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1 DIGITAL BANKING The Roadmap to 2020

1. Digital Banking Megatrends

1.1 Digital Commerce: An Introduction ............................................... 4

1.1.1 Market Segmentation.................................................................... 4

Figure 1.1: Digital Commerce Market Segmentation ............................................. 4

1.1.2 The Rise of eCommerce ............................................................... 4

1.2 .The Digital Banking Sector Today................................................. 5

1.2.1 Mobile & Online Banking Adoption ............................................. 5

Table 1.2: Banked, Mobile & Online Banked Individuals Split by 8 Key Regions: 2013-2014 ............................................................................................................ 5

Figure 1.3: Banked, Mobile & Online Banked Individuals YoY Growth Rate (%) ... 6

1.2.2 Omnichannel Banking Era Begins .............................................. 6

Figure 1.4: Example of an Omnichannel Banking Experience ............................... 6

i. Mobile – The New Branch .................................................................................. 7

Figure 1.5: Number of Bank Branches in the UK, 1990-2018e .............................. 7

1.2.3 Banking Services: Beyond Mobile, Towards Wearables .......... 7

Figure 1.6: Digital Banking Service Expansion ...................................................... 8

1.2.4 Mobile Phone Apps Becoming the Primary Channel to Bank .. 9

Figure 1.7: Top 5 Financial Apps on App Store & Google Play, UK & US Markets – September 2015 ................................................................................................ 9

Figure 1.8: UK Mobile Banking App Logins vs Internet Banking Logins (m) 2012-2014 ..................................................................................................................... 9

Figure 1.9: Users who Access App-based MBIS as a Proportion of Mobile Banking Users 2013 vs 2015 .............................................................................. 10

1.2.5 Mobile Wallets Exceed Banked Accounts ................................ 10

Figure 1.10: Mobile Money Account vs Banking Penetration, Selected Markets, 2014 (%) ............................................................................................................ 11

1.2.6 Financial Institutions Embrace Blockchain Technology ........ 11

i. Opportunities Beyond Payment ....................................................................... 12

Figure 1.11: Payment System Layers ................................................................ 12

1.2.7 The Branchless Banking Strategy ............................................ 12

Table 1.12: Branchless Mobile Banking Advantages for Developing and Developed Markets ............................................................................................ 13

1.3 Juniper Roadmapping – Digital Banking Trends ....................... 15

Figure 1.13: Juniper Roadmapping of Digital Banking Trends – Now, Near Future & Far Future....................................................................................................... 15

2. Juniper Leaderboard & Industry Influencers

2.1 Introduction .................................................................................... 18

2.2 Vendor Analysis ............................................................................ 18

2.2.1 Vendor Assessment Criteria ..................................................... 18

Table 2.1: Key Vendor Capability Assessment Criteria ....................................... 19

2.3 Limitations and Interpretation ...................................................... 20

2.3.1 New Positioning Matrix Results ................................................ 20

Figure 2.2: Juniper Leaderboard - Mobile & Online Banking Vendor Positioning 2015 .................................................................................................................. 21

Figure 2.3: Mobile & Online Banking Vendor Scoring - 2015 .............................. 22

2.3.2 Vendor Groupings ...................................................................... 23

i. Summary ........................................................................................................ 23

ii. Established Leaders ....................................................................................... 23

iii. Leading Challengers ...................................................................................... 23

Contents


iv. Disruptors & Emulators .................................................................................. 24

2.4 Mobile & Online Banking: Industry Movers & Shakers .............. 25

3. Digital Banking Market Forecasts: Mobile, Online & Wearable

3.1 Digital Banking: Market Forecast Summary................................ 28

Figure & Table 3.1: Mobile and Online Banking Service Adoption Comparison (m) 2015-2020 .......................................................................................................... 28

3.2 Market Forecasts: Online PC Banking ......................................... 29

3.2.1 Online Banking Addressable Market: Number of Banked Individuals ............................................................................................ 29

Figure & Table 3.2: Total Number of Banked Individuals (m) Split by 8 Key Regions 2015-2020 ............................................................................................ 29

3.2.2 Number of Online Banking Users, PC-based Only .................. 30

Figure & Table 3.3: Total Number of Online Banking Users, PC-based Only (m), Split by 8 Key Regions 2015-2020 ...................................................................... 30

3.3 Market Forecasts: Mobile Banking ............................................... 31

3.3.1 Number of Mobile Banking Users ............................................. 31

Figure & Table 3.4: Number of Mobile Banking Users, Split by 8 Key Regions 2015 vs 2020 ...................................................................................................... 32

3.4 Market Forecasts: Smartwatch Banking...................................... 33

3.4.1 WBIS – Smartwatch User Forecast ........................................... 33

Figure 3.5: Smartwatch Users (m) Accessing App-based Wearable Banking Information Services (WBIS), Selected Markets 2020 ......................................... 33

1. Digital Banking Megatrends

DIGITAL BANKING

The Roadmap to 2020


1.1 Digital Commerce: An Introduction

1.1.1 Market Segmentation

Juniper Research segments the overall digital commerce market into retail,

payments and banking and their principal respective sub-segments.

Figure 1.1: Digital Commerce Market Segmentation

Source: Juniper Research

It is important to appreciate that these segments are not mutually

exclusive and necessarily intersect one other to varying extents;

boundaries between the segments are not always black and white in the

reality of the marketplace and services delivered.

1.1.2 The Rise of eCommerce

eCommerce has been dominated by banking and retail services, with retail

driving its early adoption. Retail services include both physical goods and

digital goods; the latter is a diverse category of paid-for content that

includes music downloads, ticketing, games and infotainment services

amongst others.


Over the past decade, eRetail has accelerated to the point

whereby, in 2014, online payments for physical goods

purchases totalled approximately $1.46 trillion, while sales

of digital goods and services generated a further $883

billion (of which mobile and online ticket sales accounted

for nearly 90%).

By 2013, China had become the largest single country in

terms of physical goods sales, surpassing the US and,

in 2014, it extended its lead with annual growth of nearly

50%. Much of China’s growth can be attributed to the

surge in mCommerce, which accounted for around 36%

of sales by value.

