omnichannel

Internet of Everything

Digital Bank 1.0

Digital Bank 2.0

Digital Bank 3.0

Digital Bank 4.0

1998-2002 2015+2009-20142003-2008

Cust

omer

-Dri

ven

Inno

vati

on

33

Financial Institutions are actively

experimenting with how to reduce

friction for the purchase/

transaction experience, but this

is Bank 3.0 type thinking & action

There are limited cases of

removing friction completely and

embedding financial transactions

into the experience versus being

a standalone part of, step in, and

lateral part of the experience

Building on Banking 3.0 while enabling Banking 4.0

34 360º Digital Strategy is Critical to Success

(CGI Global 1000, 2016)

Evolution of Fintech

36

Finance TechnologyFintech

Technologies for banking, corporate finance, capital markets, financial

data analytics, payments and personal financial management

- Accenture/CB Insights

What is Fintech?

37 Technology is Disrupting All Industries; Banks and Financial Institutions are Not Immune

38

TALENT

• Attract: Ease of mobility and

visa policies for foreign talent

• Upskill: Development of talent

pipeline — university courses,

research and development

investment

• Retain: Policies and initiatives

that would reduce "brain drain"

REGULATIONS

• Fintech laws: Specific regulations and policies

• Overall regulatory environment: Ease of doing business,

credit availability, taxation policies, visa policies and presence

of regulatory sandboxes

• Competition: Encouragement of competition through policies

ENVIRONMENT

• Strong: Collaboration with

incumbents; accelerators,

incubators and co-working

spaces (public or corporate)

• Sealable: Ease of access to

local and international markets

• Sustainable: Government and

industry support for sustainable

development

DEMAND

• Consumers: Digital readiness:

mobile and Internet penetration

• Corporations: Demand from

enterprises, including small-

and medium-sized enterprises

(SMEs) and institutions

• Financial institutions:

Demand from financial

institutions

CAPITAL

• Risk capital: Angel funding,

government funds; ease of

raising capital from alternative

sources such as initial coin

offerings (ICOs)

• Growth capital: Access to VC

and government funds

• Strategic capital: Funding

from financial institutions, tech

firms, corporates and private

equity (PE) funds

The Fintech Ecosystem is Built on 5 Pillars

39 The 5 Fintech Trends to Watch out for

40

The Future of Financial Services, The World Economic Forum

Global Fintech is Transforming The Banking & Financial Landscape

41 Fintech Leverages Technology Among the Unbanked

42

Source: *Global Fintech Report Q3 2018 (CB Insights) **MENA Research Partners

**World Bank Report *** GSMA Report

STRUCTURAL FACTORS DRIVING FINTECH GROWTH

The region is also home to over

100 million people currently

under the age of 30**

in the Middle

East

Unbanked**

48%of men

65%of women

Among them …

86%of men

75%of women

Have a

mobile phone

The number of unique mobile

subscribers is expected to rise from

375 million in 2017 to

459 million by 2025***

Residents of the UAE have decreased their

use of cash by 25%

Digital payments are

35% more frequently used

67% believe credit and debit cards

will be replaced with more

innovative methods

believe people will

no longer carry cash72%

MENA Fintech Market Potential is Over $2 Billion

43

1 715

30

62

105

252

2002 2004 2006 2008 2010 2012 2014 2016F 2018F 2020F

THE NUMBER OF NEW FINTECH COMPANIES IS EXPLODING IN MENANew ventures in a wider range of sectors are increasingly entering the market

Cumulative number of fintech start-ups

Fintech Creation in the MENA Region is Reaching New Highs

44 2019 Fintech Unicorns

45 Fintech Eco-system

POS & PERSONAL LENDING

Abe KararFounder, ALCHEMY DIGITAL SOLUTIONSAdvisor, FINTECH GALAXY

abe.karar@alchemyds.ae(M) +971 545 77 88 99Dubai, United Arab Emirates

www.fintech-galaxy.com

Thank You!