1 GLOBAL RETAIL BANKING REPORT WHOSE CUSTOMER ARE YOU THE REALITY OF DIGITAL BANKINGThe Economist Intelligence Unit Limited 2018 2 About this report 3 Executive summary 5 Section I: Envolving trends: The digital future is here 9 Section II: New business models: What do banks want to be 10 Monzo: Aiming for seamless growth 15 Europe: Wide open 16 Section III: Digital transformation: Move fast but don’t break anything 17 A digital Greater China 20 Pepper: Starting from scratch 21 Section IV: Artifcial Intelligence is watching and learning 24 Section V: Security: An increasingly global concern 25 If the face fts 27 USA: You’re next 28 Customer due diligence: Who are you 29 Conclusion: Play to your advantages CONTENTS 2 GLOBAL RETAIL BANKING REPORT WHOSE CUSTOMER ARE YOU THE REALITY OF DIGITAL BANKINGThe Economist Intelligence Unit Limited 2018 ABOUT THIS REPORT In February-March 2018 The Economist Intelligence Unit, on behalf of Temenos, surveyed 400 global banking executives about the challengesretail banks expect to face between now and 2020, and the strategies they are deploying in response. The survey respondents were geographically diverse: 25% were drawn from Europe, 25% from the Asia-Pacifc region and almost 18% were fromNorth America. This year’s survey had our highest ever representation from emerging markets, with approximately 16% of respondents fromLatin America and 16% from Africa and the Middle East.By size of their employer, the respondent base is evenly split. Half work for parent groups with assets over US$10bn, the other half work forsmaller organisations, including co-operatives and community banks. In terms of seniority, 51% are at C-suite level and 10% are board members. A ffth (20%) of respondents work in fnance roles, over 10% work in general management roles and 9% work in IT. Marketing, sales and customerservice constitute 16% of the base. A further 6% of respondents work in information and research and 5% in research and development.In addition, in-depth interviews were conducted with 20 senior executives and experts from banks, fntech companies and security advisers. Oursincerest thanks are due to the following for their time and insight. Neil AitkenHead of communications, UK Payments Administration Tom BlomfeldChief executive ofcer, Monzo Josh BottomleyGlobal head of digital, HSBC Ray BrashChief executive ofcer, PrePay Solutions Ilan BuganimChief technology ofcer, Bank Leumi Hector CardenasCo-founder/CEO, Conekta Tamara CookHead of digital innovations, FSD Kenya Stefan Erne Chief digital ofcer, Handelsbanken Hakan ErogluExecutive, Digitisation in payments & banking, Accenture Andres FontaoManaging director, Finnovista Carol HungChief information ofcer, Standard Chartered Hong Kong Francisco IllescasCo-founder, Tesseract Jane Jee Chief executive ofcer, Kompli-Global Michel LgerExecutive vice president, Innovation, Ingenico Katie MarkSenior communication manager, Competition and Markets Authority Eduardo MorelosProgramme director, Startupbootcamp FinTech, Mexico City Robert PriggeChief revenue ofcer, Jumio Carlos Orta TejadaVice president, Regulatory Policy, Comisin Nacional Bancaria y de Valores Hans TesselaarExecutive director, Banking Industry Architecture Network Edoardo TotoloResearch Economist, FSD Kenya Roberto ValerioChief executive ofcer, RISK IDENT The report was written by Paul Burgin and edited by Rene Friedman of The Economist Intelligence Unit. 3 GLOBAL RETAIL BANKING REPORT WHOSE CUSTOMER ARE YOU THE REALITY OF DIGITAL BANKINGThe Economist Intelligence Unit Limited 2018 EXECUTIVE SUMMARY The future of banking is digital, but the human touch will remain essential in attracting new customersfor loans and complex investment products. Stakeholders must co-operate like never before to deliverthe user experience customers want while keeping their money and data safe. This report, the ffth in The Economist Intelligence Unit’s series on the future of retail banking, marks asignifcant shift in the strategic concerns of banking executives worldwide. Previous reports tracked theshift in customer expectations and its likely impact on distribution and product design. Now the focusis frmly on implementing open banking and dealing with its consequences. l Technology and digital are now bigger—and more important—trends than regulation.Changing client demand, the rise of the smartphone and the introduction of new digital technologieshave replaced post-fnancial crisis regulation as the drivers of strategic thinking at banks around theworld. Integrating open banking that allows apps to initiate payments and other fnancial transactionsis core to adapting to the digital banking age. lNo single digital strategy suits every bank in every market. Respondents say their banks areadopting diferent strategies. While 61% want to develop niche propositions, others are, to varyingdegrees, opening up and giving access to new third parties. Some banks will view regulatory andtechnological change as opportunities to recreate themselves and build new ecosystems, while othersmay simply comply with emerging norms and regulations by granting access to customer data andpayments via competitors’ smartphone apps. Going with the easiest options may leave banks, andtheir products, at risk of being assimilated, aggregated and unbundled by agile competitors, leading toa loss of brand and product visibility.l Banks must become more agile. The development of agile products requires improvedorganisational agility as well. According to 52% of survey respondents, product agility is now theirtop strategic priority. New payment players and the likes of Google, Apple, Facebook and Amazon,collectively known as GAFA, know what their clients want and are able to adapt quickly. Banks haveto keep up, restructuring their business models to ensure that new products and features can beintegrated quickly across physical and digital channels.l The impact of open banking and tighter security and data rules—and the conficts betweenthem—do not appear to be fully understood. While 71% of respondents are focusing their digitalinvestment on cyber security, only 17% are concerned about a third-party relationship vulnerabilitybeing exploited as a result of open banking. The biggest danger to a sustainable banking model is theloss of valuable data on customers’ lifestyles and needs. Without that insight, all banks will struggle toupsell more proftable loan, investment and retirement products.l Customer and regulator concerns about data security may limit some of the big banks’ambitions. The larger banks can take the fntechs on by building all-encompassing platforms thatofer a seamless interaction with other products, services and comparison tools. Ofering greaterfunctionality means banks can learn more about customer needs and tailor new products to match.。。。。。。