The leading 3 markets (China, US and Japan)

accounted for 61% of total sales between them.

In terms of digital goods sales, however, the US retains

the ascendancy, accounting for $304 billion in sales, or

34% of the global market, due both to far higher eTicket

transaction volumes than other territories and to

leadership in markets such as streamed video content.

1.2 .The Digital Banking Sector Today

1.2.1 Mobile & Online Banking Adoption

The following figure shows our estimates of the banked,

mobile and online population at the end of 2013 and 2014

for our 8 world regions, using input from a number of sources and historical data.

Table 1.2: Banked, Mobile & Online Banked Individuals Split by 8 Key Regions: 2013-2014

2013 2014

Online Mobile Banked Online Mobile Banked

North America 163.4 84.3 265.5 174.2 114.6 268.5

Latin America 64.9 40.1 204.2 79.0 49.5 234.4

West Europe 202.2 87.9 318.5 213.6 119.3 321.6

Central & East Europe 80.6 24.2 175.1 96.7 44.0 191.0

Far East & China 783.3 295.5 1001.3 816.4 353.7 1037.3

Indian Subcontinent 37.8 33.9 446.2 47.2 51.8 505.8

Rest of Asia Pacific 53.5 30.2 169.8 64.2 35.9 194.0

Africa & Middle East 33.1 25.7 340.7 39.7 33.2 381.4

Global 1,418.9 621.9 2,921.5 1,530.9 802.2 3,134.1


The above table highlights that while the number of banked individuals globally grew by 6% to

reach 3.1 billion in 2014, online banked individuals (via PCs) showed a growth rate of 8% to

reach over 1.5 billion.

Unsurprisingly, mobile banking users grew the most, at a growth rate of 29%, reaching just

over 800 million in 2014, compared to 620 million in 2013.


Figure 1.3: Banked, Mobile & Online Banked Individuals YoY Growth Rate (%)


This growth in mobile banking in particular, has been

confirmed by many of the banking vendors and FIs. A

recent survey by ING noted that mobile banking is

changing the way consumers manage their finances. It

said that ‘while 48% of European bankers felt in more

control of their finances, 20% noted that it enabled them to

pay bills online on time.’i

1.2.2 Omnichannel Banking Era Begins

Banking in the retail space has evolved over the years to become cross- and multi-channel.

However, the focus is currently on enabling an omnichannel banking strategy by providing a

seamless and integrated experience across multiple individual channels.

Figure 1.4: Example of an Omnichannel Banking Experience


While in a retail environment, an omnichannel approach offers a seamless experience across

shopping online or in-store, in a banking environment it provides a consistent and closer

experience across online, mobile and in-branch channels to the user.

However, while most consumers, especially in developed markets, prefer digital banking and

virtual channels, a good proportion of consumers still prefer an in-branch session compared to

an audio or video call with the customer contact centre. As Robert Watts from the BBA (British

Bankers Association) noted: ‘Technology is not for everyone. We all know people who are

reluctant to email, let alone join Facebook or take to Twitter. Banks want to serve their

customers and understand that not everyone wants to harness apps or other digital services.’ ii

Research products or services – Conducted via

PC/Laptop or Mobile Device

Personal advice or 1:1 session – In a local branch or via video

contact centres

Application or registration – Conducted via

PC/Laptop or Mobile Device orIn-branch

Confirmation – Received via Post, Email, Text or

Call

Monthly payments, reminders, alert set up –

Conducted via Mobile Device (including

wearables) or PC/Laptop

Customer Service – Help and assistance via

Phone, Mobile Device or PC/Laptop


Sophie Guibaud from Fidor Bank observed: ‘We believe that omnichannel

banking is the best way forward, where people have access to a variety of

methods and options to manage their finances, not just one.’ 1

i. Mobile – The New Branch

Juniper notes while this continued to be the case in the past 12 months, it

will change as banks finalise a ‘balancing act’ between multiple channels.

This is more likely to be centred on the mobile device as banks move to a

‘mobile first’ approach, a trend supported by the scale of declining

workforces and the number of physical branches.

One of our interviewees has suggested that this business model, initially

presented as an additional channel to customers to offer more

convenience, has evolved over the years to become a new ‘banking

philosophy’.

This has been confirmed by the decreasing number of branch visits by

consumers and also the closure of physical bank branches over the past

12-24 months.

In the US, for example, Bank of America’s branch network has declined by

10% over the past 2 years; it had 5,328 US branches in 2013 and this has

steadily declined every quarter to 4,789 by the end of Q2 2015.

Meanwhile, JP Morgan Chase noted a decline by 2% over the past year to

5,504 branches (as of July 2015). In the UK, McKinsey noted that as many

as 2,400 bank branches could close over the next 5 years, with a total of

2,000 already having shut over the past 5 years.

1 Juniper interviewed Sophie Guibaud, VP of European Expansion, at Fidor Bank, October 2015

Figure 1.5: Number of Bank Branches in the UK, 1990-2018e

Source: Juniper Research; 2015-2018 are estimated.

1.2.3 Banking Services: Beyond Mobile, Towards Wearables

As a result of the continued and accelerated proliferation of smartphones

and the deployment of tablets, digital banking has experienced a

substantial progression towards personalised computing via smartphones

and tablets.


A number of innovative banks are fully exploit the ubiquity of SMS by

expanding the scope of their existing message-based banking functions

beyond simply checking or current accounts.

This includes messaging associated with other financial services such as

issuing credit or debit cards, loans, mortgages, investments, stocks and

intra-border or inter-border remittance transferals.

Figure 1.6: Digital Banking Service Expansion


Comprehensive SMS services have since been simultaneously

complemented by developments in other available platforms: WAP

(Wireless Application Protocol) and smartphone apps.

Vendors have begun to integrate and support smart wearable devices

such as smartwatches. This is expected to be a key trend in the future as

more and more banks launch apps for wearables.

Wearables, such as smartwatches and glasses, are capable of bringing

contextual information to the user conveniently and provide a number of

‘push’ opportunities to the FIs.

