Digital Business Transformation: Investment Management › wp-content › uploads › 2019 › 09 › ...© 2018 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is

1 © 2019 Gartner, Inc. and/or its affiliates. All rights reserved.INTERNAL or RESTRICTED

Digital Business Transformation: Investment Management

WSTA – 19 September 2019Chuck Thomas, Senior Director – Advisory

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2 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates.

INTERNAL

Digital technologies will radically alter what an “organization” is and how it achieves its objectives.

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INTERNAL

The Coming Explosion in Technologies

Electronics & Telcom

Critical Mass on Digital Infrastructure in Computing, Connectivity & Digitized Data

What helped get you here…

Won’t get you here


By 2025, your company will either lead a digital business industry vision you have created or be part of one created by someone else.

If you are still in business…

STRATEGIC PLANNING ASSUMPTION

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What Does It Mean to Have a Digital Business Industry Vision?


First, It Is About Digital Business

A vision that captures an enormous opportunity ahead by the blurring of the digital and physical worlds. It integrates people, business and things.


We exist in a growing world of connected things

13 billion

2016

People 56%

Things 44%

2030

108 billion

People 8%

Things 92%

2050

1 trillion

People 1%

Things 99%


Second, It Builds New Sources of Wealth

Redefine anexisting industry

Redefine

Capture an entirely different industry

Capture

Create anew industry

Create


‘It saved my life!’

Apple and Fitbit transform healthcare…

An Apple Watch saved Christina Ling’s life

"The watch told me that my heart rate was 150 even though I was sitting idle for 10 minutes," said Ling, 45.

"My heart was basically suffocating," Ling said. "But what's really crazy is, I thought it was just the flu and I never set up my Apple Watch to send me any health alerts. It totally saved my life."

With medically certified solutions, healthcare moves from annual checkups to online medical observation 24 by 7, each and every day.


Next, It Identifies the Big Problem They Need to Solve

Leadership

Ambition

Scope

Competition


By 2030, only 20% of existing financial services firms will flourish and win.

80% will cease to exist, become commoditized or achieve zombie status.


INTERNAL or RESTRICTED

2%

5%7%

25%

15%

5%

13%

18%

10%

OtherCreatesignificant

opportunities forincumbents

Causeexistentialthreats to

incumbents

Causesignificant

difficulties forincumbents

Minor impactson incumbents

No impact onincumbents

Will changehow investor's

view ourindustry

Activities inother industrieswill have a halo

effect on ourindustry

No significantimpact

Impact on Industries Impact on Incumbents

57%Digital Giants will be in Our Industry

Q06: Which statement best represents your belief about the potential impact that digital giants will have on your industry in the next five years (period 2019 to 2024)?

Base: Financial Services respondents, n=96

Perceived impact that digital giants are expected to have in the next five years Percentage of Respondents

Perceived impact that digital giants are expected to have in the next five years

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Using Industry Scenarios to Generate New Value in the Age of Digital Business


What Are Scenarios? Why Are They Important?

Give context for the present and future

Understand how to succeed in those scenarios

Move away from "one size fits all" thinking

TrendsRangeofUncertainties

Timing?

Single-Point Forecast


The Single Focal Issue

What Value Can Firms Create in the Future?(And How Can They Create It?)


STEEPed in External Factors

Changes in consumer behavior Economic conditions Abundance of new technology

Evolving ecosystems New value proposition Political instability

Demographic shifts Regulations New competitors


Interrelated Forces Lead to Potential Future State

Narrow Access to Value Creation

Wide Access to Value Creation

Machine-ledPeople-led

Ecosystem Model

Autonomous Adaptability


Interrelated Forces Lead to Future Operating Models

Wide access to value creation

Machine-ledPeople-led Autonomous Adaptability

Eco

sys

tem

U

sa

ge

/Mod

el

Narrow access to value creation


Four Plausible Scenarios – Investment Management


Machine- ledPeople-led


Individualist

Platformist

Industrialist

Integrationist Eco

sys

tem

Mo

de

l

Autonomous Adaptabilty


How to Think About the Scenarios

Four different assumptions

Not mutually exclusive

No right or wrong/good or bad

No single outcome – alternatives work at many different levels


Expanding on the Four Scenarios


Critical Success Factors - Integrationist

Integrationist

Individualist



Platformist

Industrialist



Ecosys

tem

Model

Expanding PersonalConnections


Integrationist Characteristics

CEO CIO

Strategy People networkPeople supported by Technology

People Talent as differentiator Agile, Partner-focused

TechnologyEnabler, notCenterpiece

Bi-modal, static digital platform

Products Expanded ecosystem of products and service


Integrationist:Expanding Personal Connections

Customer focus: Beyond immediate customer

Collaborative and Agile

People

Augmented

Intelligence

Diverse and Diffracted

Business Models


Early Signs of an Integrationist Future

Gartner Eye on Innovation Award Winner

Most Innovative Digital Customer Service or Product

Winner: National Bank of Greece —Developed a contactless wristband that would further extend the capabilities of its existing mobile wallet solution, i-bank Pay, a waterproof Visa prepaid card in microtag form that fits inside a wristband. More than 27,000 festival goers used the paybands at Greece’s largest youth music festival.


