ADAPT TO SURVIVEHow Retail Banks are

Adapting to FinTech DisruptionHow Retail Banks are

Adapting to FinTech DisruptionAlternative lending models are transforming the banking sector, creating both competitive threats and evolutionary

opportunities for financial institutions in Asia. But with an estimated 4,000 firms challenging banks in every product line,

the level of disruption facing the financial industry has reached a tipping point, as this infographic shows:

RETAIL BANKS ARE FACING DISRUPTION FROM THE FOLLOWING AREAS:

Startups

Tech Companies(Apple, Google)

Telcos, Retailersand Insurers

NEW TECHNOLOGIES HAVE EMERGED WHICH ARE STARTING TO HAVE A DRAMATIC

IMPACT ON THE BANKING INDUSTRY:

Mobility

Internet of Things

Analytics/Big Data

Open APIs

72% of retail banks regard the threat from at least one groupof these potential competitors as either high or very high.

Source: Innovation in Retail Banking, Efma and EdgeVerve Systems Limited

2 4 6 8 10 12 14 16 18 20

2015

2014

2013

2012

2011

2010

BILLIONS OF DOLLARS

Peer-to-Peer (P2P)P2P is affecting product areas

like personal and small

business lending, and money

transfers and as a result,

Fintech Investment has grown

exponentially in recent years.

Source: Digital Disruption: How FinTech is Forcing Banking to a Tipping Point, Citi GPS

THE LARGEST SUB-SECTORS FOR INVESTMENT IN FINTECH, RANKED IN ORDER OF INVESTMENT, ARE:

£

1

$

€

$ $

1. 2. 3.

Payments Lending Wealth Management

OPINIONS ARE DIVIDED ABOUT THE FUTURE OF THE FINANCIAL INDUSTRY, BUT THE MAJORITY OF BANKS PREDICT DISRUPTION

Banks will become minor players

Fintech phenomenon is overstated

Banks will continue to dominate

Banks and Fintech will have about equal share

A mix—banks and Fintech—each dominating sectors

5

10

20

24

33

% respondents

Source: The Disruption of Banking, The Economist Intelligence Unit.

IN RESPONSE, BANKS ARE FOCUSING ON INNOVATION

200915%

201484%

201584%

Proportion of banks increasing their innovation investment from the previous year:

69% of banks believe that start-ups can have a high or very high impact on innovation.

Yet only around 40% of banks have a positive or very positive attitude to working with start-ups.

ACCORDING TO THE BANKS

THEMSELVES, THE MOST

SIGNIFICANT CHALLENGES

INVOLVED IN WORKING

WITH START-UPS ARE:

45%Cultural

Differences

53%Rules and

RegulationsSecurity

Risks

Discover How to Adapt to FinTechDisruption at Asia’s Only Event Focused

on Innovation in Digital Lending:

86%

WILL INCREASE THEIR INVOLVEMENT WITHSTART-UPS IN DIGITAL MARKETING

WILL INCREASE THEIR INVOLVEMENTWITH START-UPS IN PAYMENTS

Source: Innovation in Retail Banking, November 2015, Efma and EdgeVerve Systems Ltd.

NEW STRATEGIES FOR BANKSAccelerators / Incubators

~20% of banks now have their own accelerator/incubator or are

partnering with an external accelerator/incubator, in order to work

more closely with innovative start-ups.

Corporate Venturing

<10% of banks are investing in start-ups using a corporate venture

fund, with a further 10% making ad-hoc investments.

Alternative Partnerships

There are many other types less common types of partnership

between banks and innovative start-ups emerging including:

Banks providing lending through P2P lending platforms,

Banks licensing personal financial management technology,

Banks launching new mobile payments services.

$$

$

$$

$

VARIED APPROACHESBanks in High Income Countries: Have made a positive movement relative to

less developed countries in the last 12 months

in terms of innovation objectives and

performance

Are more concerned about the threat of

industry disruption

Are more likely to be investing in

startups or working with

accelerators and incubators

Global Banks: Are most likely to be aiming for

innovation leadership now and are

most likely to have a corporate venture

fund or an incubator which may give them

an innovation advantage over their smaller

domestic competitors in the next few years.

Adapt to SurviveGiven that start-ups are responsible for most

of the radical innovation in financial services, it

is essential that banks:

Monitor the progression of innovative

start-ups in financial services.

Watch how other banks are

taking advantage of these trends

globally.

Start working with start-ups

either as partners or suppliers.

Find ways to overcome the

regulatory and cultural issues when

working with start-ups.

Source: Innovation in Retail Banking, November 2015, Efma and EdgeVerve Systems Limited Digital Disruption:

How FinTech is Forcing Banking to a Tipping Point, Citi GPS The Disruption of Banking, The Economist Intelligence Unit

But it’s not just technology that is changing, disruptive business models are also emerging, most notably:

30

20

10

0

Despite these challenges, most banks said they expect to increase their involvement with innovative start-ups:

$$ $

$

$

$

$

$

$

$

$$

Li Hui HuiPresident of Global

Business Management,

Deputy GM of Strategic

Development,

Board of Directors

China HengFeng Bank

Bhaskar KattaHead of International Retail,

Wealth and Private Banking

Operations

ANZ

Torsten Kleine BueningHead, Governance –

Enterprise-Wide Risk

Management

Standard Chartered

Aishwarya KunalVice President, Fixed Income,

Structured Products & Loans

International Personal Bank

Citibank

19th-20th July 2016 | Singapore

This unique event will provide a platform for Banks, Fintech companies and other

financial institutions to learn the most innovative lending practices in Asia and

across the world that resonate with the sophisticated market demands.

Featuring:

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