Equally, customers, particularly those of Gen Y, are attracted to banks that

offer innovative and exciting new services that increase their ability to

efficiently and effortlessly manage their lives on the go. Banks are eager to

capture customers early and achieve ‘lock-in’. The ability to offer cutting

edge banking applications and services is also a way for banks to secure

customer loyalty and increase customer satisfaction.

Wearable banking is best suited to the following use cases:

Displaying account balances, setting up alerts or receiving notifications;

Locating ATMs and retrieving codes for ATM cash withdrawal;

Contactless payments and account transfers;

Monitoring share and stock prices;

Bill payment for accounts set up.

Wearable technology could also help refine security measures in the future

too. The GPS location of your watch, for example, compared to where

your bank card is being used, could allow banks to stop any fraudulent

activity within seconds.

Retail

OnlinePC Browser-based

& Apps

Mobile

Smartphone & Tablet Apps

Browser-based

SMS

Wearables

Apps

SMS

Phone


1.2.4 Mobile Phone Apps Becoming the Primary Channel to Bank

Apps are indicative of the personal technology revolution and represent the greatest potential

for innovation. Mobile banking has not been immune from the phenomenal growth of apps.

Banking apps typically rank highly amongst the most downloaded financial apps.

Figure 1.7: Top 5 Financial Apps on App Store & Google Play, UK & US Markets – September 2015

Source: App Annie & Juniper Research

In an interview with Juniper Research, Richard Johnson, Strategy Director at Monitise, noted

that banks were getting ‘up to 30-40 logins a month from their consumers and that puts mobile

banking amongst the 6-8 highest engaging apps that consumers have on their smartphone.’

This has increased over the past 12 months across most

regions, with NatWest and RBS in the UK reporting

average logins of 40 per month.

Additionally, the BBA in the UK noted that the number of

mobile banking logins per week exceeded that of internet

banking logins per week for the first time in Q2 2015. The

total number of mobile logins per week in the UK reached

74 million in Q2 2015, compared to 67 million online

banking logins.

Figure 1.8: UK Mobile Banking App Logins vs Internet Banking Logins (m) 2012-2014

2013 2014 Q2 2015

Mobile Banking App Logins 9.1 18.6 73.8

Internet Bank Logins 45.1 60.9 66.9

Source: BBA UK

In the US, meanwhile, a study found thatiii:

Source: Juniper Research/Malauzai Software


The study also observed that iPhone customers logged in about 5% more

often than average, while iPad users log in only 6.5 times per month,

suggesting most consumers uses it as a secondary mobile device.

Our research suggests that the number of mobile banking apps in use is

also on the rise, across all regions and key markets. However, vendors

and app developers need to make sure that the mobile-app experience is

even more seamless.

Figure 1.9: Users who Access App-based MBIS as a Proportion of Mobile Banking Users 2013 vs 2015


Additionally, banks are integrating biometric authentication, such as

Apple’s TouchID, to grant access to mobile banking apps for making

secure transactions and logins by providing an alternative to a user’s login

credentials.

1.2.5 Mobile Wallets Exceed Banked Accounts

Mobile money provides a genuine opportunity for financial inclusion for the

unbanked and under-banked. The success of mobile money across sub-

Saharan Africa means that there are now more than a dozen countries in

the region where more adults have mobile wallets/mobile money accounts

than possess bank accounts.

Using data from operators, central banks and the World Bank, Juniper

Research has identified 13 markets in sub-Saharan Africa where

penetration of mobile money services exceeded that of bank accounts

amongst adults aged 15 or over.

It should be observed that in the case of mobile money penetration

amongst adults, the number of registered accounts now exceeds the adult

population in both Kenya and Tanzania, reflecting the fact that an

increasing proportion of the population now own multiple mobile money

accounts.

Outside sub-Saharan Africa, we have identified a further 4 markets where

this trend has been observed:

Afghanistan (30% mobile money penetration versus 9% banked

penetration);

Armenia (66% vs 17%);


Bangladesh (33% vs 32%); and

Cambodia (28% vs 13%).

Usage of these services tends to be concentrated among lower-income

customers; a 2014 CGAP (Consultative Group to Assist the Poor) survey

in Bangladesh found that more than 75% of users had a monthly income

of less than $150.iv

Figure 1.10: Mobile Money Account vs Banking Penetration, Selected Markets, 2014 (%)


What is also clear is that in a number of developing markets, mobile

money has accelerated the drive towards financial inclusivity to a quite

dramatic extent. In Tanzania, the number of adults with access to financial

services doubled between 2009 and 2014.

Under the terms of the Maya Declaration, the Bank of Tanzania committed

to increase the share of the total population with access to financial

services from 27% in 2009 to 50% by 2015. Due overwhelmingly to the

uptake of mobile money services, this target was achieved in 2013.

According to Bank of Tanzania Governor Benno Ndulu, the Tanzanian

banking community was ‘really strongly against’ the idea of allowing MNOs

(Mobile Network Operators) to offer financial services at first, but now

‘embrace[s] mobile financial infrastructure as a way of growing banking

services in a cost-effective manner.’v

1.2.6 Financial Institutions Embrace Blockchain Technology

While Bitcoin has struggled to match the hype, the technology

underpinning it, the blockchain, is becoming the focus of increased

attention as an array of alternative implementations are considered.

One key sector here is banking, where players such as UBS and Deutsche

Bank are exploring models whereby banks could become ‘the custodians

of cryptographic keys’ and use the technology to create a common

standard for securities and assets trading.

0%

20%

40%

60%

80%

100%

120%

Mobile Money Account (%) Banked Individuals (%)


‘We are very bullish about blockchain technology; we truly

believe that it could be a technology that could potentially

cause a lot of disruption’ - Puneet Chhahira,

Infosys Finacle.2

i. Opportunities Beyond Payment

While most of the focus around cryptocurrency has been on its usage as

an alternative to fiat currencies, it seems increasingly likely that the optimal

longer-term prospects for cryptocurrency lie not as a means of payment,

but rather as a means of facilitating payment: that is to say, its protocols

can significantly improve existing transactional capabilities.