A Day in the Life of an Integrationist Firm

1. Real estate website identifies customer needs

2. Matches needs with opportunities

3. Notifies customer4. Customer acts —confirms intent to proceed

5. Initiates "preapproval“ through portal

6. Bank proactively identifies low balance in checking account

7. Notifies customer, initiates transfer; 1-click authorization

10. Provides access to partner ecosystems

8. Connects to loan officer, identifies cash-flow concerns

9. Offers bridge loan; offer presented and accepted

Augmented Intelligence People-Led FocusWide Access to Ecosystem

Key:

Analytics based on historical

transactions


Critical Success Factors - Platformist

Integrationist

Individualist

Platformist

Industrialist


Ecosys

tem

Model

Be a Better Platform


Machine-led

People-led



Platformist Characteristics

CEO CIO

Strategy Digital FirstOpen and PermissionlessPlatform

People Support the Technology Innovation Culture

Technology Enable the Ecosystem

Platform is learning

• AI/machine learning • Foundation of open APIs

and microservices

Products New and evolving


Platformist:Expanding Technology Endpoints

Bots Directed by Bots

People

Wide and Unrestricted

Intelligence

Diverse and Challenging

Business Models

Customer focus: Test and iterate


Early Signs of a Platformist Future

We're increasingly becoming a technology financial services company, not a bank with a technology division."

Derek White, former chief design and digital officer at Barclays, 2015


A Day in the Life of a Platformist Firm

The owner requests the smart house to create a SH-DAO in an ecosystem

1. Human owner wants to sell house

2. The smart house broadcasts "on sale" status to the ecosystem

3. Real estate agents capture the demand from any SH-DAO in the ecosystem with their smart agent DAOs

OwnerKey: SH-DAO E-DAOSM-DAOB-DAOS-DAOSA-DAO

6. SH-DAO helps the human owner via the S-DAO to negotiate the deal

7. SH-DAO sends a message to the B-DAO, SA-DAO and/or the SM-DAO about a closed deal

5. The bank, using smart mortgage DAO, preapproves loans, based on SH-DAO and/or the B-DAO, based on risk assessments

4. Buyers, using their own buyer DAOs, might engage directly with the house owner through the SH-DAO or the SA-DAO

9. The SH-DAO transfers ownership to the B-DAO and the SM-DAO, and updates its own identity to reflect the new owners

8. The winning B-DAO releases 20% of the funds to the SH-DAO, and the SM-DAO releases the remaining 80% to complete transaction

10. SH-DAO releases excess energy for sale, using an E-DAO

11. The SM-DAO captures the value from the E-DAO for the mortgage repayments


Critical Success Factors - Industrialist

Integrationist

Individualist

Platformist

Industrialist


Ecosys

tem

Model

Cost-efficiency


Machine-led

People-led



Industrialist Characteristics

CEO CIO

Strategy Cost-efficiency Cost-efficiency

PeopleSupport the Technology

Continuousimprovement

Technology Drive Scale Advanced Automation

Products Traditional


Industrialist:Cost Efficient

Customer focus: Narrow — cost and elegance

Bots Directed by Humans

People

Restricted

Intelligence

Scale and Cost

Business Models


Early Signs of an Industrialist Future

Gartner Eye on Innovation Award Winner

Most Innovative Digital Business Model:

Winner: O-Bank (Taiwan) - Restructured from the Industrial Bank of Taiwan into a commercial bank at the beginning of 2017, O-Bank built a flexible, digital-native environment, which it claims is the fastest and most convenient system in Taiwan for customers to setup an online banking account. The platform maximizes consumer convenience and provides omnichannelconsistency.


A Day in the Life of an Industrialist Firm

RegulatoryAlert

Customer or Thing

Bot asks question.

Data scientist monitors activity and receives real-time alert.

Data scientist updates conversation library.Bot receives

answer and requests transaction.

Platform Technology Function

Data scientist updates onboarding automation.

Development Projects

Interest rate algorithms

Speed-of-settlement initiative

Data Mgmt.

Analytics

AI

Service bot responds that the bank will have an answer shortly.