This is precisely the route taken by Ripple Labs. While Ripple itself exists

as a cryptocurrency (XRP), its creators regard its primary potential use

case as an IP-based technology that will allow banks to settle transactions

in real-time via a distributed network.

By enabling real-time bilateral settlement and liquidity management for FX

transactions, the protocol then opens up the potential for banks to add

comprehensive transaction traceability and reporting, together with

additional reconciliation information. The Ripple protocol would only

provide the settlement or ledgering component. It can be used as an open

standard to facilitate connectivity and interoperability.

It is clear that other cryptocurrency protocols could conceivably be used in

this or a similar fashion. Indeed, given the scale of the challenges which

2 Juniper interviewed Puneet Chhahira, Marketing Head, Infosys Finacle, September 2015

face any cryptocurrency if it is to become established as a viable means of

paying directly for goods and services, we would argue that a role in the

settlement infrastructure is a more likely prospect.

Figure 1.11: Payment System Layers

Source: Ripple

1.2.7 The Branchless Banking Strategy

The economics of physical retail is under threat with the increasing

demand for 24/7 access and real time capabilities. Indeed, banks are

becoming increasingly concerned that their market position is being

undermined by MNOs or third-party vendors now also enabled by online

technology to enter the marketplace and provide banking services.

In recognising the benefits of mobile-based financial services,

governments and Central Banks are demonstrating improved flexibility and


are now aggressively developing new branchless banking regulations to

facilitate their expansion. This has also enabled a number of telcos and

third-party vendors to enter the space, having greater capacity to provide

mobile banking to the unbanked and under-banked.

Consequently, the launch of mobile banking services across the

developing world is now accelerating and is experiencing substantial rates

of adoption amongst the low-incomed and rural poor in particular. Indeed,

while it took some 100 years to bank a billion individuals through traditional

means, it is conceivable that digital banking could accelerate the process

dramatically and bank a billion in the next 10 years.

The branchless banking and mobile banking strategies need to be at the

forefront of FIs business strategy both in the developed and developing

markets. Combining ‘branchless banking’ and mobile will enable banking

to become increasingly ubiquitous to all kind of communities and users.

‘With apps as an example, these are designed to make the lives of people

easier, with push notifications, card management, transfer on the go and

so on’, noted Guibaud from Fidor.3

However, she added that a mobile-only strategy is too restrictive: ‘Mobile

banking is a natural step in online financial services now with mobile

devices becoming so pertinent in people’s everyday lives and if it helps

integrate into their digital lifestyle, then that’s a positive offering. However,

this will likely limit certain services’.

‘There still is a demand and reliance on multiple banking channels and we

are moving towards a mobile-only or digital-only future, but we do not see

3 Juniper interviewed Sophie Guibaud, Fidor Bank, October 2015 4 Juniper interviewed Doug Brown, Senior VP, eBanking, FIS, October 2015

it occurring in the immediate term, at least not in the next 12-24 month

horizon’, concurred Doug Brown from FIS.4

Table 1.12: Branchless Mobile Banking Advantages for Developing and Developed Markets

Branchless Mobile Banking Advantages

Developing Markets

Reach unbanked and under-banked population

Offer real time services to low-income population

Offer subset to full banking services

Leading to mobile payment services and initiatives

Offer value added services including micro-

insurance and savings

Developed Markets

Opportunities for dedicated branchless banks

Reduces operating costs for FIs and banks

The opportunity to offer better digital services to

the ‘digital’ consumers



Juniper interviewed Sophie Guibaud, Vice President of

European Expansion at Fidor Bank, October 2015

Fidor Bank is a digital bank founded in Germany

in 2009. It has since expanded into Russia via a

joint venture and the UK market, with plans to

enter other European markets.

In Germany, Fidor currently has around 100,000

clients and more than 250,000 community

members.

The bank is focused on customer oriented

services, enabling its customers to actively

participate in the bank’s decision-making

processes. It offers both retail and business

banking, ranging from basic bank accounts and

savings bonds to various lending offers.

The bank has no physical branches and does

not employ any financial advisors. It interacts

with customers directly across social media,

including Twitter, Facebook, LinkedIn, YouTube

and SlideShare.

‘We believe the online banking ecosystem is

very important and at Fidor we position

ourselves at the forefront of innovation in this

space. We founded Fidor because we believe

that digital banking is the future of banking. In a

digital world, where people are moving more and

more into online platforms, mobile and online

banking is an obvious next step for financial

service providers’, noted Guibaud.

Online banking, particularly with Fidor, offers

more flexibility and urgency. For example:

‘Overdraft facilities can be set up in a few

minutes; this is one offering that can be achieved

with online/digital banking. This would never get

instant approval if you walked into a major

banking branch.’

Fidor is building its model based on an API

approach and, in Germany, the company is

already offering a wide selection of third-party

services through their platform such as

crowdfunding, precious metals trading,

cryptocurrency and P2P (person-to-person)

lending.

Case Study


1.3 Juniper Roadmapping – Digital Banking Trends

Online banking now accounts for the majority of banking transactions in

most developed markets, such as the US and, as a result, physical

branches are becoming unprofitable. As per our research, almost every

leading bank in all parts of the world now offers both mobile and online

banking.

Banks and FIs are recognising the scope for digital banking to enable

competitive differentiation. It is now regarded as a vital element of vendors’

business models that can, and should, be made universally available to

improve customer churn, revenue and profits.

Andrew Mikesell from SAP added: ‘Customers who adopt mobile banking

channels tend to be more profitable. It enables end users to be more loyal,

stick with their bank longer and there is a five-fold increase in terms of

product adoption in the mobile channel compared to online channel. As a

result, banks are focusing really on mobile first, resulting in an increasing

transaction and product pull-through. Also, once customers begin to use

the mobile channel, they tend to use just mobile and not use online too

much or at all.’ 5

5 Juniper interviewed Andrew Mikesell, mCommerce Solution Manager at SAP, June 2014

Figure 1.13: Juniper Roadmapping of Digital Banking Trends – Now, Near Future & Far Future



The above chart illustrates the future trends expected in the digital banking

industry:

As noted earlier in the report, while we consider wearable based banking

information services to emerge as a key trend over the next 12 months,

it should be noted that it is more of a gimmick at present. However, we

believe that keeping pace with technology evolution, wearable banking

will witness a faster adoption growth rate than mobile banking. Juniper

believes that the smartwatch could become an ideal device for

multi-factor authentication for approving banking transactions in the

future.

While wearables, including smart glasses, are not ideal devices for

conducting complicated financial instructions, we envisage a number of

product launches from vendors and banks over the next 5 years.

FinTech integration and open API (Application Programming Interface)

platforms will become more important in the future, ie the ability for

third-party services (such as crowdfunding tools, investment services,

cryptocurrency platforms etc) to ‘plug in’ in their offerings to the bank. ‘At

Fidor, we are already offering this in Germany and we’re planning to

introduce it into the UK soon’, noted Guibaud from Fidor Bank.6

Juniper Research also believes that the future of digital banking will

depend on banks and FIs offering customers and clients more targeted

and more relevant options that are aimed at specific user needs and

experience. This will be enabled through customer analytics and a

number of other emerging information and data management

technologies.

6 Juniper interviewed Sophie Guibaud, VP of European Expansion, at Fidor Bank, October 2015

While AI has been in use in many applications for a long time, there is

surging interest in applying AI in Fintech, in order to offer next

generation services to next generation consumers. Juniper strongly

believes that while the initial opportunity maybe restricted to intelligent

decision making, future developments will focus on how consumers

interact with banks. The opportunity here lies in the ability for banks to

intelligently mine large volumes of data to analyse consumer behaviour.

2. Juniper Leaderboard & Industry Influencers

DIGITAL BANKING

The Roadmap to 2020


2.1 Introduction

There are a number of specialist vendors that currently provide

mCommerce and banking platforms, including app providers, IT

consultancies, systems integrators and platform providers. This section

provides snapshots of a selection of these vendors; we do not cover all

vendors but rather a representative cross-section to give readers an

indication of the players active in this market.

The snapshots provide a summary of the key company parameters and

conclude with qualitative analysis of their capabilities and relative

positioning. Senior executives from the majority of these companies were

interviewed and key observations from these interviews have been

incorporated into the body of the research.

Again please note this section is not exhaustive: there are many other

vendors that could be included.

Also, we would alert our readers that we have not included banks and FIs

in our vendor analysis.

2.2 Vendor Analysis

2.2.1 Vendor Assessment Criteria

Our approach is to use a standard template to summarise vendor

capability. This template concludes with our views of the key strengths and

strategic development opportunities for each vendor.

This technique, which applies quantitative scoring to qualitative

information, enables us to assess each vendor’s capability and capacity

and its product and position in mobile and online banking. The resulting

matrix exhibits our view of relative vendor positioning.

We have grouped together our assessments of Financial Capability and

Global Reach and named them ‘Corporate Capability’ and secondly our

assessments of Banking Specific criteria and named them ‘Strategic

Position in Mobile and Online Banking’.

We have assessed each vendor’s capabilities against the following criteria.


Table 2.1: Key Vendor Capability Assessment Criteria

Category Criteria Description

Corporate Capability Corporate Financial Performance & Size

In assessing this factor we have considered the absolute size of the vendor as measured by revenues, employees and investments.

Financial Performance & Size in mCommerce

The size of the vendor in the mCommerce industry, and the commerce industry in general, based on revenues, partnerships or customers announced

Operations & Global Reach This factor considers primarily the overall extent of geographical penetration of the vendor based on numbers of countries, regions, customers and offices to measure global reach

Marketing & Partnerships

The strength of the vendor’s brand and marketing capability as perceived by a review of the company’s website: aspects such as use of case studies, communications and ‘joined-up’ marketing of total solution packages were considered. The extent to which vendors have marketing or distribution channel partnerships in place, eg in-country sales specialists and VARs (Value Added Retailers).

Strategic Position in Mobile & Online Banking

Mobile & Online Banking Product Range & Experience

This factor relates to breadth of product range coverage by platform, technology and channels. We also evaluate the vendor’s success to date, as measured by their experience and expertise with MNOs, banks and FIs.

Number of Mobile & Online Banking Customers

We evaluate here the vendor’s success to date measured by the number of customers to whom the vendor has sold their digital banking platform. This criterion is designed to balance the banking global reach criterion, by evaluating the experience of vendors that are well established in a single country, but not elsewhere.

Experience: Clients & Strength of Partnerships

We consider here the extent to which the vendor has developed channel, product and wider industry relationships that will aid increased market penetration.

Creativity & Innovation This factor assesses the vendor’s perceived innovation through its flow of new features, products, developments and enhancements.



2.3 Limitations and Interpretation

Our assessment is based on a combination of quantitative measures

where they are available (such as revenues and numbers of employees)

that will indicate relative strength and also of qualitative judgement based

on available market and vendor information as published. In addition we

have improved our in-house knowledge from meetings and interviews with

a range of industry players. We have used publicly available information to

arrive at a broad, indicative positioning of vendors in this market, on a

‘best efforts’ basis.

However, we would also caution that our analysis is almost by nature

based on incomplete information and therefore some elements of this

analysis we have had to be more judgemental than others. For example

with some vendors, less detailed financial information is typically available

if they are not publicly listed companies. We also remind readers that the

list of vendors considered is not exhaustive across the entire market but

rather selective. Juniper Research endeavours to provide accurate

information. Whilst information or comment is believed to be correct at the

time of publication, Juniper Research cannot accept any responsibility for

its completeness or accuracy: the analysis is presented on a ‘best efforts’

basis.

The Vendor Matrix below compares the positioning of banking vendors

and service providers based on Juniper’s scoring of each company against

the above criteria that Juniper has defined. The matrix is designed to

compare how the vendors position themselves in the market based on

these criteria: relative placement in one particular unit of the matrix does

not imply that any one vendor is necessarily better placed than others. For

example, one vendor’s objectives will be different from the next and the

vendor may be very successfully fulfilling them without being placed in the

top right box of the matrix which is the traditional location for the leading

players.