Service bot responds with answer.


Critical Success Factors - Individualist

Integrationist

Individualist

Platformist

Industrialist


Live and Local




Eco

sys

tem

Mo

de

l


Individualist Characteristics

CEO CIO

Strategy People firstPeople supported by Technology

PeopleInternal talent as differentiator

Staff-focused

TechnologyEnabler, notCenterpiece

Staff tools, privateplatform

Products Traditional


Individualist: Live and Local

Customer focus: Deep integration into society

Front and Back Office

People

Guided and Accelerate

Intelligence

Laser Focused on Customers

Business Models


Bank of Ireland Blog, 13 April 2017

“In 2015, we started inviting entrepreneurs to come into our branches, take a seat, and get to work on their business ideas… We called our idea the Workbench.”

Early Signs of an Individualist Future


A Day in the Life of an Individualist Firm

Bank

Branch manager knows three suitable locations that have been successful, and one location that has a history of rapid turnover.

The individualist bank steps in to help its community by linking families with critical services through local business contacts.

Local individuals turn to the bank for services including checking accounts, loans, mortgages, etc.

Clients

Because the branch manager knows people and the community, she can connect people to products.

By helping the 9other families who don't currently bank with them, the bank affirms its value and differentiates itself in the community to yield higher local market share.

As the bank gets better at analyzing the community's mix of services, business and population centers, and growth areas, it is able to determine underserved needs in the community and work with local government, community groups, franchisees and small business entrepreneurs to identify viable business ideas and provide small business funding.

Community

A neighborhood fire destroys four homes and damages nine others.

Entrepreneur

An aspiring business owner seeks an ideal and affordable location for a new business that fills a community need.


Next Steps


Scan the Radar for Leading Indicators


Ecosys

tem

Model

Integrationist

Individualist

Platformist

Industrialist


Machine-led


Income statements will measure andthen list value from ecosystems as a separate line.

People-led




Ecosys

tem

Model

Integrationist

Individualist

Platformist

Industrialist




Longer lines at the branch for more complex product and service issues




Ecosys

tem

Model

Integrationist

Individualist

Platformist

Industrialist


People-led


Regulation promoting open bankingGrowth of crypto-economicsand gig economyDecline in digital trust

Machine-led




Ecosys

tem

Model

Integrationist

Individualist

Platformist

Industrialist


People-led


Rapidly increasing percentage of customer share of wallet with aggregators and digital financial advisors.

Machine-led


Expanding Personal Connections: Integrationist Next Steps



People-led

CEOo Focus on an ecosystem model of traditional

and non-traditional revenue sources

o Continuously improve recruiting, hiring, and performance management.

o Build a culture of collaboration.

CIOo Take a people-first approach to building IT

capabilities.o Use AI and collaboration tools to aid

employee-customer relationships o Adopt a bimodal approach to digital

transformationo Prioritize security and privacy

Ec

os

ys

tem

Mo

de

l

Augment people with technology, not the other way around.


Be a Better Platform: Platformist Next Steps



Machine-led

CEOo Focus on ecosystem model

o Reframe competition

o Lead the industry in serving both people and things.

CIO

o Facilitate an IT ecosystem approach

o Deliver tools to multiple organizations to drive collaboration across teams

o Build skills to lead an amorphous, ambiguous organization.

Ec

os

ys

tem

Mo

de

l

Make innovation and the quest for new revenue and cost optimization opportunities part of the culture and standard operating procedure.


Next-level Cost-efficiency: Industrialist Next Steps



Machine-led

Ec

os

ys

tem

Mo

de

l

Ensure scalability is a shared corporate priority.

CEOo Instill a culture of process improvement and

cost optimization.

o Hire for technology skills outside of IT.

o Explore supplying operations and IT expertise to Individualist banks for new revenue.

CIOo Focus your analytics capabilities.

o Maximize access to the broad data sets that will fuel your AI investments

o Engage in targeted R&D and engaging with fintechs outside of platform models.

o Maintain margin flexibility by minimizing installed hardware and software


Live and Local: Individualist Next Steps



People-led

Ec

os

ys

tem

Mo

de

l

Be relevant to community needs.

CEOo Drive interactions and contextualization via

channel augmentation.

o Ensure succession planning for key relationship staff.

o Apply governance models that facilitate community/local connections

CIOo Enhance customer analytics and

visualization tools.

o Favor an architecture that enables local deployments and avoids over-centralization

o Democratize IT concepts by educating channel staff on the benefits of technology for their (and to their) customers


The Future Is Closer Than You Think

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Digital Business Transformation: Investment Management › wp-content › uploads › 2019 › 09 › ...© 2018 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is