Therefore, for avoidance of doubt in interpreting the matrix we are not

suggesting that any single box implies in any way that a group of vendors

is more advantageously positioned than another group, just differently

positioned. We additionally would draw the reader’s attention to the fact

that vendors are listed alphabetically in a unit of the matrix and not ranked

in any way in the box of the matrix.

The matrix is also valid at a point in time: September 2015. It does not

indicate how we expect positioning to change in the future, or indeed in

which direction we believe that the vendors are moving. We caution

against companies taking any decisions based on this analysis: it is merely

intended as an analytical summary by Juniper as an independent third-

party.

2.3.1 New Positioning Matrix Results

We have mapped out the results of our assessment, showing the 12

vendors on the positioning matrix as illustrated below.


Figure 2.2: Juniper Leaderboard - Mobile & Online Banking Vendor Positioning 2015



Figure 2.3: Mobile & Online Banking Vendor Scoring - 2015

Capability & Capacity Product & Positioning

Corporate Financial

Performance & Size

Financial Performance & Size in Sector

Operations & Global Reach

Marketing & Partnerships

Online and Mobile Banking Product Range & Experience

Customers Clients &

Strength of Partnerships

Creativity & Innovation

Accenture

Monitise

Infosys

Intelligent Environments

FIS

Fiserv

Tata Consultancy Services

Gemalto

Oracle Financial Services

Infobip

Mahindra Comviva

SAP


HIGH LOW


2.3.2 Vendor Groupings

i. Summary

Our analysis enables us to conclude that, from this particular list of

vendors, there are essentially 3 main groups.

ii. Established Leaders

These are typically corporate scale vendors, complemented by a segment

or market wide position in mobile and online banking. Typically they will

also have augmented their capability through an acquisition, joint venture

or partnership deal.

a) In April 2015, Infosys transferred the business of Finacle and

EdgeServices platform to EdgeVerve; this was estimated at

around $550 million and $35 million respectively. Its financial

services and insurance business segment accounted for 29.2% of

the total service revenue.

b) FIS is a leading vendor in the banking space and in 2013 it

acquired Open Solutions, provider of DNA (a real time account

processing platform) for a cash purchase price of $55 million. FIS

serves more than 14,000 FIs worldwide in over 130 countries.

c) Fiserv has more than 14,500 clients including banks, thrifts, credit

unions, investment management firms, leasing and finance

companies, retailers and merchants.

d) Gemalto has a 360° mobile financial services portfolio, covering

the entire scope of mobile banking from mobile payments, mobile

NFC (proximity payments) and TSM (Trusted Services Manager)

services to mobile money for the unbanked.

e) TCS, meanwhile, augmented its position via its acquisition of an

additional 40% ownership interest in TCS Africa from Tata Africa

Holdings Pty Limited and a controlling interest (51%) in ITF from

Mitsubishi Corporation in Japan.

f) Oracle is the biggest banking vendor, with 400,000 customers,

including all the top 20 banks.

iii. Leading Challengers

This group comprises the mid-market or focused segment players:

members typically have market wide, or close to market wide, position, but

usually with less comprehensive corporate capability than established

vendors.

a) Monitise has always had a strong investor backing from major and

global FIs; new partnerships include Santander, Telefonica and

MasterCard. However, the withdrawal of Visa, which first

announced its intention to sell all its stake in July 2015, led to the

company’s stock dropping more than 80% over the previous 12

months.

b) Whilst global telecommunications specialist, Infobip, extends

across some 160 countries worldwide, the name and scope of its

partners are undisclosed and its mBanking provision is limited to

mobile messaging through the SMS and USSD channels.

c) Mahindra Comviva is seeking to expand beyond its historic core

markets of sub-Saharan Africa and India into Latin America and


Eurasia; it has already achieved a double digit market share in the

former arena.

d) Accenture’s banking solution is in the Financial Services operating

group, while mCommerce solutions is in its Mobility Services. The

banking financial services industry group represented

approximately 51% of its Financial Services operating group’s net

revenues in fiscal 2014.

iv. Disruptors & Emulators

These are some of the emerging and innovative companies that have the

potential to disrupt key banking verticals and be challengers to established

leaders in the sector. Occasionally, they are emulators with an enhanced

service offering when compared to established players.

a) Innovative solutions enabling product differentiation has grown

Intelligent Environments’ user base by 155% in the last 2 years

and current migration projects are expected to double this,

according to the company.


2.4 Mobile & Online Banking: Industry Movers & Shakers

Jeffery W Yabuki

Fiserv

CEO & Director

Gary Norcross

FIS

President & COO

Clayton Locke

Intelligent Environments

CTO

Jeffery Yabuki is the President, CEO and a Director

at Fiserv.

Under Yabuki's leadership, the company announced

Fiserv 2.0, a long-term strategic platform,

transforming Fiserv into an integrated operating

company.

He also led the acquisition of CheckFree

Corporation, the leader in electronic bill payment, bill

presentment and Internet banking, the largest

acquisition in the company's history.

Prior to joining Fiserv, Yabuki was Executive Vice

President and Chief Operating Officer at H&R Block

for more than 6 years and spent 12 years at

American Express.

Norcross joined FIS in 2003 through the acquisition

of ALLTEL Information Services, where he served as

president of the Integrated Financial Solutions

division, in addition to other key leadership roles.

Using a client-focused approach, Norcross has

overseen significant growth of FIS’ product portfolio

and global footprint. He was critical to the company’s

acquisition and integration of Metavante

Technologies. He was also involved in FIS’ merger

with Certegy and its acquisitions of a large number of

companies, including Aurum Technology, BankWare,

InterCept and eFunds.

Under Norcross’ leadership, FIS has grown to more

than 39,000 employees and over $5 billion in annual

revenue.

Locke joined Intelligent Environments in 2012,

taking charge of the company’s technology team.

He brings over 30 years’ experience in the software

development and consulting industry. He has

delivered innovative products and solutions to

clients in the financial services and

telecommunications sectors, including online

banking, FX trading, enterprise architecture and

mobile application development.

Locke is responsible for technology strategy,

development and delivery of the Intelligent

Environments product suite. He does this

passionately, leveraging a lean software

development approach to build high quality software

products for the company’s solid base of blue chip

clients.


Manorajan ‘Mao’ Mohapatra

Mahindra Comviva

CEO

Chet Kamat

Oracle Financial Services

Software

CEO

Anirban Dey

Infosys, EdgeVerve

Global Head – Edge

Products

Mao Mohapatra’s career has been dedicated to the

development and deployment of innovative software

communications solutions in rapidly growing

markets, transforming high potential businesses into

true world-beating organisations.

Prior to joining Mahindra Comviva, Mao was

President and COO at Aricent, where he enjoyed a

15 year career and was instrumental in building the

company from a relative start up to a globally

recognised brand, with over $300 million in

revenues.

Mao holds a Bachelor’s degree in Electronics and

Electrical Engineering from the Birla Institute of

Technology and Science, Pilani.

Mr Kamat has more than 30 years of financial

services, consulting and business transformation

experience. His expertise in banking transformation

has driven strong top-line impact for both the

products and services businesses at Oracle

Financial Services Software.

Prior to joining Oracle, Kamat was managing director

at STG, a leading private equity firm focused on

investing in software and enterprise services

companies.

At STG he was responsible for the transformation

and operations of its portfolio companies with a

specific focus on their use of global operating

models.

At EdgeVerve, Dey heads the Sales, Marketing,

R&D, Services and Operations for the Edge

products portfolio.

Prior to joining EdgeVerve, Dey was SVP at Concur

Technologies (now part of SAP) and led R&D for

Concur’s Cloud solutions in Travel and Expense.

He has also spent over 6 years at SAP Labs India

in various roles, joining them as VP for BI & Data

Warehouse solutions and later went on to head the

HANA R&D Team in India.

His last role was to lead SAP Labs India as its

Managing Director. Prior to SAP, Dey was with

Oracle for over 10 years in their Applications

Division in California.

3. Digital Banking Market Forecasts: Mobile, Online & Wearable

DIGITAL BANKING

The Roadmap to 2020


3.1 Digital Banking: Market Forecast Summary

This section provides a comparison of mobile and online

banking users in terms of active users. Please note that

the number of online banking users is not unique. There is

a possibility that the same set of users sign up for mobile

banking services, but occasionally check and setup

services via their PC.

Figure & Table 3.1: Mobile and Online Banking Service Adoption Comparison (m) 2015-2020

Meanwhile, as can be seen in the figure below, the number of global mobile banking users is

set to overtake the total number of online banking users in 2020. Previously, we had

anticipated this to occur in 2019, but growth in the proportion of the banked population in

emerging markets using (fixed) Internet banking services over the past 12 months (especially

in India, China and selected East European countries) means that this will now only happen in

2020. However, in some markets this will happen well in advance of this date, including both

developed and developing markets. For example:

In the US, number of mobile banking users is set to exceed that of online banking users by

2017, while in Spain it is expected to happen this year.

Meanwhile, in India, the number of mobile banking users will exceed 70 million this year,

compared to over 50 million Internet banking users.

2015 2016 2017 2018 2019 2020

Online - PC Banking Users 1,616 1,702 1,789 1,880 1,974 2,066

Mobile - Handset & Tablet Banking Users 1,012 1,214 1,411 1,615 1,834 2,086


Consequently, the proportion of global online banking users as a proportion of banked

individuals is forecast to cross the 50% mark in 2016. This means that the number of online

banked individuals will reach just over 1.7 billion by the end of 2016.

However, the forecast of 2.09 billion mobile banking users means that, in 2020, almost 37% of

the global adult population will be mobile banking users by that time. Globally, while

smartphone and tablet adoption increased by 37% y-o-y (year-on-year) and 48% in 2014

respectively, mobile banking user adoption increased by 29%.

0

500

1,000

1,500

2,000

2,500

2014 2015 2016 2017 2018 2019 2020

Online - PC Banking Users

Mobile - Handset & Tablet Banking Users


3.2 Market Forecasts: Online PC Banking

3.2.1 Online Banking Addressable Market: Number of Banked Individuals

We have used World Bank data to gauge the proportion of

consumers aged 15 or over, who are most likely to have a

bank account and thereby bank online.

Figure & Table 3.2: Total Number of Banked Individuals (m) Split by 8 Key Regions 2015-2020

A significant proportion of the adult population are presently unbanked, ie without any

access to formal financial services. Country level analysis for the biggest countries in terms

of population and bank account penetration was accumulated by region to derive the

regional and global number of banked individuals.

In 2014, 60% of the global adult population had at least one bank account, as indicated by

our data. Developed markets including North America and West Europe had penetration

levels as high as 90% regionally, with developed regions in Far East & China show similar

adoption levels.

In China, over the last 12-24 months, the proportion of the adult population with a bank

account has risen significantly, reaching 76% in 2014, while in India adoption reached over

50%.

2015 2016 2017 2018 2019 2020

North America 271.5 274.5 277.5 280.6 283.7 286.8

Canada 28.9 29.2 29.5 29.8 30.1 30.4

US 242.6 245.3 248.0 250.8 253.6 256.5

Latin America 251.3 266.9 283.5 301.2 319.9 339.1

West Europe 324.8 328.1 331.3 334.7 338.1 339.1

Germany 69.3 69.3 69.4 69.5 69.5 69.6

UK 52.6 53.1 53.6 54.1 54.6 55.2

Central & East Europe 194.8 198.6 202.5 206.4 210.5 214.7

Far East & China 1,060.2 1,083.6 1,107.7 1,132.4 1,157.7 1,183.7

Indian Subcontinent 552.5 593.3 628.9 666.6 706.6 749.0

Rest of Asia Pacific 206.2 217.1 228.6 240.6 253.4 266.7

Africa & Middle East 413.0 443.4 472.3 499.5 524.9 554.6

Total 3,274.3 3,405.5 3,532.3 3,662.1 3,794.8 3,933.7

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

4,000.0

4,500.0

2015 2016 2017 2018 2019 2020

North America Latin America

West Europe Central & East Europe

Far East & China Indian Subcontinent

Rest of Asia Pacific Africa & Middle East


3.2.2 Number of Online Banking Users, PC-based Only

Juniper Research has analysed key banks in most

countries to derive the adoption levels and number of

online banked individuals.

Figure & Table 3.3: Total Number of Online Banking Users, PC-based Only (m), Split by 8 Key Regions 2015-2020


2015 2016 2017 2018 2019 2020

North America 184.7 195.7 207.3 219.4 232.1 245.6

West Europe 224.9 235.6 245.6 254.7 263.0 264.0

RoW 1,206.9 1,270.3 1,335.9 1,405.7 1,478.6 1,556.6

Total 1,616.5 1,701.6 1,788.8 1,879.9 1,973.8 2,066.3

In North America, Canada had a higher adoption of online banking services amongst

banked individuals, with just over 75% penetration level in 2014, compared to the US which

is forecast to see approximately 70% only in 2016.

a) According to the CBA (Canadian Bankers Association), 77% of Canadians reported

using online banking during the last year, with 45% them saying their use of online

banking had increased over the past 12 months.

The Far East & China region is expected to have the greatest number of online banked

individuals, driven primarily by China itself, which is expected to have close to 700 million

users this year. Internet finance services have been growing rapidly in China, according to

the China Banking Association. Latest data from the CFCA (China Financial Certification

Authority) notes that over 35% of the banked population used online banking. The CFCA

also noted that in 2014 online banking dominated eBanking services in terms of safety; 72%

of eBanking users consider online banking the safest.

As noted earlier, depending on the availability of broadband access in many developing

markets, the proportion of users capable of online banking in such markets will be small.

However, the number of mobile broadband users in these parts is comparatively high, which

means mobile banking users already exceed online (PC-based) banking users in certain

countries. For example, mobile banking users in the Indian Subcontinent is estimated to be

1.3 times the number of active online banking users in the region for 2015.

245.6264.0

North America West Europe


3.3 Market Forecasts: Mobile Banking

3.3.1 Number of Mobile Banking Users

Key takeaways:

Adoption rates in Far East & China (42%) will be significantly higher than

previously forecast, as the mobile subscriber base is accelerating

particularly aggressively, especially in China. According to the CFCA,

mobile banking in China had a 50% y-o-y increase in 2014, while

Juniper estimated 34% y-o-y growth in 2013 and 20% in 2014.

India is also witnessing a significant rise in mobile banking adoption, with

the RBI deputy governor H R Khan noting around 40 million mobile

banking customers in 2014.

Our analysis of services provided by banks is that over 90% of the global

banks offer some form of mobile banking, with an increasing proportion

of banks offering wearable smartwatch based services.

All regions will see significant growth in the percentage of mobile phone

users of mobile banking services, but overall penetration rates in

developing countries will be comparatively lower, given the size of the

unbanked and under-banked population, but representing a significant

growth opportunity.

‘Juniper Research estimates that mobile banking users will

exceed 1 billion for the first time in 2015’.

The technology is proven and currently available in most regions of the

world, reinforced by exceptional consumer demand, especially in the

developed regions. At this juncture the number of mobile banking users,

set to exceed 2 billion in 2020, will exceed the online banked individuals

for the first time.


Online Banking – 2,066 million

Mobile Banking – 2,086 million Wearable Banking – 78 million


Figure & Table 3.4: Number of Mobile Banking Users, Split by 8 Key Regions 2015 vs 2020


We forecast that the leading region, by a significant margin, will be Far East & China.

a) In Japan, the advanced status of mobile payment and commerce services generally via NTT DOCOMO, KDDI and Softbank, means that mobile

banking is a logical and attractive progression for users who are already very ‘switched on’ to wider applications, such as mobile transit ticketing or

location-based mobile couponing.

b) Juniper estimates that China will have over 280 million mobile banking users in 2015, with China Construction Bank, ICBC Bank and Agricultural Bank

of China leading adoption.

Juniper Research estimates nearly 44 million banking users in India. Combined, the Indian Subcontinent will account for 80 million this year, increasing to 260

million by 2020 overtaking the North American market for the first time.

2015

North America West Europe Far East & China Indian Subcontinent RoW

2020

North America West Europe Far East & China Indian Subcontinent RoW


3.4 Market Forecasts: Smartwatch Banking

3.4.1 WBIS – Smartwatch User Forecast

Juniper forecasts that the number of smartwatch users accessing app-

based wearable banking services to reach nearly 80 million by 2020, a

CAGR close to 100% over the forecast period.

Figure 3.5: Smartwatch Users (m) Accessing App-based Wearable Banking Information Services (WBIS), Selected Markets 2020


Juniper noted that while a number of banks have announced their

intention to launch wearable banking apps, only a few had managed to

launch commercial services in 2014.

Since the launch of Apple Watch, quite a few banks have launched

banking apps for it (for example, Barclays, NatWest, Lloyds, ICICI,

HDFC, Bank of America, Citi, DAB Bank and HSBC) and a few others

are trialling smartwatch banking apps (for example, Tangerine Bank, US

Bank and Wells Fargo).

Meanwhile, nearly all banks in Canada and UK have launched live

services; we expect the US and other West European markets to follow

soon. Consequently, these 2 markets will lead adoption, accounting for

over 70% of the global base throughout the forecast period.

By 2020, approximately 4% of mobile banking users will

access wearable banking services.


Endnotes

i Source: ING International Survey Mobile Banking 2015

ii http://www.mobileindustryreview.com/2015/03/mobile-is-the-new-banking-branch.html

iii http://www.bankingexchange.com/news-feed/item/5605-balance-checks-dominate-digital

iv http://www.slideshare.net/CGAP/is-a-transition-to-mobile-wallets-underway-in-bangladesh

v http://www.bot-tz.org/Adverts/Pressrelease/Tanzania%20hits%20FI%20target.pdf

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